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Tenders – timewaster or business generator?

Published December 13, 2016

2015-september

 

 

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.

Me too

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 →

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Your sales machine

Published December 13, 2016

2015-august

 

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.

Review yourself

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 →

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When you fight with customers

Published December 13, 2016

2015 July

 

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 →

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The unique product or service

Published December 13, 2016

2015 June cover

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 →

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The one giant deal

Published December 13, 2016

2015 April cover

 

This article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in April 2015 and is posted here by their kind permission

 

 

Opportunities and risks of getting the biggest deal ever

 

 

What do you do if you get the opportunity of a huge sale, one bigger than anything you have done so far, maybe bigger than your entire business? This is a potential game changer, the opportunity to grow spectacularly. At the same time it is scary. Will you be able to continue to supply regular customers? How will you finance this deal, what will happen if you do not get paid? Can you deliver? The opportunity opens up dreams; all the wished for things you will be able to afford for the business and your family, security for you and your workers…

Best and worst

The best things that can happen are really good. If you make reasonable margins on the huge turnover increase the extra cash can be used to increase competitiveness with additional resources, creative marketing, better buying terms and the best information systems. Once you have executed a large deal successfully, you attract other large deals. Big organisations like to deal with suppliers who other big organisations use, so your business may be at the start of an incredible growth curve.

The worst things that could happen are very bad indeed. Many suppliers have gone insolvent because large customers persisted with unreasonable demands or did not pay. You may not be able to deliver to specification or on time and have penalty or cancellation clauses invoked. If you have personal guarantees to any supplier your lifestyle can be at risk too. Continue reading →

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Solution Selling – alive and well?

Published July 8, 2015

V__82F1This 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 →

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The right workload

Published June 21, 2015

2015 MarchThis article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in March 2015 and is posted here by their kind permission

 

Entrepreneurs work hard but should get the balance right

 

 

It is routine for entrepreneurs to work very hard for long hours. Hard work is a part of entrepreneurship, but how balanced is that workload? Do you handle customer complaints, check quality, answer e-mails, expedite deliveries, do progress chasing, and fix problems? These are all reactive. Your may also do some proactive work like designing the website, selling to customers, developing products and similar tasks. Even these may really be reactive – arising from the lack of a website, no trusted salespeople and customer gripes about product deficiencies. If this sounds like you, you are working in the business, not on it, and working at a low level as well.

You should be focused on beating competitors, innovation, customer retention, structuring finances, building the brand, managing budgets and forecasts, getting the right people in place and a host of other managerial tasks. These are working on the business not in it. At least some of your time must be devoted to strategy – have you got the right products? Are you in the right markets? Should you buy competitors or be bought? Is your buying strategy right? Your pricing? Does your structure support your strategy?

Life balance is equally important. Family, health, friendships, networking, learning, spirituality, hobbies, holidays and entertainment will often be sacrificed for long days working, but there is a cost. Continue reading →

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Word of Mouth

Published May 31, 2015

word-of-mouth-marketingThe 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?

Good example

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 →

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Breakout

Published May 23, 2015

2015 FebruaryThis article was written by Ed Hatton for Entrepreneur Magazine (South African edition), as the My Mentor column published in February 2015 and is posted here by their kind permission

 

 

 

Planning and executing real growth strategies

 

 

The year 2015 stretches ahead, and many entrepreneurs I speak to are still cautious. This is understandable, 2014 was a horror year of violent strikes, power cuts, limited postal service, slow economic growth and uncertainty. The temptation to proceed with caution into 2015 is very strong.

Beware though, caution can become a habit, business plans showing a modest growth on last year can become the norm. The company does not invest in new products, markets or channels, research, marketing and training are put on hold and the company develops a culture where innovation becomes too risky “for now”.

Breaking out from the limited growth habit can be a challenge, but a very worthwhile challenge, if only as a defensive move to stop competitors getting bigger and threatening you. Continue reading →

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A better year

Published May 23, 2015

A Good year Last year was a bad year for many companies – here is how to make sure 2015 is better

 

A variant of this article was published as the Sanlam Business Tips for Business Owners January 2015 edition. This publication is a great resource for entrepreneurs, well worth subscribing.

 

 

Last year was one of the most difficult for businesses in recent times. The strike in the platinum mining sector started in January and was only settled in June. Losses to the mines and their workers were enormous, but the trickle-down effect of the mines not buying meant suppliers were badly affected. That in turn affected their supply chains, down to tax consultants of managers of third tier suppliers. Only a week after platinum strike settlement the metalworkers strike paralysed industry for a month. The post office did not deliver mail for months in some areas, new power stations again experienced construction delays, the radical EFF appeared on the stage and the e-toll saga developed in Gauteng.

On top of all this the South African national pastime of sharing bad news brought a mood of pessimism and resignation. Already in 2015 we have seen threatened strikes, load shedding xenophobic violence. 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 →

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Need a quick profit boost?

Published March 25, 2015

increased-profitsFive ideas you can implement quickly and inexpensively

 

All businesses need an occasional profit boost and very few would have the luxury of saying they were already making more than they dreamed of. Here are five relatively painless and inexpensive strategies to improve your business.

 

 

  1. Sell more to your existing customers by cross selling. Cross selling means you sell products in your range to customers who now only buy other products in your range. They may be buying products which you carry from your competitors and this is often because they do not know the extent of your product range. It does not matter that you have explicitly told them about other products in newsletters or advertising, they may not have noticed. Do this by listing your known customers, and then making a matrix of what they buy. You should have this information in your sales analysis. If there are too many customers, take a selection of maybe 50 or 100. Assuming you are sure they could use your other products, make a series of individual direct approaches by e-mail, messaging or in person. Offer trial periods, initial order discounts or anything to get their attention
  2. Stop throwing things away. Unless your organisation operates on very lean principles, chances are that you are throwing a lot of valuable stuff away. This will include packaging material scrap, damaged, stolen or obsolete goods, operational time, space, managerial time and a whole lot of other stuff. Start a ruthless campaign to cut down on waste. Pay particular attention to wasted time like idle time waiting for some needed thing to happen, wasted time making things which will have to be remade and wasted time in inefficient processes. Also pay attention to scrap and rework whether you are a manufacturer or distributor. Check the scrap bins and figure out ways to stop throwing away stuff you paid for. If you don’t have the right systems or training to manage that then buy them, it’s cheaper in the long term.
  3. Target a competitor. Pick your weakest competitor (you do have up to date competitor analysis, right?) and attack yheir weaknesses and cash cow customers with special offers, top rate service, better technology or whatever your business has which makes it different from and better than your competitors. (You do have a clear and distinct statement of your differentiation and advantages, right?). If you cannot do this chances are you either do not know what your competitors are doing or you have no clue why your customers buy from you. In which case fix that quickly before your competitor reads this and you become the victim of this strategy.
  4. Adjust prices up or down. Do this only on products where a small price change can mean a large change in demand (price elastic products). Often these are small items, consumables, service contracts, add-ons, some fashion items and minor luxury goods. The ideal is to identify a number of high volume price elastic products. Make a guess what would happen to sales at a couple of price points above and below the current price. Then draw a spreadsheet to show what the total gross profit will be at each price point. You will often find the best strategy is to increase the price rather than cut prices. The total margin may be higher and the costs lower because there are less deliveries and other unit sale related costs. If the cost to you is likely to change with volume then factor this in. Test the theory by changing the price on a few items and make sure sales follow your projections before making mass changes. Try to increase some items and reduce others so you don’t look greedy or desperate.
  5. Get rid of the junk. You probably have customers and products which are not profitable and suppliers and staff you support because of loyalty despite the fact they cost you money. Supporting loyal people and suppliers is a wonderful thing to do but then view this as charitable bequests, do not hide it in the mainstream of your business. You don’t need to be cruel in offering money instead of work, but helping suppliers to become competitive and finding more suitable employment for people who have outlived their usefulness in your company restores their pride and gives them new opportunities. You can now monitor the cost of your kindness. Then kill or replace the unprofitable products, even if it hurts (Keep thinking of Kodak, at one time the world’s second best known brand, which could never tear themselves away from film and make the switch to digital). Politely discourage the bad customers or sharply increase prices of the stuff they buy so at least you make some money from them.

Continue reading →

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Don’t slow down

Published March 25, 2015

2014_NovemberThis 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.

Opportunities

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 →

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You have a business plan – what now?

Published February 21, 2015

climbing small

 

You have spent time putting together a great business plan, don’t waste it

 

It takes time thought and money to put together a credible business plan. You may have needed one to get finance, or to get suppliers to support you, or because you believe that planning your business is the right way to go, which is the best reason. Now the plan is complete, it has goals, targets and projections, mission and vision, marketing promotions, organograms, staff recruitment and training plans, financial projections and all the other characteristics of a great business plan – so what now?

Sadly in even the best intentioned businesses the day to day activities of running the business, and as all that great work fades from memory the plan document remains in a file, never to be looked at aside from out of nostalgia. If this is done deliberately it can be a good strategy, especially if you follow Eisenhower’s motto that “Plans are nothing, planning is everything.” In this strategy the business recognises that merely developing a plan drives the business to more focused and effective actions, but the entrepreneur wants freedom to react to situations on the ground, rather than stringently following the plan. If this is so in your business I have no problem at all.

However if your business is like the majority, the great ideas and lofty goals set down in the plan will slowly be submerged in the sea of day to day tactical management, and very few of the goals of the plan will be met. If this is you, or if you are in a planning cycle and fear this very widespread problem then read on… Continue reading →

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Cashing in

Published February 9, 2015

cashing_in_my_chips-300x200This article was written by Ed Hatton and first published by Entrepreneur Magazine as a part of the Selling your Business feature in August 2014 see copyright statement at the end of this article

 

When is the right time to start thinking about selling your business?

 

The best time to think about selling your business is when you first draft the business plan. This sounds bizarre; entrepreneurs planning a new business are filled with visions of growing the businesses, employing more and more people, branching out. However a key part of business planning should be to record your objective in starting or buying the business. This could be the need to be your own boss, wealth accumulation, social good, desire for power or others. Many entrepreneurs open or buy business with the sole intent of improving its value so that it can be sold at a large profit. Contrast this with others who build businesses in fields that interest them, and the business becomes the sole passion of the entrepreneur. If this business is sold the entrepreneur will have lost their primary interest in life. Restraint of trade is usually applicable to business sales, so the entrepreneur will not be able to start again in the same field.

What happens after?

What happens after the sale? Will you retire, go into a different field, work for charity or mentor young entrepreneurs? Or will you become bored, restless and depressed, with nothing to fill your empty days? You will probably have been working intensely, travelling a lot, taking tough decisions, overcoming difficult problems and suddenly all that goes away. If you have nothing to replace that lifestyle you will need to adjust. Continue reading →

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Selling to big business

Published February 9, 2015

2014_OctoberThis 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 →

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