Archive for the ‘Business’ Category
Some of the younger readers might not know what a paperboy is and barely know what a newspaper is. Those who were around when paperboys were commonplace you can skip a head a couple of sentences. Back before Al Gore was kind enough to invent the internet for us commoners, a human being typically less than 16 years old would deliver the newspaper to your door by either walking or perhaps using a bicycle. I kid you not this really happened.
What lessons can we possibly learn from such an out of date media form and delivery method? We can learn plenty, in my opinion. It will be my job in the next 400 words or so to explain. The paperboy can teach us at least three things.
- Use of technology
- Customer service
- Keeping bad debts to a minimum
Let me begin with technology. The smart paper boys who wanted to have the largest route and most efficient delivery method would utilize a bicycle. You may think that a bicycle is very low tech but compared to walking it was very advanced. What we can learn is that employing some technologies even if not on the “bleeding edge” can yield results. Fine, don’t be an early adopter but by now you should be using things like social media to replace traditional advertising like yellow pages or, dare I say, a newspaper advertisement. Get rid of your dedicated fax line and use a scanner to send and receive pdf files over the internet at a much lower cost.
What does a 12-year-old paperboy know about customer service? If he is a good paperboy he will not fling your paper in the drive way but ask you for your preference. Would you like your paper between the storm door and the main door or shall I bring it in the kitchen and set in on the table by your coffee? This kind of thing really happened. (Ask my dad he will tell you) Of course this also was before doors were locked and remotely monitored with a smart phone. Alas, technology giveth and taketh away. How far do you go to make the customer happy? Can you tailor your customer experience to fit each customer’s wishes? Amazon does this and they are a huge company yet they maintain a unique customer experience that does not feel impersonal despite dealing with you through the internet.
Face to face interaction and good service leads to lower dead beat customers. The paperboy interacts with his customer almost daily or at least monthly when he collects his money. What we can learn from this is to become like a friend to your customer. Some good advice I got from my boss at the CPA firm where I worked was to do your best at becoming a friend of the customer. He said it is easy to fire a service provider but hard to fire a friend. We can also learn to stay on top of our receivables by monitoring them regularly. The best way to stop bad debts is not allowing the receivables to become past due in the first place.
My 400 words have been used; I hope I have reminded you that we all can learn a little from the paperboy. Have a great week.
I was recently investigating a change to the 3 essential services needed for any home – Internet, Phone and TV. Concurrent to this quest, I received a series of unsolicited offers in the mail from a nationally known provider of said services. I had some free time between appointments one day so I decided I would take my multitude of offers and nail down that great price for the telecommunication trio.
I walked in the store and was quickly waited on by a representative. I explained that I had these offers, every one of which was better than the one before. He didn’t seem interested in my offers and proceeded to tell me what they had on sale. The last bundled 3 pack offer I got had the ultra low price of $79 for the holy trinity. He printed off his sheets for 100 channels 200 channels and 300 channels and the prices were curiously all about the same between $115 and $125 per month. This is still a better deal than I have with my current set up but what happened to my $79 dollar deal?
He tried to explain to me the differences in the plans but I only had about 30 minutes before my next appointment so I had to leave and study the information back at HQ. This should not be so complicated. What happened to the deal that got me in the store? There were so many variables and things going on “behind the curtain” that I was very distrustful of the entire process. They did a bait and switch teaser rate and muddied the waters so I could not make an informed decision. Is this the ideal way to treat a customer? I think not.
I suspect that they realize they are providing a service that is essentially the same as the competition. What they aren’t telling us is that their 300 crappy channels are just like Brand X’s 300 crappy channels. The way they differentiate themselves from the competition is with their commercials. They want us to choose them because their cute puppy is better than the competition’s talking unicorn or some such nonsense.
I think what they should do is give their customers a reason to stay with them and potential customers to do business with them. How about touting good service when a problem arises? What about consistent delivery of the product with minimal amount of down time? That might also be a good thing. Perhaps they should take a cue from Delta Airlines who says the real difference between them and the competition is that the people at Delta are better.
I am still looking for an answer to my telecommunications decision but I am getting closer and closer to going retro and buying an antenna for my roof and using Hulu Plus and/or Netflix as my content provider. Of course I will buy a subscription to MLB.tv for about $10/month for my baseball needs. Doing this I will save about $60 per month and I will program my own network of stuff I like to watch.
Have a great week being authentic with your customers. They will thank you with their loyalty.
The original Wizard of Oz is one of my favorite movies and I am surprised that it took me this long to blog about the business lessons to be learned from the movie. I have not seen the recently released Oz The Great And Powerful but plan on renting it someday. From a quick scan of critic ratings it seems as though it has more disappointing ratings than positive ratings but making a prequel to a classic will add an extra level to expectations. I will judge once I have seen it. Enough about movies, let’s get to business.
The three main characters besides Dorothy each believe that they have a flaw and are trying to remedy it by visiting the wizard. One lacks courage, one lacks intellect and one lacks a heart. In the movie, it is clear that the characters possess these qualities and just need encouragement to use what they already have. As a small business owner you may also have flaws and unfortunately there is no wizard available.
If you have not read the book The E-Myth I suggest you do so to understand what you have gotten yourself into. There are three key skills needed to operate a business and if you do not have all three you will struggle. You must have technical skills, managerial skills and must have entrepreneurial skills. Most people who start a business do so because they are a good technician. They can provide “the deliverable” but that is only a small part of running a successful business, especially if you want to grow it beyond a single-person shop. Having only two out of the three skills is as good as having a stool with 2 legs or having intellect and courage but no heart.
What do you do if you recognize you are lacking in one of the skills? Depending on the situation, you can try to learn the skill but running a business and devoting time to learning a vital skill is not the best idea. You may not have time learn the skill because you may be out of business before you are adept at it. My advice is to do what you are best at and hire good employees or outsource your weak spots. After a while you may develop your missing skill(s) but hopefully by then you will be best at entrepreneurship and will have an empire to manage while you create the vision for your company.
It may be easy for me to say (and self-serving) that you should hire or outsource areas that you cannot do well but I do have a good basis for my reasoning. That basis is Economist David Ricardo’s Law of Comparative Advantage from his book published in 1817; On the Principles of Political Economy and Taxation. This law can be explained by using a simple example we can all understand. For our example let’s say you are a maker of highly fashionable and sought after widgets. These awesome, industry-leading widgets sell for $100 and you can make your widgets in one hour and cannot keep up with the demand. If all of this is true, why would you waste time cutting your grass when you can pay the polite neighbor boy $20 to do that task which also takes an hour to do? By cutting your own grass you are losing $80! This might seem like a no-brainer to you but that is what you doing by handling all of your administrative tasks, social media marketing/website maintenance, Human Resources and, dare I say, your own accounting with QuickBooks? In a small business it does make sense to wear several hats but choose those hats wisely. For example, I enjoy writing and I believe and have been told that I have a skill for it so that is why I write my own blog. If I was terrible at writing and hated doing it, it would make no sense for me to write my own blog.
Have a great week travelling wisely down the Yellow Brick Road to success.
I am listening to Harvey Mackay’s book; The Mackay MBA of Selling in the Real World on my iPad and one thing that has stuck with me so far is the sentence he uses to describe selling. He says; “Selling is helping someone get what they want.” That really stood out to me. I never thought about selling in that way. I suppose that is why he is so successful. In case you do not know; Harvey Mackay wrote the blockbuster book from the late 1980’s; Swim with the Sharks without Being Eaten Alive.
If you are in the business of selling solutions like I am this means you have to develop some skills in determining what your potential customers wants before you can help them get it. To add to the difficulty sometimes the customer doesn’t even know what they want! This is where your skill has to kick in and peel away at the layers of the onion and get to the root of the problem. Hopefully you are the solution to the problem.
I might not be a highly skilled sales person but I thought I would share this nugget of wisdom in the hope that it will target your approach to selling towards finding what the customer needs and trying your level best to get it for him. By taking this approach, I believe it will alleviate the adversarial role you will have in your customer’s eyes. From my struggles with “selling” I would ask you to keep these 3 suggestions in mind when in front of a potential customer:
1) Avoid the urge to recite an advertisement about your goods or services in hopes that they will be unable to resist your great commercial. Remember to determine the need first. If you are selling what he doesn’t want to buy you are wasting your time and his time. He may know, trust and like you but if he’s buying shoes and your selling socks you are missing an opportunity.
2) To determine the need you have to ask the right questions. How do you know he is buying shoes? The best way is to ask questions that will get the person to talk – the more the better. Rather than ask him if he would you like to buy some of your nice socks. (This is an especially bad question because it results in a yes or no answer and if no you really didn’t learn much.) You might want to ask the person; a general question about clothing and see if mentions and need that you are able to fulfill. Remember, if you can’t help but you have determined a need for shoes; if possible offer a suggestion to put him touch with someone who has great shoes. It will certainly help you with them and the shoe salesman will certainly appreciate the referral and will reciprocate when he can.
3) Another thing to keep in mind is to keep an open mind. Don’t think you know what they need before you begin your conversation. If you do have your mind-set on what they need, you will probably not ask the right questions and you will lead them down your preconceived path. Even if you see they have holes in their socks they still might want shoes who are you to judge? It is not what you think they need is what they think they need.
To summarize, the next time you are meeting with a potential customer remember to determine the need by asking the right questions without assuming you know what they need. Have a great week selling socks to people who want to buy socks.
Question: Should I discount?
Answer: Probably not
Let me explain and offer an example of the harm that a discount can do to your bottom line. First of all, I would say that you need to do a better job at creating value for your customer. If you were making a proposal on a job and you were going to sell a widget at $60 per unit but were asked to discount to get the business do you do it? The answer is it depends. One thing to note before I go further; is that the “widget” can be a manufactured product, an item you re-sell as a wholesaler or it can be an hourly rate if you are a service provider and you sell your time.
Assuming your $60 price is reasonable based on a fair assessment of the market place, that request for you to discount means you are not doing a good enough job showing the value you are offering at $60 per widget. You need to work on that before entertaining thoughts about cutting your price. I wrote about that topic last year in my blog entitled; Pricing Your Services.
If you want to realize the harmful effect to your bottom line that a seemingly “small” 10% discount has on your future revenue stream take a look at this example. In the example below I have shown the price for units sold over a five-year period. The first example shows a year one sales price of $54/widget after a 10% discount from $60/widget. In both examples it is assumed that each year there is a 3% price increase passed on to the customer. In the second example, no discounting took place in year one and the sales price in year one is $60/widget. Take note that it takes until year five to get the sales price back to $60/widget when offering the discount. I also show the total lost sale revenue over the five-year period and I believe it is significant.
With the example above I hope I have given you motivation for you to polish your skills so you can adequately demonstrate the value in your goods or services. It is worth the effort to sharpen these skills. I can think of 47,772 reasons. Please note that I also showed you why you need to try to get discounts from your suppliers – it works both ways.
Have a great week defending against the insidious effects of saying yes to a discount.
I wrote about Delta airlines last fall and my comments were not very flattering. Well, to be fair I had an experience with Delta Airlines that needs to be reported and can serve as a nice business lesson. I was booking a flight for travel later this month and made a mistake on my return flight that forced me to cancel and re-book it. I tried to re-book the flight and was unable to do so noting however that the fee to change the flight was $150.00. I was nervous to say the least as I was directed to call the number on my Delta frequent flyer card. I called the number and was put into a cue of callers but I elected to receive a call back within 5 to 6 minutes from a representative. I hung up and was skeptical. Sure enough, 5 minutes later I got a call from a nice lady that who handled my problem and informed me that there was a 24 hour grace period and that there would be no fee to change my flight. She proceeded to take my information and in minutes a bad day just got much better.
So, what is the lesson? There are a couple of lessons that I took from this incident (which was totally my fault.) The first was how much goodwill Delta earned by simply being fair. I don’t know if all airlines have this 24 hour “bonehead” rule but I assume most do. In today’s business environment, especially when dealing with a huge company expectations are very low. So low that just by being treated fairly I was blown away.
The second lesson is that much of the competition is sub par and by just doing what is right will set you apart. Keep in mind that doing what is right is the bare bones minimum of how a company should act – just above ripping someone off. Taking that thought further, do a little extra and you will be superstar. If you do a lot more than required your praises will be sung far and wide. I hope no one is satisfied with doing a little better than the competition. Make it your customer service goal to blow away the competition and higher profits will be your reward.
Have a great week rising above your competition.
I was eating a restaurant recently and was served a ton of food, as was my wife. This is a fairly common practice in the dining industry. I am sure you can name a few restaurants that are known for their large portion sizes with diners carrying out Styrofoam encased leftovers. As my wife and I had lunch the next day on the ample leftovers, we were discussing our dining experience. During the discussion, it occurred to me that the restaurant was using a good sales tactic. Serving large portions (at the commensurate large price) is using one of the tactics I wrote about in my blog Ways To Increase Sales In 2010.
In that blog I spoke of 4 ways to increase sales. For review I have listed them below:
1) Increase frequency of the transactions
2) Increase the number of the transactions
3) Increase the value of each transaction
4) Increase the price of the transactions
In a subtle way the restaurant has increased the value of the transaction. Whether you realize it or not; when you go to the restaurant that has large portions sizes along with a higher price they are not just selling you dinner, they are selling you tomorrow’s lunch too. They magically combined two transactions into one and you are actually happy about it. How many times do you glowingly tell a friend about the place by saying; “they really feed you at…”?
The next time you go to your favorite place with the large portions, remember that a real life business lesson is playing out before your very eyes. The trick is to use one of the 4 ways to increase sales in your business. Think about it over dinner and get and get back to me. Perhaps you can mull it over at dinner at the place with the gigantic portions.
Have a great week determining your sales strategy for 2013.
Before I delve into today’s topic, I am going to tell you the story behind the story. On January 12th I went on a bike ride since it warmed up to 74 degrees. On my bike ride I turned into the parking lot of a church that is very large and a great place to add-on a few miles to my ride while avoiding traffic. On the ride that day as I was about halfway into the first lap when I looked ahead and saw Wilson and it stunned me. For those of you who do not know who Wilson is, and I assume that is small number, it was Tom Hanks’ friend and sounding board while he was stuck alone on an island in the movie Cast Away.
Why was “Wilson’s” appearance; from seemingly nowhere, so stunning to me? I have business associate and friend that acts as my “Wilson” and I serve as his “Wilson”. What do I mean by that? Well, as a solo entrepreneur many times you can feel as if you are on an island. About a year ago I began meeting with him on a regular basis for coffee and to discuss ideas and happenings in our businesses. It was not my idea but; have found it to be a very valuable pursuit. I have given advice and received advice during our meetings and always find it helpful even if it is blowing off steam to someone who can relate to my frustrations. The nice thing about this is I can vent to someone else rather than my wife and she appreciates that. My “Wilson” is a good fit for me as he has a similar type of consulting business which is complimentary but not competing.
I have been in groups in the past and currently am in a group that acts my informal board of directors but having someone to confide in that is in a similar business who understands exactly what issues you face is invaluable. If you are in business by yourself, you should consider having a “Wilson” to keep you from going crazy on that lonely Island you live on.
Have great week.
About a year ago I asked the question; “What is your most valuable business asset?” In that message, I suggested taking care of your employees and offered several inexpensive suggestions to keep them happy in hope of retaining them. Today I ask the question; “How do you find them in the first place?” I have managed an accounting department and have hired people and will tell you it is difficult to find good employees. In my current role as a consultant to small businesses I see employees from an outsider’s perspective and can say that an employee problem can be devastating to the productivity and to the morale of an entire company. A small business cannot afford the drag that a bad employee can cause. From my experience in a large company, I can attest that even larger companies are stymied by a bad employee. That is why I believe it is so important to treat them right once you find a good one.
When hiring an employee you need to take it seriously as the chances are they will be with you for a relatively long time. The average tenure at a job in the U.S. is about 4.5 years according the U.S. Bureau of Labor Statistics. Read the BLS report here. Unfortunately that is only several years shorter than most marriages. According to the U.S. Census Bureau , the average marriage last about 8 years. (See page 18 of 24 of report)
How do you find a good employee? I will offer a few suggestions that might not seem too rigorous but many companies do not bother with them. Even if you follow these suggestions you cannot be guaranteed to find a winner. To increase your odds, take the time and effort to do the following:
- Do a background check, including a credit check
- Check work references; be careful if any offer lukewarm responses
- Before hiring; order a drug test
- Use multiple people to do interviews and have a standard list of relevant questions
- Ask questions to assess their ability to deal with uncomfortable situations such as “how did you handle this…”
- Check them out on Social media sites
- If you don’t have an HR professional, find a consultant to assist. In the big picture the cost is minimal.
Many small businesses use a “seat of the pants” approach when hiring employees. This is simply a bad idea. I implore you to take hiring an employee seriously since there is so much at stake. The amount of work you can get from a good employee is so much greater than a poor employee and is even greater when compounding the length of employment which can be many years.
Have a great week carefully adding valuable assets to your company.