Sustainability, More Than Survival - ISA Workshop, June 2009, with notes
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This is my presentation to the International Society of Arboriculture (ISA), in Rhode Island, June 2009. It contains many examples of how to run a more profitable tree care business. It was referenced in the podcast interview with Todd on ArborViews at http://www.isa-arbor.com/podcast/PodcastDetail.aspx?ID=8
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Sustainability, More Than Survival - ISA Workshop, June 2009, with notes
- 1. Sustainability: Business Survival in Tough Times Increase Your Profitability, Productivity and Sustainability Keith B. Center [email_address] www.moneytimepeople.com
- 2. Sustainability: Business Survival in Tough Times Business owners wear too many hats!
- 4. Agenda Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing ? ? ? What does your elephant look like? Introduction to MOPPS Assigning Value $ Business Vector Alignment
- 6. Agenda Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap ? ? ? What does your elephant look like? Introduction to MOPPS Assigning Value $ Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing Business Vector Alignment
- 7. What Does Your Elephant Look Like? Your business name here Vision V____ My Elephant P1 P2 P3 P4 P5
- 8. Vision Exercise 1: Who has a written vision? Share it.
- 13. Agenda Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap ? ? ? What does your elephant look like? Introduction to MOPPS Assigning Value $ Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Business Vector Alignment
- 14. Business Vector Alignment S P B “ Let your eyes look straight ahead, And your eyelids look right before you. Ponder the path of your feet, And let all your ways be established.” Pr 4:25-27 “ When visualizing with closed eyes the money you intend to accumulate, see yourself rendering the service… you intend to give in return…” Think and Grow Rich, Napoleon Hill S piritual P ersonal B usiness
- 15. Business Vector Alignment My Mission: To help business owners to increase profitability, productivity and sustainability. “ The one to know when your business needs to grow”
- 16. Exercise 2: Who has a written mission? Share it. Business Vector Alignment
- 17. Business Vector Alignment Your Mission: Your tag line: “ ____________________________________________________________________ ” Who we are, what we do. How we align with our clients and customers
- 18. Agenda Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap ? ? ? What does your elephant look like? Introduction to MOPPS Assigning Value $ Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing Business Vector Alignment
- 19. MOPPS - Introduction X = KPI, Key Performance Indicator Measurement Organization Policies Planning Systems M O P P S System 2 Operations, Manufactur ing X X X X X System 1 Marketing & Sales X X X X X X System 3 Accounting & Finance X X X X X X X Responsibilities Roles or Functions
- 24. MOPPS - Systems Measurement Organization Policies Planning Systems M O P P S Systems Detail in Module 2 System 2 Operations, Manufactur ing X X X X X System 1 Marketing & Sales X X X X X X System 3 Accounting & Finance X X X X X X X Responsibilities Roles or Functions
- 25. Work On, Not Just In Your Business W MOPPS – The Bottom Line You Your Business
- 27. Agenda Module 1: Your Strategic Roadmap Business Vector Alignment Module 2: Business Owners Wear Many Hats ? ? ? What does your elephant look like? Introduction to MOPPS Assigning Value $ Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing
- 35. Position: The EAB Solution Provider Tim Back Back Tree Service 513-742-TREE [email_address] Marketing Hat #1
- 36. 2005 – Mauget was only 1% $15,000 2008 – Injection 12.14% $216,000 in ArborJet products 2008 – Vertical Mulch Air Knife 12.6% 2005 – Vertical Mulch Air Knife 4%, $60,000 Marketing Hat #1
- 37. Exercise 3 How are you positioning your company? Share it. Marketing Hat #1
- 40. Copyright 2001 Mitch Meyerson and Jay Conrad Levinson. All rights reserved. Reproduced with permission 2006 Are You A Guerrilla? Score 1 10 Marketing Hat #1 16. I take Consistent Action on my marketing plan. 15. Develop marketing Partnerships with other businesses. 14. Consistently use Imagination 13. I look for ways to Amaze my customers with exceptional service. 12. My business is oriented to giving. We make Generosity a part of our overall marketing plan. 11. I build strong one-to-one Relationships knowing that people buy from friends rather than strangers. 10. I use Online Marketing as one of my major marketing weapons 9. I have a clear and specific Marketing Plan that guides my weekly action steps. 8. I focus on having a clearly defined Marketing Niche . 7. Enthusiastic and consistently positive in all my interactions. 6. Measure effectiveness of my marketing weapons. 5. Follow-up consistently 4. Assortment of strategies. 3. I am Aggressive in my marketing efforts 2. I look at all marketing from the Customer’s point of view 1. My words attitudes and actions are all Intentional and based on my marketing goals COMPETENCY
- 42. Agenda Module 1: Your Strategic Roadmap Business Vector Alignment Module 2: Business Owners Wear Many Hats Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing ? ? ? What does your elephant look like? Introduction to MOPPS Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Assigning Value $
- 49. Tree Mortician Remove storm damage $1,200 Opportunity sounded like this… Sales is a Process Hat #2 Tree Physician $8,320 He left with this!
- 52. Sales is a Process Hat #2 Sales Call Daily Log: Total Friday Total Thursday Total Wednesday Total Tuesday Total Monday (Customer Contacts) Networking Customer Sales Visits Appointments Set Actions Requested Contacts Dials Day/date
- 53. Sales is a Process Hat #2 Sales Pipeline:
- 54. … if you my friend don’t get no cash” “ Winning Through Intimidation”, Robert Ringer “ Closing deals is so much trash… Sales is a Process Hat #2 Remember!
- 55. Agenda Module 1: Your Strategic Roadmap Business Vector Alignment Module 2: Business Owners Wear Many Hats Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing ? ? ? What does your elephant look like? Introduction to MOPPS Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Assigning Value $
- 57. A B C V S M ABC = VSM A ctivity B ased C osting = Operations Hat #3 Getting to Lean: V alue S tream M apping
- 58. Operations Hat #3 Value Stream Map for a Fast Food Restaurant: Time waiting = 105 to 135 seconds Value add time = 150 seconds
- 59. Exercise 4 Process for tree care Operations Hat #3
- 61. Operations Hat #3 Value Stream for Tree Removal: Process: Arrive on site Validate tree, inspect with owner Set up equipment, bucket, chipper Start climbing / limb removal Chipping Trunk removal Chipping Stump grinding Cleanup Manpower: Three man team One climber Two on chipper Physically demanding High risk work Brings in $3,000/day/Team
- 62. Operations Hat #3 Value Stream for Injectables: Process: Measure tree at breast height Determine number of plugs & formulation Fill injection device Drill Plug Inject Clean up Document when to follow up and gain agreement from owner. Manpower: One person Not physically demanding Low risk work Brings in $3,000 to $5,000 each Three people $9-$15,000/day
- 64. Agenda Module 1: Your Strategic Roadmap What does your elephant look like? Introduction to MOPPS Business Vector Alignment Module 2: Business Owners Wear Many Hats Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing ? ? ? Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Assigning Value $
- 66. First, A Lesson in Waste Accounting & Finance Hat #4
- 67. Tuning Your Accounting Systems For Maximum Business Impact Accounting & Finance Hat #4 $45,000 NET INCOME BEFORE TAXES 195,000 Total Operating Expenses 75,000 Administrative Expenses 120,000 Marketing Expenses Operating Expenses 240,000 Gross Margin 360,000 Cost of Sales 600,000 Sales THE TOMMY COMPANY STATEMENT OF EARNINGS (Income Statement)
- 77. How do you feel now? Accounting & Finance Hat #4 Total Improvement Potential Inventory + A/R + A/P = 28.5%
- 79. Agenda Module 1: Your Strategic Roadmap Module 2: Business Owners Wear Many Hats Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing ? ? ? What does your elephant look like? Introduction to MOPPS Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Business Vector Alignment Assigning Value $
- 83. Hiring: Climbers Highly skilled, high cost Human Resources Hat #4 Injectors Highly sytematized, lower cost
- 89. Agenda Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap What does your elephant look like? Introduction to MOPPS Business Vector Alignment Assigning Value $ Module 3: Getting the hats all together… Visual Accountability Systems ? ? ? KPI’s Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing
- 90. Getting the Hats All Together Business owners wear too many hats!
- 91. Key Performance Indicators KPI’s
- 92. X = KPI Measurement Organization Policies Planning Systems M O P P S MOPPS Responsibilities Roles or Functions System 1 Marketing & Sales System 2 Operations, Manufactur ing System 3 Accounting & Finance X X X X X X X X X X X X X X X X X X
- 94. Simplified Scorecard Key Performance Indicators
- 95. Discuss KPI’s That You Are Using Exercise 4: Key Performance Indicators
- 97. Agenda Module 2: Business Owners Wear Many Hats Module 1: Your Strategic Roadmap What does your elephant look like? Introduction to MOPPS ? ? ? Assigning Value $ Module 3: Getting the hats all together… KPI’s Visual Accountability Systems Business Vector Alignment Hat #4 Accounting & Finance Hat #3 Operations Hat #2 Sales Hat #5 Human Resources Hat #1 Marketing
- 98. Visual Accountability Systems Visual Accountability Systems empower employees to hold each other accountable, thus reducing the need for supervision. As a result the owner/manager has more time for driving business. Remember: If it isn’t seen, then it’s hidden. And if it’s hidden it can hurt you.
- 99. Visual Accountability Systems Where Systems with KPI’s meet Visual Controls Focus + Accountability + Visibility = Profitability + KPI’s 2 3 4 5 Wk 1 Leads Sales Production Returns KPI $ $ $ Input Output
- 100. Visual Accountability Systems “ A visual device can stand in the place of a supervisor by answering questions asked on a day to day basis…” Sherrie Ford “ The main purpose of visual control is to organize the working area such that people (even outsiders) can tell whether things are going well or are amiss without the help of expert.” Dr. Chao-Hsien Chu “ The ability to understand the status of a production area in 5 minutes or less by simple observation without use of computers or speaking to anyone.” Dr. Richard A. Wysk “ A visual device can stand in the place of a supervisor by answering questions asked on a day to day basis…” Sherrie Ford
- 102. The OR Status Board Visual Accountability Systems
- 104. Visual Accountability Systems Printouts provide finer detail `
- 105. Visual Accountability Systems 2 3 4 5 Wk 1 Leads Sales Production Returns KPI Where Systems with KPI’s meet Visual Controls Focus + Accountability + Visibility = Profitability Think about your _____________________________ your own ______________________ C ritical S uccess F actors and develop K ey P erformance I ndicators + KPI’s $ $ $ Input Output
- 107. Sustainability: Business Survival in Tough Times Keith B. Center Mason International Business Group 513-459-7309 [email_address] Increase Your Profitability, Productivity and Sustainability www.moneytimepeople.com
Editor's Notes
- 1. Good morning, thank you for coming this morning. Welcome to the “Sustainability in Tough Times” workshop. Based on evaluations from past attendees I can guarantee that you will take home ideas that you can start implementing immediately in your business. 2. Introductions: Let’s first get acquainted. My name is Keith Center and I am the speaker this morning. Please give your name and company. This workshop was inspired by “How to Start and Manage Your Business”, by Arnold and Egon Van Den Berg. The workshop contains many of the best ideas that I have heard, and used, in business over the last 30+, almost 40 years. Many years ago I did some research for Arnold and he really liked it. He offered to be my mentor when I was too young and dumb to know what that could mean. I looked him up a few months ago on the internet. According to the press, is now sitting on a portfolio of $4B. That’s with a “B”. Perhaps I should have listened a little better. In this seminar you will hear scores of ideas. Some may be “blinding flashes of the obvious.” You’ve heard or read the idea before, but for some reason this time it clicks, and you decide that it is time to implement them. Other ideas will be new. But if you only come away with one or two ideas that you can implement immediately, then your time today will be well invested. The workbook contains many tools that you can take and modify to your business needs and also a booklist at the end of some of the key resources that I have used.
- Business owners wear many hats. There is a hat for marketing, which is outbound getting your brand out there. A hat for Sales, selling something is always fun. But after you’ve sold something you have to manufacture it, or order it, build it. So there is a hat for Operations. After that what happens? Well you need to get paid and so there is another hat, Accounting and Finance. After you get paid you need to maintain that relationship and so you need a customer Our agenda for today is broken into three modules. Your strategic roadmap, the many hats that you as business owners must wear and also the most important module, Getting the hats all together.
- Here we have two elephants. They are very different elephants, but none the less clearly identifiable as elephants. Each drawn by a different artist that has a particular idea that they see in their minds eye. My son brought this elephant back from Thailand. It brings to mind a question that one of my mentors, Dr. Z, asked a me couple of times. He asked “How do you carve an elephant?” Does anyone here know how to carve an elephant? …. The answer is to cut away everything that does not look like an elephant. And then he’d chuckle. It took me years before the penny dropped. He was talking about VISION! The key here is, that with vision quite often it is not clear, but what is clear is what is NOT a part of your vision, and so you cut it out. I have made decisions based on this principle. I may not have had a clear picture of an aspect of my business, but I did know what was not a part of it. So if I was not sure, I went ahead. If it did not fit, I cut it out. The objective is to get clarity on your goal, your elephant. It takes more than two words, or more than a sentence such as a “vision statement” how can you have a clear vision in only two words? Just suppose you had a vision, or were captured by aliens and taken to the planet Xanadu. You would be talking and talking and talking about what you saw. Two words would not cut it. A sentence would not cut it. That might be a summary. So it is with your elephant, your vision. You need detail and lots of it. The P1-P5 is the number of pages of my elephant when I first started writing it. Lots of detail. Lots of clarity and frequent scheduled revisions to get it clearer. You can distil this down to objectives that are long term, goals that are mid to short term and tasks that need to be done in a summary. Some people call this a strategic plan. All it is clarity of purpose, clarity of vision that covers all aspects of your business and personal life. The point is, your elephant and my elephant may be recognizable as businesses, but will be quite different.
- Tom Watson was an executive with NCR. One day he and the president of NCR had a falling out. The story goes that Tom came in to work the next day and his desk and personal effects were on the front lawn. The president had poured gas on them and set them on fire. He wanted Watson to have the clear message that he had been fired! That ugly event actually help frame his vision of what IBM would be. And today IBM is the dominant force, the yardstick by which their competitors compare themselves, in the IT industry, and NCR is just a niche player. Notice the words underlined
- This clip from the movie millions, is about two little boys visualizing what their future home is like. As you watch this movie, try to put your self in their place. Only it’s your business that is getting built. Isn’t that great? The scene that really got me was the wires coming into the breaker box and then the light coming on. So that is what I mean by vision. You cannot describe this clip in two words, or a sentence and capture what happened. It is that way with your vision for your business and what you want it to become.
- Business health check is in the book
- What kind of business do you want to own? What will it look like, what will it do? Once that becomes a little clearer, then ask. “What kind of person would own a business like this? Once that is clear ask, “What must I do to become this kind of person?” If you cannot see yourself becoming that kind of person, then perhaps you are in the wrong business. This is somewhat cyclical. You can think of it as an iterative process where you ask these questions of yourself and your elephant, your business, over and over again in order to achieve and maintain clarity.
- Let’s move now to strategic alignment.
- There are three areas of alignment with respect to business vision. B = Business Vision P = Personal Vision S = Spiritual Vision. In this context, spiritual is not about religion. In this world there are natural laws that exist. What did Newton discover? Gravity. What is Archimedes principle? Floatation. How about Bernouli’s equation? Lift, flight and jet engines all rely on this. These are examples of natural laws. In the movie “A Beautiful Mind” John Nash was rewarded for a developing a win-win strategy for his friend son how to pick up girls. Not sure if it happened quite that way, but the issue was to try and create a win-win scenario for the majority. In business we should always strive for a win-win. If not, success cannot be sustained because you have to continue to get new business rather than giving and ultimately receiving. We all need to align with natural laws, spiritual goals or however you want to look at those things in your life that are neither personal or business vision. In the movie “The Secret” The Law of Attraction is called the secret. If you are negative, you attract negative situations. If positive, positive situations. There is more than that, but these are natural laws that heavily impact business. If you do not align with them, then you are out of balance. Throughout this workshop we will come back to the concept of balance ad you will get a better feel for what I mean. This diagram has a multiple of uses and we will be using it over again.
- Here is an example of a Mission Statement and tag line. It is customer centric. The focus is on the customer.
- Consider using OPBP mission and vision stuff… Now it’s your turn. If do not have a mission statement and tag line, you need to develop one and you can come back to this part of the workbook and include it at a later time. Just keep open to it.
- MOPPS stands for Measurement, Organization, Policies, Planning and Systems. There are three basic business systems. At every intersection point of a system and roles & responsibilities work is done. And where work is done something can be measured. And when you measure those things vital to understanding your business they are called KPI’s or Key Performance Indicators.
- Build a functional org chart for your business. If you are a sole proprietor, assign the amounts of time that you must give to each role. There will be some roles that you may be able to do, but it takes a long time and they are just not what your core business function is. E.G. Legal, who wants to be an amateur lawyer and risk their whole business? Or accounting and bookkeeping? Many start businesses because of their technical competence, but lack sales and marketing experience. A word of caution with that last one. I have talked with many business owners who spend a ton of money on pretty brochures and stationery, advertising and etc., but have not properly aligned their business vision and strategy. They spend the money to hide from selling, a more important task, and many marketing organizations just don’t get it when it comes to selling product.
- Values create policies
- Sometimes you feel that you are holding the weight of the entire business yourself. You need to get out from under the business for a while every week and take an objective look at the business. Imagine that you are the “eye in the sky” and you are looking through a glass roof and seeing not individual people, but work being done. Roles and responsibilities being fulfilled.
- The modern view is the Japanese view. That is why American companies lost share to Japanese in industries like automotive. Ironically, the Koreans are doing this to the Japanese now. Pricing a product is one of the key roles of marketing. In my life I have spend a lot of years working with the Japanese and have studied why they have been successful. Yes there are also issues that I will not get into, but let’s look at the positives. In America price is arrived at by Cost + Margin = Price. If something costs us $10 and we need a $20% GM, then we mark it up by $2 and sell for $12. In Japan they look at the same equation, but apply it differently. The first thing that they look at is Price. What will the market bear? And this is what the equation looks like to them. Price – Margin = Cost. So if the market will pay only $11 and we need $2 profit, then we need to get the cost down to $9. And that is what the Japanese do. They work efficiently to get the production cost down to a level that meets the acceptable price to the market. Example: Use Arnold’s e.g. of the soap and toiletries dispenser. 5-6 x production cost is the retail price.
- Positioning: Which car do you think of first when it comes to safety? Volvo Which watch do you think of when it comes to prestige? Rolex There can only be one in first place. This is positioning.
- There are too many products and services. Advertising in America is $376 per year per person according to Ries and Trout. That is incredible! How can a small businessman compete with that. Rules of thumb indicate that if my target market is only 1,000 people, then I need to spend $376,000 on advertising per year just to keep up with the competition’s spend. How can I be a world class company when it comes to marketing when it costs so much? We will come back to that hanging question. (Guerilla Marketing).
- If you can’t be first, then where can you be? Example of Avis: Their original slogan was “We’re number two. We try harder.” When they passed Hertz, the number one car rental company, they changed the slogan to “we try harder”. The answer is that you occupy the part of the brain, or “creneau” where there is a gap. To do that you must find it and that means not only “know thyself”, your strengths and weaknesses, but also “know thy competition” and their strengths and weaknesses. Then to quote one of my favorite generals, Gen. Douglas MacArthur, “Hit ‘em where they ain’t.” Position your strength against their weakness and manage to your weakness. This is true both professionally and personally. And it is a game of strategy. Now back to “How do I compete when I don’t have the budget to pay $375 per capita per year for advertising and marketing?”
- Discuss product mix here… How to out position your competition by being known for… Aeration, or ArborJet – EAB specialist Not just tree removal, pruning, Take it to the next level…. Look for ideas while you’re here…
- E.G. of the Boer War. The Boers hit them where they weren’t [email_address]
- Guerilla Marketing: I can set up a meeting with a trained killer in this field and work with you on a plan where you can get more for less in so you can compete with the big guys and to quote MacArthur again “hit ‘em where they ain’t” “ If you want to be rich, you have to do what rich people did before they were rich – you have to find out what they did to become rich. If you want to have a successful company, you have to do what successful companies did before they were successful.” 22 Immutable Laws of Branding. What others say about your brand is much more powerful than what you can say about yourself. That’s why publicity in general is more powerful than advertising. Use Christian Blue Pages as an example of positioning. It means credibility to those who advertise in it. I means trust to those who see it. The Yellow Pages already existed. In branding the name is considered to be the most important thing. Their’s defines their target market and blue is thought of as clean such a Blue Cross, blue suites outsell gray or brown. Use slides from Guerilla Marketing and also the 100 ideas as a handout Conclusion When it comes to marketing, tragically the marketing people have not really sold much more than their own services. This is especially true of those selling to small business. As a result, there is a disconnect with sales. Recently I talked with a business owner who had spent good money on some marketing pieces. These were good pieces and I was impressed. I came out with several ideas on how to sell using them that were new ideas for the business owner that I could not understand why the marketing guy didn’t think of. To me they were a knee jerk reaction. I can remember reading a striking article years ago that simply said if you have money to spend on marketing and sales, spend it on sales first and marketing second. The tactical is more important than the strategic. You cannot win a guerilla war from the air. You must commit to feet on the street. Israel proved that against Hezbollah. So next we will move to sales as a system.
- Sales is a process, make no mistake. That process varies according to the type of product, service and company you are and the target market. But remember that it is a process. How to find more, win more, keep more. Find: This is marketing. Win: Pipeline, Prospect, Present, Follow Up. The three keys. Objections are said to be the friend of salesmen because it shows interest. Not always accurate. If you are getting a lot of objections the chances are that your presentation is creating them. You need to understand what the objections are and to address them during the presentation so that the customer never has to bring them up. Keep. There is a rule of thumb that says that every customer that you alienate will tell five others that your product or service is bad. That does not mean that you will win 5 sales for every good customer, but it does mean that you will lose five opportunities for sure. Also, it costs about 5x to win a customer as it does to retain one. So how do you retain them? Apply principles of CRM (show basics and introduce CRM software). See everything from the customer’s point of view. The more that you can see from their point of view the better they are. Sales resistance is fear. If you try to see everything from their perspective then the more likely they are to listen to you. They have a fear of being sold. It is normal and natural. The larger the item’s cost to them , the greater the resistance. Example of a $15 tool vs. a $15,000 purchase. Or, a $15 tool vs. a $15 box of cereal. The relative cost is seen as very high for the value delivered. Ever go through a supermarket and buy something that’s a dime less based on price? It’s not that the money is the issue. It is the perceived value was not there for the higher cost item. What is your value? How do you define your value? Make a value statement, or statements. These should align with your business strategy/ mission. What are your core competencies, what you do best? What are your weaknesses? How to avoid weakness and work on strength? E.G. Of table tennis player who said “When I focus on my forehand I am invincible!” Win-win: Do you want and desire a business relationship that will last with your customers and suppliers? Then make it win-win. E.G. “I will provide you a product and a service at a very fair price. In return please permit me to make a fair profit.” Objections: In any sales situation there are objections. These can be reduced down to six common objections. They vary from product to product, industry to industry, but there are typically a maximum of six. It’s like the 10 commandments. There’s only so many that you can commit and then your doing the same stuff and calling it by a different name. Same with objections. So learn what yours are and prepare the responses. Keep a diary, or log of what happened in each selling situation and look for why it was successful, or unsuccessful. You might think “I blew the close”, but the root cause may be that you selected the wrong prospect. Yes, there was a need, yes there was a want. But his needs and wants did not align with your core competencies, or strengths. So know your strengths. Retail Sales: Blue suits always outsell grey or brown. Why? Who cares, just go with it. See dress for success. Changing the approach from “can I help you” to “Have you been here before” This is known to generate a 12-16% increase in sales. Why? Who cares! Take the money and run! Accept that it works. Construction Sales How many bids per year do you actually submit? How many do you actually win? What characteristics define those wins? Size – of project, of revenue, of resources required? Why did you win? Ask the customer, it may be price alone, but if you probe you may find that there are other factors. Make sure that you get answers so that you can align your reasons for winning which should be, or lead you to, your strengths. Why did you lose? Ask! It may be price alone, it may be your salesman, or other relationships, or reputation. Find out by asking the customer and tell him up front that you will not try to persuade him otherwise. (This is actually called unhooking and once a PO is cut it is illegal to my knowledge). Get to where you understand what your core competencies are, your skills, and align them with the kind of buyer that needs and wants these kinds of skills. This is aligning your sweet spot with the buyers needs. You must measure or quantify. If not you are playing a game without a score or a time.
- This came from a physician. Actually, it is not in the Hippocratic Oath. Some attribute this to Hippocrates, some to Galen the Roman surgeon who made great advances in medicine through sewing gladiators back up and restoring them to health.
- SPIN Selling. A great book by Neil Rackham, a little too academic for most. But if you get the field guide, it takes you through enough of the research to help you understand why this works, and the exercises get you prepared for the right questions at the right time. If there is one difference between this book and every other book on sales, it is that it focuses on getting the buyer to answer questions that help them to understand what are the implications of their current situation vs. what your product or service can bring.
- Really, it all starts with the customer. Aligning your core business, what you do best, with what your customer needs and wants most. What you do best, and most profitably, with the client whose needs align with what you do best. Michael Port talks about the velvet rope, it’s often easier to decide who you don’t want to do business with, than to focus on who you do want to do business with.
- Rule of fives – for every customer relationship that goes sour, he will talk to others and five customers you would have otherwise had will not buy. It does not go the other way so that every good reference you have will get you five sales, it may get you some, but not five.
- Modify it to suit your kind of business and sales contact process
- There could be three phases, or six phases in your sales process, but make sure that you document them. Document them and the results, or metrics that you see at each phase. You want an early warning system for sales so that you will be able to correct a problem before it becomes one.
- As Arnold said. “If you go into business for yourself, it must pay you well!” That payment may not always be financial, but you should feel well compensated for whatever you do, otherwise resentment builds and you lose focus. And make sure that you get paid.
- Some use McDonald’s as an example of a franchise. This is what Michael Gerber used in his book “The eMyth Revisited”. I prefer to use Toyota because it is a manufacturing company, and a manufacturing company is systems, or process, driven. Secondly, it is a world class company and the leader in it’s industry. The ideas that I will cover have universal use and please use your value sheet to capture ideas and potential value. As an example, sales is a process, and there are several ideas that you may find applicable to sales in this section, even though it is not a function of operations.
- When you hear of lean manufacturing, a lot of people say “But I’m not a manufacturer, how can that apply to me?” Well, if you surf the web you will find presentations on diverse applications such as Library Systems and Lean, the Department of the Navy and Lean. The focus on reduction of cost is one of only two basic ways to increase profits. And studying how you can apply these principals to your business takes you closer to getting your business more profitable.
- It is said that love makes the world go round, and French is the language of love. But in the business world it is money that makes it go round, and accounting is the language of business.
- Give as a handout
- Inventory Turn Over Inventory turn over = Cost Of Sales / Average Inventory This ratio indicates the rate at which the inventory flows in and out of the business. Inventory costs a lot of money, more than most business owners realize. How much inventory should we hold if we are doing a certain amount in sales? This ratio helps us to see this. Let’s look at the costs Cost per Year Finance 10-12% Inventory costs money. You must borrow to have inventory and that means that you have to pay interest on that money. Insurance 1-2% Inventory has a value and therefore must be insured. Storage and Handling 1-3% Space has a cost. Handling also costs Taxes 2-3% You must pay property taxes on inventory Shrinkage 3-10% Shrinkage means loss due to theft, breakage, deterioration, obsolescence, etc. The range is due to the variation in the kind of product in inventory. From this it is clear that holding $1 in inventory can cost anywhere from 17-30 cents. Holding $100,000 in inventory can cost $17,000 - $30,000 per year in holding costs. By increasing the amount of turns, we can reduce the holding costs. Cost of Sales / Average Inventory = $120,000 / $30,000 = 4/1 Therefore inventory turns over four times in a year or once every three months. This could be compared to the industry average and get a benchmark if it is too high. If inventory reduced to $20k Cost of Sales / Average Inventory = $120,000 / $20,000 = 6/1 Result: Reduced Holding Costs = $10,000 x 17-30% = $1,700 - $3,000 Say average of $2.5k, What is the impact to the business? In this case the business only made $15k last year, so the impact to the Gross Margin is $2.5k of pure profit, or $2,500 / $15,000 = 16.7% improvement in margin! That’s pretty extraordinary. You might think that $2.5k isn’t much, but to impact your bottom line by 16.7 % is nothing short of incredible! Receivables Current Receivables = $120,000 Average number of days outstanding = 50 days Proposed days improvement plan = 10 days resulting from a six (6) month action plan Percentage improvement = 20% Effective increase in working capital = $24,000 This means $24,000 less that you are borrowing at 10-12% = $2.4k to $2.88k Show the impact to GM as a % Payables Suppose we have a supplier that provides terms of 10 days, net 2% This means that if you, the buyer, can pay this invoice within 10 days you get a 2% discount. Looking at our inventory of 4 turns of an average of $30k, we get $120k per year in purchases. If we can consistently pay promptly within 10 days that means 2% reduction in cost, or $2,400, that goes directly to our bottom line. If inventory is reduced by $10,000 we saw that the carrying cost was reduced by $2.5k or 17%.
- Get paid at the time of service delivery. Pay incentives to your people for collecting a check at that time, or consider using credit cards. Invoice immediately if you have to invoice. E.G. of snow removal story
- Tools – Divine Group, HR Chally, Profiles XT Are they entrepreneurs. Will they get more experience and training and then leave, possibly taking customers with them? Are they likely to have accidents and increase your workers comp?
- If you are to work on the business you need to take the time and do the personal development in the right areas. And you may need coaching from “The guy to know when your business needs to grow”
- Customer returns - could also add Warranty Claims Use this with the Business Chassis to show how it can grow with a little tweaking
- Let’s take this measuring and managing a step further. Making employees accountable to each other to produce extraordinary results.