As businesses grow things change. For example the company that supplied you with 10 units per month may not be the best when you need 1,000 units each month.
Your sales are going from strength to strength, you have the right team in place to efficiently operate your business – now you need the right supplier contracts. The indication that you are looking for is how many problems do you have with supply? Late delivery, incorrect deliveries, unacceptable failure rates – these are examples of what can go wrong with your current suppliers and indicate that you need to overhaul that area of your business.
Can your current supplier deliver the higher quantities at the required quality? Can they deliver to the new locations you have opened?
Maybe you have developed new products or new ways to produce the existing offers – in which case you need new supplier arrangements.
What new requirements has your business growth created, and how does that change things with your suppliers? Do you need larger quantities than when you started the business, or maybe you now need deliveries to several production sites instead of just one? Maybe your capability has changed and now you need component parts instead of fully functional sub-assemblies? (Or maybe the other way around?)
Maybe you need a better “Partnering” relationship with a single supplier, or perhaps your business will be better served by establishing supply contracts with several suppliers for each item? The key is what your business is best served by?
Creating a new product and having the gumption to get out and sell it requires a certain skill set, handling the larger team and all the “people skills” stuff is another skill set, and handling the financial side of the business is yet another.
Adding these new skills to your team will continue your journey to a profitable business on auto-pilot. You’ll have the full set of skills in four more posts.
There are “road blocks” that every business has to navigate past if it is to succeed. We all think we know what they are – the right deal with suppliers, cash flow, the right team and so on. Very few of us know what all the blocks are, and almost nobody knows that the roadblocks arrive in the same sequence, for every business.
Think of each as a foundation for the next stage rather than a blockage. It will only be a blockage if you ignore the stage, fail to properly prepare or try to bypass it. In all there are eight stages, and as an example you won’t be very successful ramping up your sales (Step two) if you haven’t first proved that your concept works. To illustrate that – imagine telling people “I can’t show you any working examples, but I’d like you to buy one”. That’s a tough sale!
So you know that “Proof of Concept” is the first stage. This is the foundation upon which your business is built. During this stage you do whatever you need to do to get your concept into the hands of a customer. You build a prototype and demonstrate it, perhaps revising and improving the design over a number of cycles. Maybe you build the first production-ready units as well.
If you deliver a service then you need someone to tell others how great the experience was – not only how well you performed your duties or the success they had implementing your advice but the ease with which the transaction was completed.
It may be that you almost give away the first one. If you have a product then maybe you lend it for a short period instead of giving it away forever. A service can be provided for a cycle or two, in the understanding that if value is delivered then the arrangement will move to more commercial terms.
You might also sell the first one at a discount, just to get it “out there”. Why?
When you move to Stage Two and you ramp up your sales efforts you need something for prospective clients to hold on to. You need some facts and figures, a video maybe, some testimonials and any combination of those or a lot more. You need something that will be perceived as reducing the risk for your “almost customer”, and in short that’s proof that your idea works.
Many of us start a business doing the same things as we did for someone else – “I can do it better than him”, “If it was my own business I’d keep ALL the money for me” are thoughts that many would recognise.
Even if you have been doing the same thing you still need to prove the concept when it is your own business. You no longer have the same infrastructure you used to have – maybe you no longer have an assistant, or maybe you don’t have all the machinery and equipment your old boss has, and maybe it is as simple as your guarantee can’t hold the same power (I know some people hired a particular global consultancy because “You’re big enough to sue if anything goes wrong”).
Your new business is different to where you used to work, so you need to first prove the concept. The next post will discuss your marketing from a new perspective.
The good news is that you have been doing this for almost all of your working life. To find out more about what is meant – read The E-Myth by Gerber.
Let’s start by identifying what we mean by ‘marketing’. Again – marketing is influencing people to buy from you. That’s the easy part.
Now think about this quote from Warren Buffet: “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
So when are you influencing people? Obviously your adverts influence people, in fact they are supposed to do exactly that. You’re also influencing people when they ring you, or when they visit your premises. The quality of your service (including the service provided by your team) will influence them to return, or to never come back.
When you are shopping you might be seen by people who are your customers, so you will influence them by your behaviour at that time. Likewise when you are driving your car, attending a sports event, or the ballet. In fact no matter where you are you are you are probably seen by your customers or potential customers.
In the 1990’s there was a certain President of the USA. During his term just about every financial indicator was way into the green zone. Employment was up, profits were booming, international respect for the US was at a high – yet he is remembered for some personal activities that coloured everyone’s opinion of that person. He forgot that no matter where you are, someone’s watching. He spent eight years demonstrating the ability to do the job, and five minutes destroying that reputation.
Are you more protected from bad publicity than a President of the USA? I suspect not.
It isn’t so much “When should I market?” as an awareness that every time you step outside your home then you are marketing.
What is the most effective way to generate higher profits? In 1844 Charles Dickens wrote about a scheme very much like a Ponzi Scheme, in 1987 the movie Wall Street warned of doing things the wrong way and in 2013 the movie Wolf of Wall Street demonstrated that these aren’t just stories, this is what happens in real life.
These stories are relevant because first they tell us that it has been generally accepted since at least the early 1900’s that long term profits are not generated by inappropriate business practice, either illegal or just antisocial in nature.
You prefer to buy from people who you know, like and trust. So do your customers. So why do some people still persist in acting against their customer’s best interests?
One reason may be that the salesperson is attempting to maximise their profits, and some jurisdictions require Company Directors to maximise the profit of the company. Surely that’s all good?
It may be until you take actually think about it. Which gives you the biggest overall profit – ripping a client off once or maybe twice at the highest possible profit margin, and in the process driving them away so that they find someone else to do business with or maybe settling for 75% of that profit and keeping that customer for four or five years? Even at half of the original profit you make more money by working with your customer base.
The real point is that we know the right way to treat customers and treating them that way delivers what both of you want: they get good value and you get solid long term profits. Treating your customers so they naturally want to buy from you gives you time to improve your business so that even more people want to buy from you and the existing customer base is even more certain you are the right person to do business with. What would an ever-increasing number of return customers do for your profit margin?
And isn’t making a profit the idea behind being in business?
Today I read that Facebook is predicted to fail. Not immediately, but it has been suggested that it will be 20% of its maximum size by December 2014. The cause of the demise is that younger users have been moving away. Read more about it here:http://www.abc.net.au/news/2014-01-23/facebook-could-fade-out-like-a-disease-researchers/5214524
And there seems to be a debate about the value of Twitter. The company, not the tweets you send out. It is currently valued at 70 times its annual revenues. Refer http://www.abc.net.au/news/2014-01-22/kohler-what-is-twitter-worth/5212376
So what does this mean for you and your business? There are two major points that I think every business owner needs to consider.
The first is that any business can fail. The biggest business on the planet in your industry is not safe. No business is too big to fail.
The second is the power of the customer. Your business must provide a need (or want) and take steps to make sure that the customer is happy. Existing customers have a habit of leaving. They change jobs, move house, retire … there are many valid reasons why their situation changes, but they will – sooner or later – stop buying from you. That just means you never stop looking for new customers.
Governments can get away with not always being polite because they legislate for people to use their services, they do not compete.
There are a number of attributes a successful business must have – and one of those is innovation. In this case innovation means additional products or services that add value to your customer, not additional problems for your customer.
How can you treat your customers better?