Posts Tagged ‘business owner’

3 Strategies – Good, Fast or Cheap

Tuesday, March 31st, 2015

When I first saw this picture a couple of weeks ago, I had a really good chuckle.Good, fast or cheap - which strategy will you choose to grow your business?

Then I realized – it illustrated the key aspects of both strategy development and execution far more effectively than all of the books and articles ever written.

You’re a business owner, the company’s done well, but you know there’s room to grow and you know where you want your company to be in 3 years’ time.

To get there, you will have to do a number of things.

One of the most important is you’ll have to make choices.

You can be a low-cost provider, the cheapest supplier in town, low margins offset by high turnover.

To prevent those skinny margins disappearing, you will have to keep 2 things low:

•  The cost of making or buying your product or service. That will affect quality.
•  Your overhead – which means you won’t be offering the best delivery or support around.

So being cheap is OK but your service won’t be perceived as good or fast and you’ll be continually fighting to protect, or expand, your market share on price alone.

OR

You can differentiate your products/services by providing good quality, fast service or both. Lower turnover is offset by greatly improved margins.

•  Your cost of making, or developing, your product or service will be higher because you’ll use the best materials and skilled labour.
•  Your overhead will be higher too. Fast delivery requires competent people and good infrastructure; maintaining a reputation for quality requires research and development and innovation.

So you can be good, fast, or both but you’ll be well up the price range. Perhaps even in the wonderful world of premium pricing.

But you won’t be cheap.

OR

You can focus on a specific market, segment of a market, or niche and build the reputation for specialized knowledge and expertise.

In this case, you shouldn’t have to be cheap since your expertise should create the perception that you’re good.

If you’re really good, you can, to at least some extent, choose how fast you want to be. Why? – Because people will wait for the best specialist to fix their problem.

To wrap up, let me return to the point I made about the picture earlier – it’s taken me almost 300 words to say what it said in 26! And I’m sure I haven’t made you laugh once.

 

If you enjoyed this post you’ll also enjoy Want Your Company To Grow? Here Are 3 Words To Live By

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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From Strategy to Results – Plus Some Succession Planning

Tuesday, January 6th, 2015

In an ’80s TV series called “The A Team”, one of the main characters used to say “I love it when a plan comes together”.Good strategy executed successfully

Here’s a wonderful example of a real life plan coming together.

In 2009 a recruiting company called LEAPJob hired us to help them with their business strategy.

It was a family business founded by Donna and Marcus Miller. One of their sons, Jeremy, worked in the firm with them. Stephen, their other son, had a very successful career with a large software company.

There were 3 major issues to consider.

First, the Millers believed the recruiting industry was undergoing fundamental change. They were concerned about the future for smaller companies.

Second, LEAPJob had an extremely high level of brand recognition in its target market and a very successful on-line lead generation engine.

Finally, Donna and Marcus were thinking about retiring.

The outcome was a 2-step strategy.

The recruiting business would be sold in approximately 3 years and Donna and Marcus would retire.

While they were positioning LEAPJob for sale, Donna and Marcus would help Jeremy launch a new business. This would leverage his skills in marketing and branding – competencies Jeremy had honed by leading the rebranding effort and building the lead generation engine.

Fast forward to January 2015.

Jeremy’s first book, published by an established Canadian label, is about to be launched. It will be available in stores and on-line via Amazon, Barnes and Noble and iBooks, amongst others, in a few days’ time.

The title of the book “Sticky Branding” is also the name of his company.

Jeremy’s commented a number of times over the years that our process played a significant role in his journey.

But the idea to pinpoint and profile small and mid-sized companies with sticky brands; the analytical skills to see the factors common to them; and the creativity to combine those factors and his own experience were all Jeremy’s.

The result – lessons which can be applied by the owners of small and mid-sized companies who want their companies to “stand out, attract customers & grow an incredible brand”

He’s had to deal with some hard knocks and tough times but now Jeremy is on the brink of success. I admire his focus and willpower.

Donna and Marcus are happily retired.

I love it when a good strategy is executed successfully.

 

If you enjoyed this post you’ll also enjoy Strategies That Get Results Are Developed By Thinkers And Doers

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Lists That Last

Tuesday, November 25th, 2014

It’s funny how 2 unrelated events often come together to produce a completely unexpected outcome.Stay focused on the list of your company's set principles to maintain consistent success

In this case, the first event is that we recently decided to undertake a long overdue revamp of our web site. As a result, I’ve been thinking about the changes we need to make to our content.

The second is that I’m re-reading Jim Collins’ book “Built To Last” which employs his now familiar technique of contrasting Visionary companies with less successful Comparison companies.

One of the differences between them is that the Visionary companies all had a well-articulated core ideology.

Collins credits that core ideology with keeping the company focused on a set of principles that it practiced consistently through the decades. That focus was a major contributor to the Visionary companies consistent success.

That set me thinking.

When I started ProfitPATH 12 years ago, I had 2 reasons for doing so.

One was to share the tools and techniques I’d learned working for some remarkable companies, on 3 different continents. This didn’t mean I knew more than other people. I just knew different things.

The second was to do things differently to traditional consulting companies.

In fact, I made a list of all the things the consultants I’d hired over the years had done that had annoyed me and said – we’ll do the opposite.

I’ve often spoken about that list to colleagues and clients over the years, and I try very hard to live by it every day.

But, apart from the original scrap of paper I scribbled it on, I’ve never actually written it down or publicized it.

Now I’m going to change that.

That list is going to replace the outdated content that inhabits one of the pages on our current web site.

There are, of course, a couple of challenges.

Those of you who know me will agree that I have really bad handwriting. So, even if I could find the piece of paper on which I wrote the list, I probably wouldn’t be able to read it.

Fortunately, I remember most of the items quite well as I have verbally shared them often. The others will come back to me as I’m writing down the former.

I’ll share the list with you next week. And you can tell me what you think before I put them on the web site.

 

If you enjoyed this post you’ll also enjoy The Elusive ‘Silver Bullet’

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

How Do You Know If Your Company Will Fail?

Tuesday, October 21st, 2014

Let me go back almost 20 years to give you some context.How do business owners know if their company is on the path to decline?

My last real job (that’s what my wife calls the jobs I had before I became a consultant) was running the Canadian subsidiary of a 100-year-old, multi-national corporation.

Our owners, a much larger, publicly listed corporation, had bought us years before as a ‘cash cow’. There was, therefore, very limited investment in any aspect of the operations.

When I joined, the core business was rapidly being replaced by a new technology. We developed a new strategy for Canada and quickly set about executing it.

But, even when we appeared to be having some success with the new strategy, I used to ask myself if it was already too late – and how I would know if it was.

Now let’s return to the present day.

I’m re-reading Jim Collins’ book “How The Mighty Fall”. It was written as a result of a CEO asking how he would know if his company, successful as it had been, was already on the path to decline.

Imagine me asking the same question as the CEO of one of America’s most successful companies – several years before he asked it. It would indeed be remarkable, were it not for a few important details.

Clearly the circumstances were different. The CEO was being more farsighted than my employers had been.

And, more importantly, I’ll bet that many business owners have worried – and still worry – over the same question. I’m sure they started long before I asked it and some are still asking it now.

So why even raise the topic?

For one thing, if Collins’ book had been available in the mid-1990s, I would have had my answer. I would have known that, in time, the company would be sold to a competitor and, when that didn’t work, be absorbed by another competitor and almost completely disappear.

For another, “How The Mighty Fall” should be mandatory reading for all business owners. Or at least for those who understand that their past successes offer no guarantee, or even protection, for the future.

One point that caught my attention – and I’m only on page 48 – is that complacency was responsible for only one of the failed companies.

Another is that being an innovator was no protection from failure.

I would have assumed the opposite in both cases. So, perhaps I’m not as far ahead as I thought…………

 

If you enjoyed this post you’ll also enjoy Targets Are Targets, Results Are Reality

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

7 Ways to Hold Consultants Accountable Now

Tuesday, September 23rd, 2014

7 ways to hold consultants accountable nowMy wife will tell you I like giving other people advice.

That’s probably why I’m a management consultant.

But even consultants have to take some of their own advice – and change in order to grow.

For example, we must find a process for linking our compensation to our results in a meaningful way.

There’s no doubt this is hard to do. But that’s no excuse for refusing to try.

However, at the risk of making a huge understatement, it’s going to take time.

So, while we’re waiting, what can a business owner do to make sure the consultants they hire actually deliver results?

1. I talked about our own solution to linking compensation to results last year in a post called “Let’s Hold Consultants Responsible For Results”. It isn’t perfect, but it’s better than the traditional model.

2. Four years ago I suggested how owners can keep control when they work with consultants.

3. Around the same time I highlighted 3 reasons why consulting engagements fail. It’s really not difficult to avoid making them.

4. Look for consultants who have had practical, “hands on” experience operating a company. They have 2 clear advantages over consultants who have spent their entire career in consulting roles, as I pointed out in 2011.

5. There are also clues that you can listen for. Consultants who are effective tend to say certain things.

Here are 2 more things that I thought about this week.

6. Yesterday I was talking to a business owner who had been referred by an existing client. He asked if I would go out and meet him. I agreed immediately because that’s the only way to determine if there’s any chemistry between us.

Some people might consider the idea of “chemistry” to be foolish. But I can tell you from experience, that without it, the risk of a project failing increases dramatically.

7. Ask what success will look like. It’s more than just a description of what the consultant’s going to do and the services they’ll deliver. It’s about knowing how, when and what they will do to help you get the results you want.

Success, they say, comes not from doing one big thing well, but from doing many little things well. Perhaps change is like that too.

We at ProfitPATH, and lots of other consultants, are chipping away, doing the necessary things that will bring change to our business.

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Jim StewartJim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Stick to Your Knitting or Reinvent Yourself? What’s the Right Answer?

Tuesday, August 19th, 2014

Don't knowIf you focus on what you do best, you’ll prosper. Look at Coca-Cola or Southwest Airlines or Disney.

So, understand your core competencies and stick to your knitting.

Good advice, correct?

But what about companies like Kodak and Nokia? They stayed focused on what they did best. And it really didn’t work so well for them.

So, perhaps it’s not such good advice after all.

My Dad used to say “rules are for the guidance of wise men – and the blind obedience of fools.”

Just because we drop that magic word ‘strategy’ – as in strategic consistency – into a rule, that doesn’t make it an exception to be followed blindly.

Kodak, Nokia, and a host of others like them, did understand their core competencies. But they either didn’t see, couldn’t understand – or simply ignored – a reality.

Something else started going on in their industry that made those core competencies obsolete or insufficient. In Kodak’s case, it was digital photography; in Nokia’s, the advent of the smartphone.

Perhaps a better rule for business owners is to stick to the knitting, but keep looking outside of the company in case something fundamental begins to change.

And as soon as that change becomes evident, begin reinventing – around the capabilities that brought success to the company in the first place.

That’s what Lou Gerstner did at IBM and Andy Grove did at Intel. (Much as I dislike using only large corporate entities for examples in my blog posts, they are usually well enough known for everyone to be aware of them.)

So the reinvention comes from adding new capabilities to the ones that brought success in the first place.

Ken Favaro, who wrote the article, that inspired this post and for whom I have the greatest respect, says that if you do this, you can manage the tension between strategic consistency and reinvention.

Perhaps I’m over simplifying but I see it as using common sense to deal with the changes that have, and always will occur in an industry.

But, as Stephen Covey pointed out, common sense is not that common. And it’s particularly difficult to hang on to it in the face of never ending pressure to make deadlines, maintain quality, fight off competitors, keep staff motivated – and, of course, make the payroll.

 

If you enjoyed this post you’ll also enjoy Strategy Working? Then Don’t Make These 5 Mistakes

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Strategy And The Evil ‘Gang Of 5’

Tuesday, August 12th, 2014

Ken Favaro calls them the “Gang of 5”.the evil 'gang of 5' adversely affects strategy

He talks about them with reference to large, public companies.

But every business owner we’ve dealt with over the last 13 years would recognize them.

That’s because entrepreneurs are only too familiar with the challenge of making this year’s top and bottom line, while simultaneously investing in the future.

The Gang of 5 draws its strength from the:

  • Resulting competition between the needs of short and long-term priorities and,
  • The belief that this trade off has to exist.

Let me introduce them and you’ll see what I mean.

Let’s begin with the 2 members that cause too little investment in the future.

1.  Financial engineering – or working the numbers by cutting costs to make the current year’s bottom line or continually postponing expenditure on, for example, training, hiring or replacing aging equipment, from one year to another.

2.  Price leadership – or price-cutting. This is worse, because it’s a very public tactic. Once you’ve lowered prices, how easy is it to put them back up again? It’s not.

Then there’s the 3 members who show up when a company does spend – but unwisely or excessively.

3.  Innovation leadership – gone wrong. Symptoms of a misguided approach to innovation are, for example, not launching a product until it is “perfect”; expecting customers to buy a service developed without their input; cost overruns and products launched way behind schedule.

4.  Cross selling – can be a good thing but not if it leads to the development of products which are “bundled” for sale at reduced margins to a few “key” accounts. Double jeopardy occurs when the customers’ business changes or key decision-makers leave.

5.  Market leadership – or “we have to be the biggest” comes from the misguided belief that to make maximum profits, a company has to be the market leader. We’ve worked with many companies that quietly carve themselves a specialized niche in a market and make superb margins as a result.

The reality is that a business has to find a way to make a profit and invest in the future every year.

How do you, as a business owner, do that?

One way is to have a clear picture of where you want your company, not just your sales, to be in 3 years’ time. Then, before making key decisions, asking how the outcome will help get you there.

 

If you enjoyed this post you’ll also enjoy 2 Things That Cause Bad Strategy

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Strategy – 3 Things To Argue About

Tuesday, May 13th, 2014

This morning, I gave my good friend Jeremy Miller some feedback about one of his blog posts.3 things to argue about strategy

Actually, I’m being polite. I told him where I disagreed with what he’d said.

The reason for the disagreement.

In his post Jeremy argued that:

  • Numeric goals, e.g. grow to $50 million in annual revenues in 5 years, lack meaning.
  • They – and SMART (Specific, Measurable, Attainable, Realistic and Time Related) goals – aren’t aspirational.
  • And they don’t engage people’s hearts; tell them why they should change their behaviors; or why their contributions matter.

Knowing how Jeremy thinks, this surprised me. However, as we talked I began to see his point of view.

Jeremy is a branding specialist.

Some of the companies he works with employ strategy consultants to help build their business strategy. And some of these consultants leave Jeremy’s clients having developed a strategy and set lofty goals.

Unfortunately, with everyone exhausted by the effort of developing the strategy, no thought is given to how to execute it.

And, to make matters worse, the only people to participate were the owner and management team.

Jeremy is left with the task of designing and implementing a marketing or branding program to achieve the goals.

His thinking is rooted in the frustration which arises when little or no thought has been given to how to translate a strategy into results.

“Strategy” has 2 parts.

That is because, I think, we’ve misused the word strategy for some time now.

Many people – consultants included – believe the job is done when a strategy has been developed. Let’s face it; most of the “models” in common use are designed to develop strategy.

It’s common knowledge that most companies fail at execution. Yet, ironically, there are far fewer “models” designed to guide the successful execution of a strategy.

The model we’ve been using, and improving, for 12 years now deals with both.

Yes, that is unashamed self-promotion.

But it’s also how I know that, if as many people as possible are involved in both developing a strategy and working out how it will be executed:

  • The meaning of numeric goals will be evident in the things a company intends to do.
  • Satisfying more customers, increasing profits and creating more jobs will become worthy aspirations.
  • Goals – numeric and SMART – will engage people’s hearts, explain why they should change their behaviors and why their contributions matter.

I’ll talk more about how the “strategy development only” model is broken – in future posts.

 

 

If you enjoyed this post you’ll also enjoy “You Can Achieve Any Result You Want To……”

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

5 Tips For Ensuring A Smooth Transition In Ownership

Tuesday, March 18th, 2014

There are 3 things that a business owner must do to ensure their exit plan goes well. The first is to pick the right buyer – and I talked about that last week.5 things that will help make the transition to the new owner go smoothly

The second is to make the transition to the new owner silky smooth. Here are 5 things that can be done to make that happen.

1.  Identify the stakeholders. Regardless of whether the company is sold to a 3rd party, members of the management team or to a family member, there are 5 groups of people who will be affected.

They are the employees; customers; suppliers; bank or other investors; and family members.

And there may be a sixth – a “regular” or Advisory Board.

2.  Communicate with them. There is some information they will all need to be given. But there is some that only has to be shared with specific group(s).

And the method, e.g. face-to-face or in writing – and timing of the communication will vary.

3.  Time the transition well. Ideally that would be:

  • When the economy is forecast to do well.
  • After 3 years of good results.
  • When the seller is still in good health.
  • At a time of year that is not the company’s busiest period.

4.  Plan and project manage it. Many ‘baby boomer’ owners seem determined to avoid thinking about their exit until the last moment. That creates problems from a tax planning, and every other, point of view.

Careful planning is vital when one family member is to be chosen over others. It takes time to assess business acumen and to design and implement a development program.

5.  Anticipate the 3 things that will happen during the transition. The first is that productivity will go down. People will be preoccupied trying to guess what the future holds and what the change means for them.

Not everyone will be happy. Some key employees may leave and, worse, some family members will feel slighted.

Finally, there may be more mistakes because people are distracted. And there are unexpected problems at every other time, so it’s logical to expect them during the transition.

Most business owners will only sell one business during their life. And there are very few other things they will do only once.

Doesn’t that make putting time and effort into getting it right seem like common sense?

 

If you enjoyed this post you’ll also enjoy Being Profitable and Strong Increases Valuation

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

6 Tips For Finding The Right Buyer

Tuesday, March 11th, 2014

Last week I was one of three speakers at the Toronto Star’s Small Business Club event, “Exit and Succession Planning”.Finding the right buyer or successor for your business

My talk included 6 things a business owner can do to ensure she/he finds the right buyer or successor.

1.  Money. The seller must be satisfied that the buyer has the funds to complete the transaction.

In a sale to a third party, for example, the seller must obtain evidence – from a bank or accountant – that the buyer can meet their commitments.

But having money isn’t enough – particularly if part of the purchase price is to be paid from future profits.

2.  Knowledge of the Industry. The better a buyer’s knowledge of the industry, the more likely the transition will succeed.

In a Management Buy Out (MBO) or family succession, the current owner knows the key players’ level of knowledge.

If the owner has been planning ahead, they will, for example, have given the players opportunities to build relationships in industry associations.

3.  Business Acumen. The purchaser or successor must have proven they know how to make money.

For example, a third-party buyer may have been a successful CEO or owned other businesses. A family member may have done well for a company in another industry or country.

4.  Appetite for Risk. When you’re watching someone else run a company it’s easy to underestimate the risks they are taking.

For example, as an MBO progresses, the management team begin to understand fully the risks that come with ownership.

That’s one reason why MBO’s collapse more frequently than sales to third parties or transfers to family members.

5.  People Skills. A seller must look for evidence that a third-party purchaser has successfully led people and built strong relationships with customers and suppliers.

By planning for an MBO or transfer to a family member, the owner can give the key players opportunities to prove their capability.

6.  Business/Strategic Plan. Regardless whose it is, a business plan has to pass 4 tests.

  • Don’t attempt too much too quickly.
  • Have clear Action Plans to ensure implementation.
  • Provide adequate resources to support the Action Plans.
  • Have a clear follow up and review process.

Hopefully they’re all common sense. If so, the transition will go well – and the party can begin!

 

If you enjoyed this post you’ll also enjoy Don’t Destroy the Long Term Value of Your Company……

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Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

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