Posts Tagged ‘costs’

Top Ten In 2014……

Monday, December 29th, 2014

The results are in!

Our top 10 blog posts in 2014 were:

1.   Adaptive Strategy – A Way To Profits In The New Normal? looks at an alternative strategy that is built on the 3 R’s (Responsiveness, Resilience, Readiness) required in a changing environment.

2.   6 Ways A Business Owner Can Influence Culture looks at the ways a business owner can develop a culture which will help increase operating profits and build shareholder value.

3.   6 Challenges Fast Growing Companies Face discusses the 6 challenges of execution which, if not dealt with, could prove fatal.

4.   3 Times When You May Need To Change Your Strategy explains when a company should review its strategy and what makes that review and any subsequent actions necessary.

5.   The Difference Between A Strategy And A Plan talks about the difference between strategy and planning and why it’s important to understand what these terms mean.

6.   6 Things We Can All Learn From Family-Owned Business puts forward 6 simple things business owners can implement to achieve better long-term financial performances.

7.  Use These 3 Tips To Make Your Next Critical Decision offers 3 things Ram Charan, co-author of “Execution”, says business leaders do when faced with a critical decision.

8.  5 Traits Effective Business Owners Share outlines some of the traits effective entrepreneurs have in common that contribute to the growth of their businesses.

9.  3 Reasons Why Consulting Assignments Fail and 3 Reasons Why Consulting Assignments Fail – Part 2 addresses the most common reasons why things can go wrong between consultants and their clients.

10. Strategic Planning – 3 Things That Are Wrong With It outlines how business owners make 3 mistakes that could destroy their company when they confuse strategy and strategic planning.

If you missed any of them, here’s another opportunity!

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Strategic Planning – 3 Things That Are Wrong With It

Tuesday, February 18th, 2014

We all know that picking a strategy means making choices.3 things wrong with strategic planning

But that means making guesses about that great unknown, the future. What happens then if we make the wrong choice? Could we destroy a company?

That’s why, according to Roger Martin¹, we turn choosing a strategy into a problem that can be solved using tools we are comfortable with.

And we call that strategic planning.

But, Martin says, companies make 3 mistakes when they confuse strategy and strategic planning.

1.  Putting the cart before the horse:

All strategic plans have 3 parts:

•  A vision or mission statement,
•  A list of initiatives required to achieve it,
•  The results of those initiatives expressed as financial statements.

These financials typically project 3 – 5 years into the future, making them “strategic” (although management typically focuses on only the first year’s numbers).

But the dominant logic in these plans, says Martin, is affordability; the plan consists of whichever initiatives fit the company’s resources. And that’s putting the cart before the horse.

2.  Relying on cost-based thinking:

The company is in control of its costs – it can, for example, decide how much office space it needs and how to promote its products.

And costs are known, or can be calculated, so fit easily into planning.

This thinking is extended to revenue forecasting and companies build detailed, internal forecasts by, for example, salesperson or product.

But these projections gloss over the fact that customers control revenue and that they decide how much a company gets.

3.  Basing strategy on what the company can control:

A number of well-known models are used for strategic planning. But they can be misused. Take Mintzberg’s concept of emergent strategy.

Martin believes it was intended to make business owners comfortable making adjustments to their deliberate strategy in response to changes emerging in the environment.

However, because waiting, and following what others are doing, is much safer than making hard choices and taking risks, emergent strategy has been hijacked to justify not making any strategic choices in the face of unpredictability.

But following competitors’ choices will never produce a unique or valuable advantage.

What do I think?

I like Martin’s views but the crux still lies in linking planning to execution, turning desire into results.

__________________________________
“The Big Lie of Strategic Planning”, Harvard Business Review, January 2014,
http://hbr.org/2014/01/the-big-lie-of-strategic-planning/ar/pr

 

If you enjoyed this post you’ll also enjoy Bad Strategy – How To Spot It

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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

Attract More B2B Prospects with Content Marketing

Tuesday, October 16th, 2012

This week’s guest is Paul Heron, CEO of Complex2Clear, a Toronto-based communications agency specializing in proposals, content marketing and websites for companies selling B2B services.

 

If you’re reading this post, chances are you think strategically and work at staying ahead of your competition in innovation, quality, delivery and client experience.

But who, besides your employees and your clients, appreciates how much value you deliver? Do outsiders generally know and admire your company ─ or do you often find yourself starting from scratch when explaining your key benefits and track record to new prospects?

If you’re in the “starting from scratch” category, consider content marketing, a powerful tool for building positive awareness about your business.

Content marketing is the practice of creating and sharing useful information prospects and others can read, listen to or watch via blogs, e-newsletters, white papers, research reports, magazine articles, industry presentations, webinars, case studies, podcasts, videos and others formats.

The idea is to demonstrate that your company is innovative and expert, but also generous in spirit ─ willing to share valuable knowledge freely with others. You gain recognition for being both smart and approachable and become the logical first stop for anyone shopping for your products.

Content marketing is among the fastest growing trends in marketing (to prove this, Google the phrase). Once available only to large consulting and financial services firms with research and printing budgets, it can now be practiced by anyone with a website.

Sound interesting? Here are some tips and a high-level schedule to help you get started.

CONTENT MARKETING TIPS

Start with research: Where is your community online? How can you best reach them? What kind of information would prospects find useful? What frequency makes sense ─ for you and your audiences?

Focus on your core message: Remember, this is a marketing initiative, not a creative writing exercise. It’s critical that each piece of content support your brand. Creating random blog posts about whatever’s on your mind is not content marketing.

Start small: Don’t overcommit. It’s better to publish monthly (or quarterly) and increase frequency, than to start weekly and burn out in a few months. Decide what resources you have and fit your campaign to your capabilities.

Set up your website to support content marketing: Use a contact manager and forms to begin building a list of people to whom you can push your content. Enable Google Analytics, so you can see which site pages attract and retain visitors to guide your content development. Here’s a video and free website audit tool to help you in this process.

Manage information quality: Make sure every item you publish is valuable. Your growing list of subscribers following your content is a business asset. Protect it with a process that ensures they receive consistent quality. Assign one person to review all content before publishing.

Avoid infomercials: This shouldn’t need to be said ─ but never stray into advertising in your content marketing. Along with poor quality (see above), it’s the fastest way to burn off your audience.

Set goals: Content marketing takes time and money. Set goals, track your costs and measure results to ensure it’s a good investment of your resources.

SCHEDULE

1. Confirm you have the appetite and resources for a content marketing initiative. Be realistic. A content marketing campaign is a long slow process. If you can afford to, consider using an outside agency to supplement your internal staff.

2. Brainstorm ideas for content to share. Use a facilitator and generate lots of topics. Plan to repeat this exercise every few months.

3. Rank each topic’s potential impact and time/effort to develop. Segment high-impact topics into several items to increase mileage. Identify your priorities and low-hanging fruit. Plan to revisit important topics every 6 months or so with an update.

4. Identify a subject matter expert for each topic. Who will be responsible for each item? This person may not be the writer; he or she could generate bullet points and review the draft for accuracy and completeness.

5. Set your priorities, channels and schedule. Frequency is important. When managing resources, consider publishing shorter items to increase frequency. The aim is to be top-of-mind when a prospect needs your services.

6. Document your plan, assign responsibilities and deploy. Manage your content marketing campaign like any other business process to enjoy maximum success.

You can contact Paul at 416-619-9208 or paul@complex2clear.com

5 Tips To Improve Margins and the Bottom Line……

Wednesday, May 5th, 2010

Sometimes the old truths are the most important ones. A conversation with a client the other day got me thinking about these simple tips that can pay major dividends.

There are really only 4 ways to increase profits – sell more, improve margins, cut costs or do all three. Costs always have a habit of creeping upwards over time. So, particularly in these economic times, it pays to take a hard look at them and then eliminate the things we can live without. But there’s a limit to the extent to which we can cut costs before we hurt the company’s long term growth potential. To get steady, incremental increases in profit we have to sell more and improve margins.

There are only 2 ways to sell more – add new customers or increase sales to existing customers. In my experience, when we talk about selling more we tend to put the focus on adding new customers. But we know that it costs at least 6 times more to sell to a new customer than to an existing client. That’s not hard to understand when we consider the “acquisition” costs – e.g. advertising, telemarketing, etc.

Tip # 1. Don’t lose your least expensive prospects – existing customers. They must be convinced that we do a great job; otherwise they wouldn’t buy from us. Every business loses some customers over time, but when customers leak away, replacing them with new ones cuts into profits. The key is to focus on our “retention rate”. We need to have a process that alerts us when a customer stops purchasing from us. And we must find out why exactly they’re leaving – not simply make assumptions. Keeping customers satisfied is better for your bottom line than replacing them.

Tip # 2. Remember not all customers are created equal when it comes to profitability. Pareto’s rule tells us that 80% of our profits will come from 20% of our customers. But, how many of us slip into the situation, over time, of treating all customers as equally important? That actually hurts our profits because we waste money using the same marketing and selling techniques on everyone and treat them the same way when they contact us.

So, how do we recognize the 20% of customers who give us 80% of our profits? They are the companies who buy from us regularly and understand the value of what we do for their business. They focus on quality and reliability rather than price and they pay on time. Because they are successful in their field, they have the potential to grow, allowing us to grow with them. They may even refer potential clients to us. These are our “A” customers. Can you identify yours?

Tip # 3. It makes good business sense to treat “A” customers differently than the others. Everyone in the organization should know who they are. So, when they talk to them on the phone or face-to-face, answer their email, make product for them or pick their orders, these “A” clients get the most prompt, attentive, efficient service we can give. We should market differently to them too. Stay closely in touch personally and via email, e.g. send them our newsletters, and develop the relationship by figuring out how we can help them respond to the changes in their industry.

Tip #4. Watch the customers who offer some, but not all, of the benefits of our “A’s” very closely. They still focus on quality and reliability but may not have been around as long as “A’s” and so may not buy as regularly and/or as much. These are our “B” customers, and apart from what they do for our bottom line today, they have the potential to be the “A’s” of the future. Identify them and build a strong relationship with them. They may get fewer face-to-face visits than the “A’s” but they do get regular calls from our internal sales staff – a very effective but much less costly method of maintaining contact. They are also on our email database.

Then there are customers who buy smaller amounts consistently but who have very little potential for further development. These customers – our “C’s” – are solid contributors to the remaining 20% of our profits but the ones who may be most likely to drift away. Our sales and marketing strategies are designed to maintain these relationships in a cost effective way. Primary contact is via regular (but less frequent than for “B” clients) calls from internal sales and email contact about the products or services they buy.

The final group is easy to recognize – they complain most and buy small quantities of our products irregularly. That’s because they are focused on price and discounts. They buy from us only when we’re cheaper than our competitors – they have no loyalty. When they do buy from us, they are abrupt, demanding, they always need delivery immediately and people hate dealing with them. Processing their orders requires our staff to drop everything else and get them to the front of the line. They are our “D” accounts. Dealing with “D’s” can be so disruptive that occasionally they even cause us to make mistakes with the orders for the profitable customers.

Tip # 5. The final tip is to “fire” your “D” accounts. That’s correct, if orders from “D” customers are profitable they’re at the bottom end of the margin scale and the amount of resource required to get them out the door wipes out anything we were going to make. Yet we all have “D” accounts – why don’t we just get rid of them? We don’t have to be rude, simply play them at their own game – quote high prices or long lead times. They’ll make the decision not to deal with us. Do it often enough and they’ll stop calling.

Focus on your “A” and “B” customers and you’ll improve your margins. Match your sales and marketing resources to customer type and get rid of your “D’s” and you’ll improve the bottom line. Make retaining “C’” customers a priority; work hard at turning your “B” accounts into “A’s” and get your sales staff focused on understanding your “A” accounts’ business – then you’ll not only sell more but you’ll make more profitable sales.

Some “oldies” but truly “goldies” in these very difficult times!

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