George Sierchio's Blog for Technology Consulting & Service Business Owners

Growth By Acquisition (Part 2) – Let’s Talk Valuation

noreply@blogger.com (George Sierchio) — Wed, 11 Jan 2012 22:38:00 +0000

Today, in Part 2, we’ll focus on something that I get asked about all of the time… valuation and what to look at when figuring how much a business is worth. This is a very common question and the truthful answer is not as simple as you would hope. So I will do my best to give you an idea of how a business is valued the right way in an M&A scenario inside of the IT Channel.

First, a caveat. I need to explain what I mean by M&A. Although an individual or group of investors can buy an existing business, I’m referring to valuation for an M&A transaction consisting of an existing company putting together a deal with another existing company to bring the acquired company into the fold through an asset purchase transaction. The other scenarios (investor or an individual with no existing company) have similarities in what you will read below, but are different enough to warrant not including them in this post.

With that said, let’s talk first about what sellers (the entity being acquired) should have in mind. As much as you don’t want to hear it, the value of your business is ultimately what another entity is willing to pay for it. Another thing to understand is that models and multiples are just ballpark items you can use to have an idea of what your business MAY be worth to another entity. It may actually be worth less or quite possibly be worth more to them.

Keeping the aforementioned things in mind, know that the following will be of high value in some way, shape or form to any buyer:

Perceived Level of Risk
Intellectual Property
Unique Capabilities
Revenue Model (which also ties to risk level)
Cultural and Technical Fit (also ties back to risk level)
Net Cash Flow

You can check with someone familiar with M&A valuations in the IT industry to help you out with “ball park” multipliers to have a general idea of what your Net Cash Flow is currently worth based on the type of revenue model for the services you provide (reseller vs time and materials/projects vs a mainly recurring revenue (such as MSP or hosted services)). And I encourage a potential seller to have an idea of their business value to another entity, but it really is a ball park.

Ultimately, the buyer determines what they are willing to pay and the structure around the deal as a whole. You, as the seller, get to listen to why the offer is what it is and decide to take it or not. Of course you also have the option to negotiate any part of the offer should you have a valid point to argue or bring into a different light for the buyer’s consideration.

If you are a potential seller, read on about how a buyer should be thinking so you can see the big picture.

So let’s move on to the buyer thought process on business valuation. When you are looking to acquire another business, your reasoning for doing so can be many things (see Part 1 of this post series). But your ultimate goal is to look at another business and see how bringing it into the fold of your business is going to boost your bottom line and value as an investment. So the thinking should be not the value of what is, but the value of what will be with this new company bolted on to your existing company.

It’s truly a return vs risk scenario coupled with deal cost vs deal price. So a great deal with a higher value will have low risk and high return. You should be more than willing to pay for that opportunity regardless of what the “multiplier” turns out to be as long as the cost of the deal doesn’t make it a bad idea.

Get multipliers out of your head since they are after thoughts in M&A except for dealing with enterprise value to determine stock price and a stock related transaction. Stock certainly could come into play if stock in the buyer’s company is in play for a deal, but regardless this is an entirely different conversation that we are not going into here. I would be happy to talk to you about it in another venue.

Let me give you a different take on how to look at what would be a good value for a transaction. Although some rather complicated accounting math like discounted cash flow (DCF), internal rate of return (IRR) and the like are necessary to check the deal, a good deal is all about if I pay X in Y manner, what does my return on that investment look like over Z time? I can’t get into the details behind X, Y and Z here, but that’s what it’s all about.

You’re investing in the assets of another entity to get a return on that investment. You’re looking at it not so much as what are the revenues, expense and profits as THEY run it, but what does all that look like when integrated it into YOUR company and how much can you afford to pay for it and still see the return desired.

Hopefully you have a better picture about how all of this works in terms of where deal value comes from when it buying and integrating another company. Next we’ll talk about some common deal structure options for financing the payment of a deal from buyer to seller and continue on from there.

To Your Business Success-

George J Sierchio

Growth By Acquisition (Part 1) - What is it and who is it for?

noreply@blogger.com (George Sierchio) — Fri, 23 Dec 2011 19:58:00 +0000

Growth by acquisition is a terrific topic to talk about for anyone that owns a business in the IT Channel regardless of the current or future company size. This could mean both being on the buy side and the sell side of a transaction in order to spur quick growth on top of organic growth. It’s a pretty broad topic so I have decided to distribute this educational information in pieces with this being Part 1.

Today we’ll focus on why growth by acquisition and M&A activity in general is so prevalent in this IT Channel and why a company would decide to grow by buying a smaller business or selling to a larger one and growing with them.

The first thing you need to understand is that M&A activity, whether you happen to notice it around you or not, is common in the IT consulting and services space. Why?

Well, for starters this industry has a very low barrier to entry, meaning it doesn’t take much capital to hang out a shingle and start a business. Because of this there are an overwhelming number of IT service providers in the US and Canada ranging from 1 to 100 person shop and a decent amount of 100+ shops as well. Especially in heavily populated areas, you can throw a rock and hit a couple of IT businesses focusing on servicing the SMB market. That leads to organic growth issues for big and small companies as markets get saturated with players.

There are also a slew of things these companies can provide like managed services, project work, high level consulting, design work, programming, hosting, etc. Put these factors together and you get an industry that is known as being highly fragmented.

So the above is why growth by acquisition is normally popular in the Channel, but the last 5 years or so it got a little boost due to the popularity of managed and hosted services using recurring revenue models. Leveraging economies of scale that come with adding on recurring revenue that someone else has built is a smart move versus the pains of organically growing these areas.

Since about 2009, M&A activity has been especially high and will continue on that path for the next few years. This is due do to the down economy and presents itself in two ways. First, organic growth for most established companies slowed a bit since the economy tanked. Good companies are holding steady or growing a little in revenue/profits, but the rate of that growth has been stymied compared to their norm. This economic trend makes growth by acquisition an even more appealing concept from the buy and the sell side.

In addition, very well run companies are sitting on money that is doing nothing for them in traditional investment avenues. M&A presents a way to use that money as an investment into the business that is risk controllable and has a much better shot of gaining big returns as well as doing it in a short period of time.

So who would growth by acquisition be good for? Here’s a quick list for both the buy side and sell side perspective to see if it would be right for your business:

- Outperform Organic Growth that has slowed, has stagnated or could still be doing well

For sellers: Join forces with a rapidly growing organization

For buyers: Do in less than a year what ok or even good organic growth may take 3+ years to achieve

- Get access to new Talent and Capabilities

- Make In-Roads into New Markets

- Achieve Economies of Scale

- Lifestyle Improvement

- Career Enhancement for buyers or sellers in terms of reducing the number of hats you need to wear by now being involved with other smart people that can do the jobs you don’t want to do or aren’t good at.

- Buyers can rapidly get to a company size where a lucrative exit is possible

- Sellers may be thinking

Take some money off the table without completely selling the business in order to get a bigger payout when the new joined entity reaches growth goals

A full exit of the company. Keep in mind most M&A deals involving buying companies with revenues of under $5MM are not usually intended to be full exits for the sellers but to build a better management team as well as grow revenues and profits. Unless you are already well into retirement age you probably won’t be seeing retirement like money on a smaller company and the buyer probably doesn’t want you leave anytime soon. Lastly, although another topic, in most cases it takes a good 3 years to see a full payout of a purchase.

So there you have it in a nutshell. Growth by acquisition should be on everyone’s mind as a business owner in the channel. It’s not for every owner or every business entity, but it certainly is a strategic vision to think about.

Any questions, you know where to find me. Until next time…

To Your Business Success-

George J Sierchio

Communicate to Grow Your IT Business

noreply@blogger.com (George Sierchio) — Fri, 23 Sep 2011 16:04:00 +0000

One of the great dividers between growing and stagnant IT consulting & service providers (MSP, integrators, developers, etc) is communication. In part this is due to the fact that the majority of smaller technology companies are run by technology people that are generally not all that interested in, or good at, communicating. Whether that be written or spoken. That’s not a knock, just a fact gathered from working with many service providers over the years.

That can readily be seen by how hard it is to get a tech to fill out a ticket or timesheet correctly and timely. Many technology driven people take that from their tech days right into the operation of their company, even after they see the light of day that they need documentation and verbal communication within their business to do something as simple and necessary as billing a client.

The need for technology utilization is growing and will continue to grow. Even the simplest and smallest of business rely more and more on technology to get things done, cut costs, and automate. The good news is it’s not going away so you’re in a good business, albeit a constantly changing one. The bad news is that as more technology comes into play with fewer barriers to entry to use it, more things become a commodity in terms of buying, implementing and maintaining that technology. That means more and more of what an IT service company used to do is becoming obsolete or cheapening to the point of being a commodity. And the commodity game is not one you want to be in.

Gaining clients and the money the follows are in the delivery and supply of knowledge and management. NOCs and help desks can be outsourced by a client or your business for your client. Onsite break fix and installation techs can be readily found by a client and by you without even hiring one as an employee. Monitoring can be heavily scripted and automated and then shoveled over to the previously mentioned NOC/help desk to take care of and escalated to the cheap techs that can be hired at will. Maintenance related items are a commodity.

What can’t be outsourced easily are the relationships that come from consulting, planning/design work and managing all of the pieces of technology and people that come together to operate a business. You can’t deliver this stuff hiding behind a workstation. It requires higher level skills and actually interacting with people.

This is where the real value comes from inside of a managed services program. Vendor management, disaster recovery planning, monthly reports, quarterly business reviews, annual technology planning, network/process design and implementation, etc. Without these items and the people with communication skills to make it happen… you are selling a commodity… you are selling on price. That’s one of the reasons why communication is a big separator of companies.

But there’s more…

We just scratched the surface with service delivery and some client management mixed in (reports, QBR, annual plans), but there’s also communication needed in positioning, lead generation, and some more client management.

Blogs, articles, newsletters, special reports, whitepapers, videos, speaking, networking and possibly even social media are important to positioning your business as a knowledge leader and the go to people in your specializations. Nobody will know what you do if you don’t actually tell them via speaking to them or published (web or physical) writing. I’m not saying YOU have to do all of this, but your business needs to. Either someone internally to your company or an outsource service has to be positioning your company and attaching a way to capture leads generated.

That’s positioning and lead generation, but then there’s some more client management to be had that involves communication. I find that a lot of IT companies do not do a good job of letting their clients know up front via a meeting, and better yet a letter or agreement to back it up, as to
•how the client is involved in service delivery (what are the client responsibilities for you to do your job on a project, break fix deal or MSP plan),
•when you will do it and the associated price tag (normal business hours, OT etc),
•how to properly contact you for service,
•what priority the client falls under (high priority, etc),
•how payment is invoiced and when it’s expected to be paid,
•what happens when payment doesn’t come as expected,
•and the fact that, yes, prices will not stay the same forever

I can’t tell you how many people I cross that don’t charge more for out of normal business hours, weekend and holiday work. Many also have not raised prices in two plus years. And it’s all due to a lack of communication, which is much more difficult to do after the fact versus putting it in place up front.

The last piece of communication that seems to be lackluster for most is a mix of marketing and client management. I actually categorize this as client management as it's all about keeping your existing clients, but using your written communication such as newsletters and blogs as well as setting up meetings or lunch dates is crucial to marketing to your existing clients. The QBRs and annual technology meetings are terrific for setting up necessary projects and getting insights to possible new technology that may be needed. Taking that a step further, you also need to also be proactive on what you can offer and not wait for these set meetings.

You have a new service, a new LOB app comes out, alternative methods of the same service you are providing are developed (like a cloud-based services), good things/bad things happening in technology, etc. These things need to be communicated to your client base for a number of reasons.

First, to let them know you are thinking about them and what is best for their use of technology. Second, so that you become, and stay, the main source of anything IT (or anything that plugs into a network for that matter) related to them. For example, even if a particular cloud service is not relevant to your client in your eyes, it doesn’t mean they see it the same way...yet. If they don’t know you know about it or would know about it, they just don’t think it’s something they should ask your opinion on. Hence, the door is open to a competitor that can answer their questions. Not a good thing for you.

This is what the pool of solid, well paying clients wants from a company like yours. Not just good techs to outsource to, but also being their IT manager and CIO all wrapped up into one. Communication in all the forms described above is the way to do that and be part of the group of IT consulting & service companies that are steadily growing, maximizing profitability and building business value. So pick out something from this post and start working on it one at a time. If you want to talk about it, you know where to find me.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Huge Education/Networking Opportunities at SMB Nation 2011

noreply@blogger.com (George Sierchio) — Tue, 30 Aug 2011 14:50:00 +0000

Not my normal post but still educational and something I thought was important to let you all know about. As we approach September, a huge educational and networking opportunity is in the works that I think you should take advantage of as much as possible.

SMB Nation Fall 2011 is upon us and it brings 2 things to the table… The event itself and the pre-day events as well.

If you thought about going, there’s still time to see the awesome line-up of business and technical sessions Harry Brelsford and his gang have put together under the guise of Pivot to the Next Wave of Emerging Technology. As always there will be an abundance of networking opportunities that come along with 500+ attendees and a host of vendors looking to give you and your clients money making and business operations tools. Oh and I’ll be there too looking forward to meeting you.

Of course, let’s not forget my favorite supplier of educational material, Karl Palachuk. Karl has faithfully provided a pre-day event to SMB Nation Fall for 7 years now. I attended his Cloud based pre-day last year and this one proves to be even better. This year he has a 6 hour event on Sept 29th entitled Making Money in the Cloud (and it has a satisfaction money back guarantee to boot).

But wait, there’s more…

Karl has let me in on a discount to give to you all. It’s good for anything he has (books, webinars, etc) at SMBbooks.com, his cloud services round table calls OR to use for his pre-day event at SMB Nation. It’s a $50 off code for any purchase of $99 or more. This is a terrific opportunity to get great educational content from a number of authors (yes including me) as well as Karl himself, whom I respect greatly in his realm of knowledge for service delivery as an MSP and cloud services provider.

The code is Summer2011 and is good through Sept 30th 2011. Get yourself to his blog here for the details.

But I’m not done yet…

For a limited time, I also have a 10% discount available to attend http://fall.smbnation.com/ as my guest. If you are interested in that code (I can’t post it here), fill out the contact form on my website here and indicate you want the discount. If you don’t already have it, I’ll even send you my 4 Pillars for Business Success E-book for reading material on the trip.

This is a slew of opportunity to get your hands on much needed educational material and meet new people that can certainly help your business. And I’m glad to make sure you know about it and get you motivated to take advantage of it.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Defining Profits for IT Service Providers

noreply@blogger.com (George Sierchio) — Fri, 19 Aug 2011 13:53:00 +0000

Profits can be defined in a variety of ways but I like to talk profits by way of Gross Profit and EBITDA.

GROSS PROFIT

In an IT service company, gross profit is simply defined as the revenue of a service minus the cost to deliver that service. In my calculations, the cost to deliver is the gross wages of technicians. If it’s a bundled service such as managed services, then the cost also includes RMM, outsourced items (NOC, help desk), and 3rd party products/services (anti-spam, anti-virus, etc).

When it comes to just plain resold items such as hardware, software or 3rd party products/services, then the gross profit is the revenue of the resold item minus the cost of that item.

Pretty simple right? But somehow this important little financial piece is often overlooked. That either happens from misunderstanding how it works, not realizing its importance or because the calculation is not right in your face.

So why is Gross Profit so important?

First off, gross profit gets you to your calculation of Gross Margin, which is Gross Profit divided by the revenue it came from. This is the real number you want to look at since it tells you how much you have left to pay for everything else and generate your EBITDA and net profits from.

For example if your overall company gross margin is 50%, then you have 50% left to cover all of the rest of your costs and your profit. We’ll get more into that in a bit.

EBITDA

EBITDA is earnings before interest, taxes, depreciation and amortization. When you do a true breakeven analysis you need to exclude all those miscellaneous expenses like credit card interest, non-payroll taxes, ancillary owner perks beyond health insurance, equipment depreciation, charitable contributions, etc. This value is typically much higher than the net profit and is not affected by fluff factors that purposely lower profits for tax purposes.

So why do we need to have and look at EBITDA based profit?

Well, that’s where you are getting your (business owner) over and above salary money. (Please don’t forget to include your appropriate salary in your costs, as it’s a huge mistake most make.) More importantly, EBITDA profit what is paying for the above mentioned items not included in EBITDA as well as things not found on a P&L like loan principle.

And then of course if you want to have room to move on providing discounts and/or money to pay for commissions and referral fees, this is where it comes from. So you better know what your profits are.

The other important reason to understand and use EBITDA as a profit mark is that this is the most popular and useful factor in determining the value of a business.

You certainly do not want to work your business based on breakeven. It’s dangerous and you have very little real business value without profits in a consulting & service oriented company.

Typically in a service oriented IT business you are looking for an EBITDA in the neighborhood of 20% of revenue to be on track with the best. More is always better if you can pull it off.

PUTTING IT TOGETHER

You need to think like a business owner no matter what size your business is now or where you want it to be in the future. Not understanding costs to deliver and costs of goods sold and how they play into the big picture is a true mistake waiting to create disaster. Not going one step further to understand and purposefully place profits into your business… and not leaving it to math after the fact to figure out the profits… is a necessity no matter what your business model is.

Here’s a very simplistic example to follow:

Services should be running in a gross margin range of 50% of revenue. Selling, General and Administrative (SGA) should run around 30%. EBITDA should be around 20%. So if you keep your Gross Margin at 50%, leaving you with 50% of your revenue, and your SGA is at 30%, that’s 80% of your revenue spent. Do the math and you have an EBITDA profit of 20% left over. Do some more math and you see a reduction in Gross Margin or SGA produces more profit.

It’s a little more complicated than this, but not rocket science by any means. If you want a little more detail, grab my free e-book 4 Pillars to Business Success and then take advantage of the free 30 minute session that comes with it. Or just set up a session and let’s talk about this important subject.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Positioning- The Key to Easier Marketing, Sales & Higher Profits

noreply@blogger.com (George Sierchio) — Thu, 14 Jul 2011 01:43:00 +0000

Let’s define positioning and show how it directly ties to easier marketing and sales of your services. Better yet, how it is important to value pricing, which leads to higher profitability.

In my eyes positioning has 3 parts:

• Being recognized as a “hero” to a particular group, known as your target audience.

• A way to introduce yourself before any marketing has been done to already be a known entity.

• How you separate yourself from competitors, avoid price wars and get top dollar.

Basically, positioning is a mix of public relations (PR) and marketing. Positioning is known as the small business version of branding. And this is a good thing since big company branding is really a waste of money as its results can’t be tracked very well.

Let’s do an exercise here as an example.

I want you to think about a vendor you have recently used in your business or that you are considering using. Could be for a product you needed to buy, a service you needed or even advice.

Now I want you to think about how you came across that particular vendor sitting on the top of your list.

Did someone make a recommendation and tell you why this vendor was so great for them? Did you read about them somewhere? Did you meet them somewhere? What made you think they were the ones to go with?

Are they specialists in their industry? Do they hold expert accolades in the industry and products/services they provide? Did something just stand out in your mind that said “these people really know what they’re doing”?

The odds are something about their expertise and their application of knowledge caught your attention. Because of this, it most likely also had very little to do with how much they charged, especially if this was a service related vendor (meaning a non-commodity item).

So how does this pertain to you?

You and your company are specialists at something. If not you should be and become the go to people. What I mean is you can either be a specialist at a certain set of services and/or to a few particular target audiences.

For example, if you are in a rural location with limited prospects in any particular industry, you could specialize in BDR services and networks and deliver that to a certain geographic region. But trying to convince a prospect that you are good at what you do when you list out 50 things really waters down their perception that your small business could possibly be an expert at all of them.

As another example, which I like much better, you could specialize in delivering 10 different technology solutions aimed in particular at say dentists, eye doctors and ear/nose/throat specialists. Now you are truly an expert to those prospects and covering a bigger spectrum of services makes a lot of sense.

You’re probably thinking “but I have big competitors that everybody knows as the expert”. I’m telling you; so what?

The reality is, no matter where you are you can’t be everything to all people. Your best bet is to stick to a few particular audiences and know them inside and out for the services you can provide. This also allows for better internal processes that stay consistent to maximize productivity and profitability. Especially when your prime goal is to deliver recurring revenue types of services.

It also stays true to the notion that specialists make more than generalists. But in this case you can still be a generalist as far as the tech work goes as long as you are a specialist in terms of your target market.

So if you take the above and put it into perspective, your positioning (branding) certainly makes marketing a whole lot easier, which in turn makes sales easier as your expertise erodes away target audiences thinking about price as a main issue. That leads to the fact that now you are able to take this known expertise and place a heftier price tag on it without much argument.

One good way to position your business as an expert is in the form of writing. Take for example the above information that came from a small piece of my most recent free e-book 4 Pillars to Business Success (which you can get right here to see the rest of this particular Positioning Section http://consultantscoach.com/ebookfree.php).

It doesn’t have to be as comprehensive as this particular 30 page e-book or a full actual book. It can be in the form of a whitepaper, special report, checklist, self assessment, blog post or article to name a few.

If you are considering a longer piece such as an e-book or full book, I do recommend checking this new book just put out by my good friend Karl Palachuk. It’s called Publish Your First Book and you can grab it here http://www.smashwords.com/books/view/69594.

Believe me, I know marketing is difficult and it’s not a first nature thing to most people, especially us technology based folks. But a little upfront positioning work makes it a lot easier and you can get some good tips on that from the e-book if you take 5 minutes to read the section let alone the rest of the book.

So get out there and start position and see the huge difference it will make.

To Your Business Success-

George J Sierchio

Best Way to Price Your Services?... Know Your Numbers

noreply@blogger.com (George Sierchio) — Wed, 22 Jun 2011 19:16:00 +0000

Lately, more and more debates have been surfacing on how to properly price things such as managed services. I find that properly pricing anything including hourly and fixed fee project services has always been a sore spot for technology (MSP, VAR, IT Consultants, etc) to properly figure out in their business.

Even with managed services and other flat fee services being around for quite some time now, companies are still in the dark about how to best do this. And I’m not just talking about new companies or companies just starting to ramp up flat fee/recurring revenue services. Some have been around for a number of years with good success and still can’t answer the question about their profitability or where their pricing model came from.

There is no room here to go over how to specifically price managed services (or any other recurring revenue service like BDR), or price flat fee projects, or hourly projects or break fix work. But there are some basic tenants no matter what methodology you are familiar with or service type you are providing that just plain make sense as a starting point. Otherwise you are always grasping at straws.

That doesn’t mean you are not profitable, but you are still sitting in a position of not knowing where your pricing really came from and just how profitable it is. It also does mean you really don’t know at what point you’re no longer profitable at all, which is something that can’t be an unknown with managed services or fixed price anything.

So here are the basics…

You need to know what your true break even labor rate is. Labor rate is business expense divided by time to get dollars per hour. In a service/consulting based business that means all expenses including all employees with the owners getting paid commensurate money for their position/role. It does not include cost of goods sold items. The time piece is the minimum utilization hours in accordance to the full time and part time techs you have working on the payroll. I like to use a 60% utilization rate to get the hours figure. You divide the expenses for the year (forecasted budget) by the total minimal utilization hours and you have a break even dollar per hour figure.

You need to know your vendor costs (when dealing with managed services or other outsourced items) such as anti spam, RMM tools, help desk, etc. These are costs of goods sold (COGS)

For managed services or any fixed fee deal you need to know pretty accurately what the time to deliver the packaged service is.

You need to build in a minimum profit for your labor and your outsourced tools and services.

Put this all together and you have a price tag for fixed fee work that gives you a minimal profit margin and the ability to raise your prices on a value basis and what the marketing will bear.

For example if your break even labor rate is $100/hr and you want a 20% profit margin you would use $125/hr. If your outsourced costs were $100/m for a particular client and you want a 35% profit margin on those you would charge $154/m. And if your (managed) services should take about 5 hours a month to deliver, then your labor would be $625/m. Put this all together and you have a profitable monthly service packaged at $779 per month.

Now you can do your research to see if the market will bear that price. If it can’t then you have a problem. You will either have to live with a smaller profit margin (not recommended) or effectively reduce the hours needed to deliver the services or reduce some of your expenses to lower your break even needs. If the market can bear the price, then you can sell that package for whatever the market/industry/niche is willing to pay on a value driven pricing model or for the minimal price tag you calculated. But you still need to know your numbers first to come up with a base to work with. Anything else is guess work.

Again, this is a very simplified example with some nitty gritty missing, but the point is pricing is always based on knowing some core numbers and using them to build a model of your choice. Be it per job, per person, per device, per engagement, per experience, value pricing, whatever.

I welcome you to check out a little more detail on this as well as the other three of the four pillars of business success in a quick and free e-book right here. http://consultantscoach.com/ebookfree.php

To Your Business Success-

George Sierchio
The Consultant’s Coach

PS time is running out, if you are an MSPmentor follower, to vote for this year’s MSPmentor 250. Deadline is Friday June 24th. You can vote here http://www.mspmentor.net/2011/06/20/mspmentor-250-nominations-deadline-is-friday-june-24/

PPS My good friend Karl Palachuck is once again putting together a kick-butt pre-day event for SMB Nation in Vegas. He has an early-early bird registration deal going on right now for his Making Money in the Small Business Cloud event that includes some give-aways as well. I attended a cloud based pre-day of his last year and it’s always chock full of good information. A good play even if you are not attending SMB Nation but will be, or live, in the vicinity of Las Vegas. Details here http://blog.smallbizthoughts.com/2011/06/super-amazing-savings-smb-nation-preday.html

Successful Technology Service Marketing: More “How” than “What”

noreply@blogger.com (George Sierchio) — Fri, 03 Jun 2011 15:30:00 +0000

What I find causes many technology (MSP, VAR, Integrators, etc) service and consulting business owners to suffer through less than successful marketing campaigns is not enough concentration on the “how” of marketing and too much focus on the “what” that they are marketing. So here’s a short and sweet post on a concept that packs a lot of punch.

Before you can market anything, it’s a given that the “what”, meaning the service itself, its delivery and pricing, are well thought out and set. Once that is the case, the best “what” can’t be sold if the “how” isn’t also well planned. So let’s take a peek at the “how” a little deeper.

The pieces of marketing a service, program, product, etc consist of:

•How are you determining your target? A very detailed profile of who the ideal buyer is including industry, company size/revenues/etc, problems they have that the item solves, and the best person to contact that can make a decision and better yet write the check.

•How you are reaching potential buyers and make them a true lead? Meaning both method (direct marketing, internet search, joint ventures, etc) and the media (blogs, articles, email series, white papers, books, video, webinars, in person events, etc).

•How are you further connecting with potential prospects? A marketing funnel to take them from lead to sale prospect is key. Consulting and services are very much a relationship type of sale so thinking a lead will likely buy without constantly pushing them along a funnel that builds that relationship is a bad approach to take. A funnel encompasses a multi-step approach. By steps I mean not just hitting them over the head 10 times but more importantly having calls to action that take them into a higher level of the relationship along the funnel starting with education and moving further from there towards talking directly about your offerings as it pertains to their situation.

•How are you keeping clients engaged? Once they are into the sales process (which includes displaying how your programs, services, etc. are different from the competition and valuable to the buyer) and a sale is made, the last piece of the “how” is triggered. Part of the purpose behind having a client management process is to stay connected to them, keep them as a client and be able to put more things in front of them that make sense for them to buy from you.

The fact of the matter is that being in the IT (MSP, VAR, Integrators, etc) service and consulting industry means a lot of competition to deal with even if you do provide superior offerings. The good news is a shift in your thoughts on the importance of “how” regarding marketing will be a huge step in setting you apart from the majority of the others out there. Ultimately, this will help to fight off the bigger guys playing numbers games like dialing for dollars as well as the inferior fly-by-night, here-today-gone-tomorrow shops winning work through cut rate pricing and offerings.

By the way, as far as dealing with cut rate competition, they really aren’t competition anyway as the clients they land are typically NOT good clients to have. Doing a good job in bullet point #1 above will take them out of the picture right off the bat.

Want to talk about what you’re doing and how to get better results? Leave a comment or contact us directly.

Want a little more powerful information on this and the 3 other important pieces to a solid business? Grab our latest free e-book here.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Summer is Coming- Don’t Vacation from Bettering Your Technology Business

noreply@blogger.com (George Sierchio) — Fri, 27 May 2011 12:39:00 +0000

Summer is high time for vacations for you, employees, vendors and clients alike. But just because project work may slow down and new clients may decide to wait until September to come on board doesn’t mean running your IT (MSP, VAR, Consulting) business comes to a screeching halt. Leave that bad habit to your competitors.

What it does mean is more time to market, learn and work ON the business. A chance to get ahead of the pack. An opportunity to make up for the time at the beginning of the year you didn’t have to get those important items on your schedule and get them done. Don’t miss it and don’t just lie down because you figure your competition is doing just that so you get a break. Not a good idea and not very entrepreneur-like.

I definitely encourage you to get out of the office and spend time with the family. Take a vacation and make sure your employees do the same. Time off is very important to everyone in your company and is needed to stay refreshed and at the top of your game. But I doubt you are taking off from June through August so why not make the most of a slow time?

I recommend everyone work on the following during a slow period at any time of the year:

Marketing- Don’t stop the regular blog posts or newsletters. Maybe even get ahead of the game on this and come up with a handful of posts and articles now that you can pepper in later for the summer or fall.

Maybe few will be interested in attending a webinar in the summer, but you have the time to develop them as well as possibly record a few of them and/or short videos. You can push them out towards the end of the summer or get them up on your website right now. Don’t forget your site works for you 24/7/365 and believe me not every prospect is on vacation at the same time! This may be the (slow) time when they are using the internet to find what your business does.

How about events? There are plenty of industry events that take place in the summer. Find ones that your client base normally attends and get there as a speaker (if it’s not too late) or as an attendee. Meet some people and find out what things they are struggling with that you can help on and market to them.

Haven’t found the time to think about and/or develop a new campaign for one of your offerings? Take the slow time to do that. Haven’t had a chance to look at your metrics from previous campaigns? Look now and make your adjustments. There is plenty to tackle with marketing.

Education- Constantly learning and evolving is the cornerstone of running a good business. Didn’t have time all year yet? Well you probably do in the summer so why not beef on, and get help with, some of the things you have been struggling with all year now? Then you can be ready to rock when the fall hits.

Read the books you have been waiting to find time for, watch videos, find someone to answer your questions, go to IT (MSP, VAR, Consulting) business events. Do something!

Work ON the Business- Another thing entrepreneurs struggle with is carving out very, very necessary time to be an actual business owner. If business is slow, you have no excuses. Look at your business to see what is working and find a way to make those things better as well as apply them in other areas of the business. See what’s not working and make it better or decide it just isn’t worth doing anymore. Get your employees involved since they will have more time as well.

Develop systems and processes with employee and/or outside input and get it down on paper to increase productivity and efficiency. Check your financial picture and set some goals with a plan to make those goals happen for the rest of the year. Upgrade your physical systems and tools as well (line of business apps for example) if you have been delaying due to no time.

This all has to get done to constantly make the business better for you, employees, and clients alike so if you have the time in the summer, take it.

These are just a few examples of what you can be doing if your summers are usually on the slow side with projects and new work. So take some time off and then make a plan to get some things down and actually execute on it. There really is no excuse, right? If you are reading this and your wheels are turning, you are already ahead of the game.
Have a great holiday weekend!

To Your Business Success-

George J Sierchio
The Consultant’s Coach

The Right Way to Use Business Networking for Your IT Lead Generation

noreply@blogger.com (George Sierchio) — Thu, 19 May 2011 01:56:00 +0000

This month I had a discussion with two different coaching/advisory clients on how to best utilize old school local networking groups and events to their best advantage. Neither had any success in the past but thought they might have been doing something wrong. Turns out they were.

I’m not a huge fan of networking groups, chambers and the like, but done right they can serve your business well as one piece to a marketing system.

First, let me tell you why I don’t like this type of lead generation. To begin with, the people you meet at these gatherings are usually not good targets to begin with because most of them are business owners like you or sales people but more importantly because they are there to sell to you. That’s the first mistake anybody makes as the plan for going to a networking event… thinking that your target audience will be abundant.

Except for your local accountant, insurance guy, attorney, banker, mortgage person and low end “computer dude”, it’s not a good place to find clients. And yes I meant to say low end since most of the businesses there are too small to be a a real IT consulting (MSP, VAR etc) business target audience or too big and represented by a salesperson. So the low end guy is there to pick up some break fix work at $50/hr (hopefully that’s not you) and the big business reps are looking to gain the small businesses as customers, not be a customer to the small business.

And if your target audience IS represented, there are usually not many of them. This means finding and chasing that person or two is a waste of time and whatever money you plunked down to be a member or attend the event. By the way this isn’t a post about having targets and niches but it obviously comes into play so keep it in mind when you choose an event to go to.

The second thing I don’t like about these environments is that people don’t understand that networking events/groups are to “network”, as the title states, not to sell. It’s about meeting people and approaching them in a way to get to know them and see if you can help them out, not about walking up and giving a sales pitch.

So how does a networking group or event really work to your advantage? Finding joint venture partners. Yes I am back on that subject. Doesn’t it make more sense to find one or two people at the event that know 5, 10, 25 companies that fit your target market than hunt for the one company that could be a client of yours? I’m into logical and easy so I would pick door number one here.

I recommend trying a group or event out using the joint venture partner approach. You go as a guest or you join on a temporary basis with the aim to find and meet people that may have an inside track to clients in your niche(s). Find out what their client base is all about and if there is a match, set up a meeting with them offline to see if some kind of joint venture can be fashioned. Now you have met one person that can connect you to many by going to one meeting versus hitting a meeting every week to collect and give out business cards to people that never plan on doing any business with one another.

Just in case you do meet someone that could potentially be a client, don’t just give them your card. Find out what they do and drive the conversation to find out what their IT infrastructure and issues look like. Pick something out about what they said and give them your elevator pitch with a story leaning towards that issue (I wrote about this a few posts ago).

AND have with you some white papers on key subjects to give them so they can be educated on the subject they have an issue with. Now you have given them good information and have an excuse to call them up later. You can also give them your card and right a web address on it to a whitepaper or video from your site that might help them or grab their card and ask if you can email that info to them. Another excuse to contact them and for a very good reasons so that they won’t mind it.

So the bottom line is that if you choose to utilize networking groups, chambers, etc, they are best used to meet people that also service the same target market that you do, see if there is a fit to work together, and set up a marketing joint venture if there is a fit. If you do meet a potential client that fits your criteria, be ready to learn about them and leave them with educational information to establish a reason to follow up and build a relationship. No sales pitches!

Any comments or questions? Leave them below.

To Your Business Success-

George Sierchio
The Consultant’s Coach

A Simple IT Business Success Formula

noreply@blogger.com (George Sierchio) — Fri, 13 May 2011 19:15:00 +0000

Once again I have been doubly inspired to write about a particular topic. First inspiration by a few recent conversations with IT and computer consulting business owners and the next by recently reading a spot-on article by master marketer Dan Kennedy.

Unfortunately, the desire to write on this topic is not coming from a good place but from a position of annoyance on how a particular simple business (or life) formula can escape very smart people. And even worse many of those same people actually have the gumption to argue about why they stick with their theory.

Here it is in six easy bullet points for you:

•Have a plan/process/system to do X

•Actually execute on that plan/process/system

•Figure out as fast as possible if the plan/process/system doesn’t actually work at all

•STOP DOING WHAT DOESN’T WORK (or work enough to truly justify continuing)

•Figure out what does work, even a little bit and make it better

•Repeat the plan/process/system that does work as much as you can and for anything else you can apply it to

That’s it in a nutshell. Basically if you can identify something that does work, improve upon it if you can, do more of it as much as possible and stop wasting time, money and energy on the things that are a losing battle

Examples:

If you have a particular way to generate leads that works well for service X, do more of it and find a way to apply it to service Y.

If you have a way to close deals for service X, do more of it and find a way to apply it to service Y.

If you have a way to increase margins on service x, do more of it and find a way to apply it to service Y.

If you have a way to quickly and profitably price out service x, do more of it and find a way to apply it to service Y.

I will assume you get what I’m driving at by now so I’ll stop.

Need a little insight as to what you may be doing well or not and how to go about changing your ways? You know where to find me or just leave a comment below.

To Your Business Success-

George Sierchio
The Consultant’s Coach

5 Basic Steps to Attracting Valuable Clients

noreply@blogger.com (George Sierchio) — Tue, 03 May 2011 13:06:00 +0000

After a recent speaking engagement I was a bit inspired by a side conversation I had with a group of attendees to write about the importance in attracting the best clients possible with your marketing. In other words, high value clients to go with your high value technology consulting services.

Once you have a good business structure in place including your 4Ps of Positioning, Processes, Pricing and Profits you will quickly realize that you have some, if not mostly, not so stellar clients. We all have gone through this phase of taking what we can get until we have established the true sandbox we want to play in. But the ultimate goal should be to work with those that value what you bring to the table, agree with your pricing which includes you making a profit as any company is in business to do, and those with the means to pay for it.

With that said, let’s talk about some basic principles and steps to attracting those types of valuable clients with your marketing. Although it probably goes without saying, I’ll say it anyway; if you don’t set the criteria for, and aim at, attracting valuable clients, you certainly won’t get them.

Below are my take on what I think are a good set of guidelines adopted from a marketing mentor of mine, Robert Middleton.

How many of these are you doing?

1. Set your goals and criteria for your high value clients within your niches of choice. Saying it is not going to get you anywhere. Create a written description of your ideal clients and the services or programs you could offer them.

2. Do the research on where these ideal clients can be found. When setting up marketing plans and campaigns with those in my advisory programs, we take the time to brainstorm where these successful potential clients congregate such as associations, groups, industry/niche events, etc. We also think outside the box a bit to look for potential Joint Venture (JV) partners that provide services or products to these high value potential clients. If they are spending the time and money on these organizations and vendors to better themselves then they are more likely to benefit from your offers and be able to pay for them.

3. Detail the programs, products and services you offer to them. Be specific and understand the need for the offers, the outcomes you deliver, the benefits your clients receive and the structure of delivery. You can't sell a service or program that you haven't mapped out.

4. Create a selling process for your offers. Literally script out the selling process for prospects who are ready to explore doing business with you. It’s actually a good practice to have a solid selling process in place BEFORE you bother with the marketing part since you may already have current clients that have been identified as high end clients that don’t have all you have to offer. You don’t need a marketing effort if you already have the relationship. On top of that, having the selling process already in place allows you to be ready immediately should a referral cross your path that didn’t require any marketing or something as simple as asking current clients for a referral.

5. Now you are ready to develop focused and targeted marketing campaigns for each of your offers and to each of your target market segments.

To sum it up, if you are positioning yourself as an expert, have the processes in place to deliver high value offers, and have done the work to price it correctly for profitability, you are ready to take on these 5 steps to successfully attract valuable clients that fit the criteria you set.

Try it out for one for your offers and niches and see what happens when you map it all out. As usual, comments and questions are welcome below. And you know where to find me if you want to discuss this subject personally.

To Your Business Success-

George Sierchio
The Consultant’s Coach

PS Every once in a while I open up a forum to grab topics from those that regularly read the blog. To send me topics you would like to see educational content on, please follow this link. http://www.getresponse.com/survey.html?survey_id=7204

Technology Business Blogging Basics

noreply@blogger.com (George Sierchio) — Fri, 15 Apr 2011 02:05:00 +0000

Although everyone has a blog these days and the result that a business can get out of it varies, I see many blogs that certainly can’t be doing much. On top of that, I get asked quite a lot about my opinion on how to best utilize a blog in the technology consulting and service field. So why not throw out some pointers on giving it the best chance possible to work?

First things first, I assume it would be a good idea to know what the purpose of a business blog really is. Sounds like a simple question and it is. But many just rush into writing one or getting content from a third party without really thinking about the big picture. And that’s fairly common practice when it comes to using any positioning or marketing mediums. A little knowledge and planning can go a long way.

In my eyes, a blog serves two purposes; either a post is based on thought leadership where you pontificate on a current event, a new product, a new technology, etc or a post is made for educational purposes. These two routes are positioning the writer and the business as an expert on the subject while also providing relevant information to the desired audience.

Just like any other kind of positioning or marketing, the audience is important. Whether they be current clients, potential clients you are in regular contact with or potential clients floating around on the web in search of your knowledge, your material should relate directly to them in terms they can understand.

A post does not have to be a full length article, so they are fairly quick to write and read. Usually you are good if you stay in the neighborhood of 400 to 1000 words. You could also post a quick one to five minute video instead, which besides a keyword rich written post is something the search engines like very much.

So what else can be in a blog post besides the content? Good question, glad you asked. When relevant and not taking away from your post, it’s good to have links that go to other sites and blogs in reference to what you are writing. It helps the readers understand who or what you are talking about without you explaining it and again, those search engine guys appreciate it. For example, if you are mentioning an industry person or company, you could link out to their site or to a Wikipedia page.

Another type of link I believe is important to have, but not over do, is something back to a page in your website that again is relevant to what you are talking about. Writing about BDR’s? Then link the term BDR to a page on your website that has more information on your BDR programs. Better yet, a sign up page to grab a whitepaper or view an educational video. Simple as that. But if you do that too much iy gets to be advertising and not education or information based so think about it carefully before you make the whole post a big link.

If at all possible, it’s also good to elicit a response from your readers by adding in some kind of question or a reason to comment. I will tell you that you shouldn’t get discouraged if people are reading but nobody or few are commenting. Unless you have a tremendous readership such as a professional information dissemination site like MSPMentor, you can’t put that kind of pressure on yourself. Readership is more important than comments. Speaking of that, it would be important use some kind of analytics to track visitors. Some blog platforms have this built in or you can use Google Analytics for free.

It takes time to get found and read organically. And sometimes significant time. So do not stop plugging away at your posts. If nothing else, each post could be beefed up and re-purposed as an article, whitepaper or even an educational speaking session later on for other marketing and positioning opportunities. Just keep consistently putting up good content, or enhancing 3rd party provided content and letting those you have contact with know it’s there.

That leads us to the next issues…. Consistency. I’m often asked how often they should post. Keep in mind again that your business is not an online magazine being expected to post three times a day. Two times a week is more than enough and typically I recommend once a week. That’s all it takes

Lastly I want to throw in some ways to get new and hopefully consistent readers using other social media. I think the most bang for the buck (even if it’s a free resource) is to always notify those attached to you via Twitter, your business Facebook page, and LinkedIn. Once set up it’s automatic and there is no extra effort involved.

I personally think attaching your blog to these three resources does more for you than aimlessly tweeting, randomly making facebook posts or just letting your LinkedIn profile sit idle. By the way, LinkedIn groups that your audience belongs to are great resources to find topics to write about. Additionally, since you are part of that group these potential clients will see your blog posts as they are automatically posted to your profile.

That’s it in a nutshell. If you can follow these guidelines, you will get traction from utilizing a blog. Otherwise, it’s probably a waste of time (and money if you are paying a 3rd party).

Can you think of any other ways to better a blog as a positioning/marketing tool? Had any successes or failures to share? Write it on down below otherwise you know where to find me.

To Your Business Success-

George Sierchio
The Consultant’s Coach

The Money is in the Process

noreply@blogger.com (George Sierchio) — Mon, 28 Mar 2011 13:37:00 +0000

Today I want to talk about a pet peeve of mine. A subject that I come across literally every day in which I have contact with technology entrepreneurs.

I’m speaking of intelligent people that are extremely logical in nature yet almost every one of them fail to answer a question about their business that starts with “What are the steps you use to do X?”.

Sometimes it’s dependent on the subject, but often times this question can’t be clearly answered across the board. The subject could be sales, marketing, financial, service delivery, employee or client related. Regardless, I know there is a relatively high chance that I am going to hear silence when I ask how something is done.

The worst part is that many times there is an answer, but it can’t be articulated. For example if you have managed to get your business to $500k in revenue and I ask you what your sales process is to close a deal, you should be able to answer that question. Think about it. There must be some steps you are doing consistently or you wouldn’t be at $500k in sales. That goes way beyond luck.

With this said, the notion that the money is in the process has two positive meanings for your business.

First, having a process to do anything inside of your business promotes the most efficient and organized manner in which to accomplish a regularly done task, whether major or minor in nature. That translates into consistency, productivity and maximized profitability. No doubt. And it doesn’t matter if you are all by yourself or have 50 employees.

Having a process affords you the opportunity to move responsibilities from your plate to a sub or an employee. It also provides the backbone to train new hires of any discipline (admin, tech, sales, management, etc).

You want employees to do their best and feel important to the success of the business, but you don’t want them to be able to hold you hostage because the process is their heads and not on paper. And when they move up the ranks or leave all together for whatever reason, you need the next person in line with the same or similar skill sets to be able to take over those duties without disrupting the business operation.

The second positive impact that processes have on your business is the fact that they translate into greater business value. When someone on the outside looking in sees a well oiled machine and that oil can be proved through documented processes, it screams organization and ease of transition, which translates into higher value and lower risk.

Put yourself in a buyer’s shoes for a minute to see what I mean. Let’s say you are looking to buy a $500k revenue company that has been in the health care IT field for at least 3 years. If you found two that pretty much hit the mark on those two main criteria, would you rather pay top dollar for, and merge with:

- Company A that can tell you exactly how they get leads, turn them into clients, service them efficiently, keep them as long term clients and profit from it all

or

- Company B that has no business if their one salesperson/account manager leaves and has margins all over the place from client to client due to no consistency on how they price or sign on customers

My guess is Company B wouldn’t even get a second look.

In a nutshell, there is truly no reason to not document processes where consistency is needed and the task at hand is done on a regular basis. That’s at a minimum as you can make a process for any task. And this goes for the super small to the bigger SMB technology business. Truly no exceptions.

We, as technical people in a technical business, are logical in nature so it should come very easily to outline a process in logic diagram form and where possible turn it into some sort of written process, checklist and/or training tool.

Writing it down in logic flow and written form also gives you the opportunity to see if there are any holes in your process. It also allows you to continuously revisit the process to change it as needed or use it as a starting point for a similar process especially when it comes to sales and marketing. Once you invent the wheel there is no need to completely reinvent it. Simple as that.

Now get out there and start documenting some processes to help you make more money!

To Your Business Success-

George Sierchio
The Consultant’s Coach

Story Telling to Boost Marketing & Sales Efforts

noreply@blogger.com (George Sierchio) — Wed, 16 Mar 2011 22:24:00 +0000

While reading Inc. Magazine this month, I came across an interesting quick interview article with Peter Gruber (CEO of Mandalay Entertainment and Professor at UCLA). It talked about something that I have always felt is the missing link for marketing and sales in a relationship based business such as technology consulting and services.

That something is effective and purposeful story telling.

Think about it. Much of what you provide your clients is beyond their scope of core business competency, knowledge and/or understanding. If not, then a lot of your programs, services and insights wouldn’t be bought in the first place. How better to explain, not in technical terms but in business terms, what your company does than in a relative story?

In his new book, Tell to Win, Gruber talks about purposeful stories. As an example he mentions that when you tell a joke, your purpose is to make someone laugh. When you tell a story about someone that had a heart attack, your purpose may be to push the listener to get themselves in shape.

His point is that the first piece of using stories is to have a distinct purpose for telling the story. And then just like any good sales or marketing attempt, you want to have a mechanism to get your audience’s attention in the story. Last, he states the goal of your story needs to show what’s in it for the listener. A true what’s in it for me (WIIFM) approach.

I couldn’t agree more with his premise. Whether you are marketing through writing, speaking, direct mail, cold calling, networking, etc or in a sales conversation to seal the deal, you will get much further and better results if you use a story to relate your point to the audience.

Obviously this is easier done in a selling situation as you should know the prospect well enough at that point to truly relate to their situation, needs and personality in a story. But going back to my usual rhetoric on targeted audiences in marketing, if you are isolating segments of your audience in your marketing campaigns then you can paint a picture for them using stories relative to their industry, typical outcome needs and typical situations.

Here are some quick situational story lines to get you started:

- Bad things that have happened to others in the prospect’s situation and how they could have been avoided

- Bad things that were prevented from happening by others doing X in the prospect’s situation

- Bad things turned good by others doing X in the prospect’s situation

- Status quo things turned very good by others doing X in the prospect’s situation

Although a topic for another conversation, using stories does bring up the sore spot of many about using fear or scare tactics to market and sell. I will tell you this; people are people so emotions are an important chord to strike as they have a huge impact on decision making. But pushing fear way overboard or using it when it’s really not the main emotion on the table for what you are trying to convey, is not a good idea.

People see that coming from a mile away especially if it’s the only emotional trigger you are trying to hit instead of it being in the mix of a few triggers. Whether they really are fearful or not, most people do not want to feel like they bought into something solely because of a perceived weakness like fear.

Additionally, just conveying fear or just one trigger in general is a bad idea unless you absolutely already know this one trigger is THE emotion for the audience. I would venture to guess you won’t typically have the luxury of knowing that to be the case.

So the bottom line is this… in your marketing and sales, whenever you need to clarify something, get undivided attention, or put a situation in perspective to your audience, use a relative story as an example to get your point across.

To Your Business Success-

George Sierchio
The Consultant’s Coach

How Bad was the 2010 Economy for Technology Businesses?

noreply@blogger.com (George Sierchio) — Fri, 25 Feb 2011 17:06:00 +0000

Ask many technology consulting and service business owners how 2010 was for them and most will say it was just as bad as 2009. No economic uptick. No relief. Clients failing. No new clients to be found.

But I beg to differ.

What I saw was unstructured and disorganized businesses with leaders that did not care to dig into understanding their business or potential clients didn’t fare well. The ones that made sure they were running profitable companies that delivered value and took care of their clients from all aspects did pretty darn well.

How, you ask? Bad economies are a time of shake out. Well run businesses, even well run start-ups, historically do well in a rough economy. Yes some will invariable fail because what they sell is dependent on consumers having money to spend on luxuries or high ticket items. And yes bigger companies will cut costs, but mostly as a means to shed fat that shouldn’t have been there in the first place. But beyond that, the good to great companies, regardless of size, will always at least hold steady if not prosper off the backs of those that fail.

When a so-so company loses clients or disappears leaving clients in the lurch, the solid companies will pick them up because those companies still need that service. When clients are other businesses, a rough economy will let you know if they themselves are good companies by how they react and how they survive or thrive.

Those that only reduce spending because of fat shedding or are actually growing due to picking up the deserted customers of their competition, are good clients. They still need your services to provide for their customers. They may even need more if what you do provides cost relief (it does, right?). If you’re chock full of low level, high anxiety, bad paying clients, you will suffer and possibly not recover.

In a good to great economy even a horrible company can make some kind of money (i.e. even a blind squirrel can find a nut), but that doesn’t prove they know what they’re doing. These last few years have done a good job of shaking out the bad companies. And those left not hanging on by a string will get through 2011 with gains putting them in a position to do even better with a righted economy up ahead.

Understanding the finances and metrics that make up a well structure company, applying them to your business and being able to pivot on a dime to make company direction adjustments are what being a small to medium business is all about.

Being an entrepreneur in a variety of industries for two decades, including the technology consulting industry, I’ve seen a lot of companies on both sides of this line. But the reason I know that 2010 was actually a good year for good companies with conscientious leaders is seen in those I advised throughout last year.

Let me give you an example or what these clients saw from 2009 (before I was working with them) to 2010:

- Average of 35% gain in revenue with a couple having over 70% gain and one at almost 90%

- Gain in recurring revenue ranged from 15 to 100%

- Average gross margin increase of 8%

- EBITDA Profits ranging from a slight loss (compared to a huge 2009 loss) to mid 5-figure gains (on top of a handsome salary of course) with a few turning 2009 losses into very respectable 2010 profit gains

It didn’t take much but a better understanding of business operations, metrics, pricing, profitability and client base to see improvement in a so-called bad economy. In some cases, there was huge improvement. Size of the business was not a factor, but determination by the owners was a major factor.

You are in a business made to help others that rely on technology. Once technology use and reliance is there, it will never go away. It will only change and adapt. That’s what delivering technology consulting and services to the SMB world is all about so it’s a great space to be in and yours to lose.

Those that are structured to do well in a rough economy are going to do very well in a recovered as well as a thriving economy. If you know your industry, comprehend how a business should operate and understand the needs and potential needs of your target clients (target being a key word here), you have what it takes to do well in any economy including being able to scale up or down as needed and still make money.

That’s what it takes to be able to say “What bad economy?”

To Your Business Success-

George Sierchio
The Consultant’s Coach

Timely IT Business Website Marketing Tips

noreply@blogger.com (George Sierchio) — Fri, 18 Feb 2011 14:57:00 +0000

As news hits about companies doing things the very wrong way to boost website results, I thought passing along some very solid information from my friend and SEO/Social Media expert Stu Crawford of Ulistic was a great idea.

Read the excerpt below from his Feb 14th blog post about what's in the news and some tips on doing things the right way with SEO of your IT business website.

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SEO and your MSP Marketing

JC Penney is all the buzz right now. The New York Times blew the whistle on this American retailer for purchasing links and even top-notch SEO experts are finding other faults with JC Penney web marketing strategy. Will Matt Cutts allow JC Penney to appear in the search rankings soon? Only time will tell.

Every SEO professional who cares about their craft are watching blogs, news feeds and online papers reading about JC Penney’s mess with Google and how their outsourced SEO firm turned to Black hat SEO tactics to help build their rankings on some very broad search keywords. What are Black Hat SEO strategies? For me, it is simple…if it looks wrong then it is.

Today I spoke with a trusted MSP colleague about SEO and social media for Managed Service Providers.

I know many MSPs are turning to some very good firms for content delivery and managed social media services. This is not a bad thing at all for many managed service providers who simply need something online. However, for those MSPs who are serious about using the web to market their business need to really take a look at the potential damage that maybe caused.

In the JC Penney issue, Alan Bleiweiss nailed some of the issues found with JC Penney. Read Alan’s blog post here. The biggest one for me was duplicate content. In a conversation with the Ulistic SEO team the other day we discussed duplicate content and the challenges facing many. Not just in the MSPs business. Duplicate content is a big challenges in many industries.

MSPs need to be concerned about duplicate content online. Duplicate content is a 1996 issue. Now JC Penney’s duplicate content issue is internal but I really don’t see a difference in what they did to what is happening online today.

What I have seen working with the top MSPs in North America that all the top search results come from organizations who invest in custom developed websites and develop their own content. I have checked many major centers in North America. Toronto, Houston, Vancouver, Seattle, Orange County and many more. The results are the same. Those IT consulting firms who invest in a custom MSP website and have specific keywords in their SEO campaigns have great results.

Here are three tips for your SEO success.

1.Keep your title tags under 60 characters. We recommend 60 characters. Google recommends no more than 67 characters. 68 in the maximum.
2.Keep your descriptions under 155 characters. Same story. Google doesn’t recognize more than 155 characters. Use words in your description to attract visitors to your website.
3.You must have different titles and descriptions on all pages. This is a must. Keep your words relevant to what your page talks about.

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There are many more SEO tips and tricks that can be quickly and easily applied to your website. I'm available to answer your questions and comments below, or feel free to ask Stuart Crawford directly as his company Ulistic can certainly help your MSP business with top grade SEO services.

To Your Business Success-

George Sierchio
The Consultant's Coach

Costs of Failing to Use Education in Your Business

noreply@blogger.com (George Sierchio) — Fri, 11 Feb 2011 02:23:00 +0000

I am a huge fan of learning. Every chance I get I like to learn about interesting and important subjects from books, articles and straight from an expert. This goes for business subjects, technology subjects and personal subjects.

It would be a good guess that any intelligent and logical person would feel the same way. Yet I often witness intelligent and logical business owners failing to apply this to important parts of their business. An action that would make their lives easier and produce much better results in what makes their business work.

If you were looking for me to give you the absolute reason why, well that’s not going to happen as I’m not a psychologist. I can take a fairly good guess though and say a strong possible reason is business owners, especially technology service and consulting business owners, make too many assumptions. And you know what the saying is about why you shouldn’t ASS-U-ME so I won’t repeat it here.

Jumping right in, the four major areas that I feel cost businesses a lot of time, money and lost profits due to lack of education are below.

Let’s start with the internal side of things.

First off, as you would guess coming from me, is entrepreneurs failing to educate themselves on all the pieces of a well structured business. Nobody knows, or can do, everything that well that they don’t have things to learn and keep learning. And I mean nobody. You also can’t just be concerned with technology especially since business needs are what drives your consulting company internally and the businesses of the people that hire you. Technology is just a tool to make it happen.

You don’t need to be an accountant or a lawyer or have an MBA to be an SMB owner. Actually I think all three of these things would hurt more than help.

But you do need to have your finger on the pulse of high level things that go on in your business. Such as understanding finances and the metrics inside of that information, using good contracts that protect all parties, keeping above board on government regulations and requirements, knowing what to look for to make informed business direction decisions, having enough sales and marketing knowledge to be the driving force behind what the company is selling and how it does it. Even having several layers of management with good people in place does not replace the need for this working knowledge.

The next much forgotten internal educational item is with employees. This means any kind of employee or even contractors in some cases. From admins to marketing to sales to techs. The best of the best will end up struggling if they have no clue as to how you want them to do things. Systems, processes, procedures, checklists, etc. If they don’t exist then a great employee only armed with prior experience and a title is not going to do as well as they can and is very likely to eventually cause your business problems. And it’s not their fault.

Usually the damage is seen when it’s too late. Even after that revelation, many business owners still don’t make any changes, but spend most of their time fixing mistakes and leaving everything wide open for it to happen again.

Let’s move to external or client facing education.

Current clients need constant education on what you can do for them. If they don’t know you can help them with something, there’s a good chance they will ask someone else. Employing a variety of communication methods will solve this problem. Blogs, newsletters, webinars, scheduled meetings, technology reviews, etc are easy ways to educate them on what your company provides and do it in a non-pushy, non-sales type of way.

Current as well as potential clients also like to know why you are suggesting they deploy some kind of technology solution. Even if they are a known entity and trust your company’s judgment, they want to know the purpose behind your suggestions. And I don’t mean from a technology standpoint ,but from a business standpoint. What most fail to comprehend is that marketing is educating. This is especially true for tougher sells like services and knowledge versus products.

When you can’t really see and feel something like a service, knowing from a slightly technical but more business oriented viewpoint what the purpose is to a particular solution makes it easier to buy. You can tell someone until you’re blue in the face that their backup solution and the technology it uses is inadequate, but all they are thinking is “no it backs things up like it always has and all you want to do is have me pay you instead”.

To put a different twist on it, if you were going to buy a car and a salesman said “your current car doesn’t have the latest XYZ feature but this car does so it’s a good buy”, would that sell you on it? Probably not because whatever he was talking about didn’t mean anything to you and you don’t understand the significance. Just like your clients and potential clients, you don’t know what you don’t know so rattling off features or baseless scare tactics can just sound like useless sales talk.

But if the car salesman said “the XYZ engine in this car allows for better acceleration when you need it as well as getting twice the gas mileage of most engines so with the frequent long highway travel you told me about you should be looking for a car built with this engine”. Now you’ve learned something, it means something to you, it wasn’t a sales pitch and this salesman just became a trusted source of information instead of a car peddler. It makes you feel comfortable asking more questions to him to help choose a car.

The odds of him being the one to sell you a car just sky rocketed! All due to education and not trying to impress you with his technical knowledge of which you wouldn’t even know if he was lying to you. And just as important not talking to you as if you were just plain stupid and would be better off just doing what he says.

I hope you can see where education is a friend whether for you, your staff or your clients and potential clients. Try it out for yourself and see where you will avoid wasting money, put more money in your pocket and have a much easier time running a productive business.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Saving Your Business From Bad Debts

noreply@blogger.com (George Sierchio) — Wed, 02 Feb 2011 04:13:00 +0000

Nothing is perfect in this world. Good economy or bad, businesses will run into a deadbeat or two when it comes to getting paid.

Even when recurring revenue is the name of the game, it doesn’t guarantee payment. As a matter of fact, sometimes it makes getting paid more difficult as you get lax when a client has paid you timely for a few months of a contract. Then an ACH or credit card transaction issues comes along or a check outside of the grace period. Then another with an apology when you call to see what’s happening. And all of a sudden… nobody is answering your calls to find out what’s happening.

At least with a fixed fee project or a recurring revenue service you get paid up front and can see some issues coming, but it doesn’t necessarily stop them.

God forbid you are actually a SERVICE business still buying big ticket items for clients and having them pay you back. There are a variety of ways around that if you don’t feel up to requiring payment for products up front like using hardware as a service vendors, leasing companies, or procurement as a service vendors.

If banks aren’t giving out credit why in the world should you be? Recognize that clients who demand a project only happens if you buy the equipment and software for them are very likely not worthy of you doing the work for them. THEY CAN’T AFFORD IT. And neither can you. So don’t consider it a lost opportunity. Consider it a lucky break that you didn’t get into bed with a bad client that could very likely sink your whole ship in a non-payment scenario.

But I digress…

With that said, you can do a pretty good job on the cheap to do your best in not taking on clients that are very likely to give you payment problems. You deserve to get paid and you deserve to protect yourself. Don’t forget that.

Instead of writing all of this out for you, what I want to do is refer you to a pretty comprehensive recent article on inc.com.

Check it out with this link:
http://www.inc.com/guides/2010/11/how-to-assess-the-credit-risk-of-your-customers.html

Interestingly enough, the article starts out with a story from an IT company. Go figure…

To Your Business Success-

George Sierchio
The Consultant’s Coach

Client Management and Your Role as Business Owner

noreply@blogger.com (George Sierchio) — Tue, 25 Jan 2011 20:31:00 +0000

As we are in the end of the first month of 2011, you should have already applied some client management techniques to your business. In this case I am referring to applying the 80/20 rule to see who your bottom of the barrel clients are and finding a way to pull them out of that position or politely drop them as a client to make room for better paying, pleasure to work with clientele.

At this time you should also be raising your time & materials/project prices accordingly or risk losing the chance as most will accept this as a given without much of a fight as the year turns (recurring revenue fee increases should be based on whatever the SLA states but as a side note don’t forget to have automatic increases or the opportunity to increase built into that as well).

You did do that already, right? If not, hop on it as the end/beginning of a year as well as at contract end time is when this should happen. And if everyone is not on some kind of contract/agreement regardless of the type of service/consulting work you do for them, then get them on one. It’s good for everyone to remove as much gray area as possible when working together to solve problems and avoid them as well. It’s also just a plain good business practice and adds value to your company.

But that’s not what this post is about. What I want to talk about are a couple of other important client management items that will ease your marketing pain and avoid the loss of a good client.

I’m sure that got your attention.

So here’s the quick version, as obvious as these points might be, many businesses of varying size do not do these or fail to do them on a regular basis:

Check the Happiness Meter: Of course when you are doing work for clients or doing a monthly report for recurring services you make contact. But that’s often not enough and often not from the right people if we are talking about techs and engineers. You would be surprised how well an email every month or a phone call every month or quarter just to say hello without any sales tones and take their happiness temperature will do for you. If you have account managers, sales people or even a service manager, they can make that call. Sometimes it’s good to also get that call from the head cheese though and for you to hear how things are first hand.

Keep them Educated: This is where your blog or Newsletter comes in. If you don’t do a newsletter, a blog and an email about new blog posts will do. Educate, Educate, Educate. They need to know what’s going on in the world that is affecting the technology they are using and you are their conduit. If not, then someone else will be.

Let Them Know What You Do: It may come as a shock for you that your clients might not know all the services and products you can provide for them. Or know other complimentary vendors you can put them in touch with. As the owner of your business, it’s your job to determine what things your typical clients may need and be able to deliver them.

Let me take a moment and say I am not advocating being everything to anyone. If you know me, that is a huge no-no in my advising. What I mean is that in your small group of niches/verticals, you should be able to deliver expert services covering all ground. Not cover all ground for every possible type of client out there as your company can’t possibly make that claim nor will anyone believe you.

Second to that is letting them know you handle those things or have the resources for them to get in touch with those that do. Anything you can do to make sure they ask your company before dealing with anything that uses technology is key. Otherwise you will see new items popping up here at the client site, possibly interfering with the work you do for them. It will also indicate there are new vendors knocking at your back door because you let them into your yard. You need to be the technology gatekeeper.

This is where you cut down on marketing costs by marketing, in a not-so -pushy manner using the old adage “it’s easier (and cheaper and faster) to sell to an existing client than to find and sell to new clients”. This is very crucial, like the other above points, regarding keeping current clients as current clients.

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It’s amazing how important client management is to stability and to growth, but more amazing on how often it’s an afterthought. These are critical items that no small to medium business owner should be neglecting nor pushing off of their plate.

It’s your job to know your customer base and be able to have the company poised to deliver what they need and keep them happy. If you don’t, I promise you someone else is looking for the opportunity to get in there and make it happen.
Comments and questions welcome as usual.

To Your Business Success-

George Sierchio
The Consultant’s Coach

4 Key Pieces to Business Success

noreply@blogger.com (George Sierchio) — Sat, 15 Jan 2011 17:54:00 +0000

Believe it or not, there are truly 4 key pieces to success in business and as an entrepreneur.

I can’t take complete credit for this post as it’s my take on a list I received from Marketing and JV expert Rich Schefren. Since I completely agree with him and I thought it was excellent timing for a first month of the year post, here is my version for your reading pleasure…

Many business owners from all kinds of industries often think that having a lot of information in front of them (books, self help programs, and yes even blogs) and being a part of lots of groups (forums, masterminds, peer groups, etc) gives them what they need to separate the winners from losers in business. Sort of thinking the person with the most information or smartest person in the room is the most successful.

Think about that for a minute and you will find it’s not the case. If it were true, then all you would have to do to be the best is join the most groups and buy the most books.

And as for the smartest being the most successful, I’m sure you know a bunch of colleagues that are doing much better than you in business although you may consider them a bit of a dope. I’m sure a few people just popped into your mind on that comment :-)

Having good information and being part of groups as well as getting good advice and guidance while working hard at your business are all very important. BUT they are just the tip of the iceberg and often lead to information overload because the 2 key pieces to success are not adhered to.

Take a look at this tiny but crucial list and see where you may be missing the boat:

1. Being Action-Oriented

Just like being proactive versus reactive for your clients, the same holds true for your business. You can listen to the best advice, get the best guidance, read the best books and blogs, be part of great forums and still get nowhere. The difference is in actually taking action and executing on what you have learned.

After planning, execution is the next most popular failure point of a business owner. Doing your best to absorb information and then maybe reacting to it is not the golden ticket to success. Even worse would be taking the time to try to learn something, then never implementing it and blaming the source of the information.

Sometimes this is caused by information overload or paralysis by analysis. Meaning not knowing what to do first with a ton of good information or even how to execute it. Other times it’s caused by fear of doing it wrong or outright failure in the execution. This is a bit of a catch 22 since if this is the case. You know doing nothing is not going to fix it. Other people are stuck in the rut if “this is good stuff but maybe not the perfect stuff so I’ll wait until the next chunk of information on the subject comes my way”. Obviously this usually leads to always waiting for the next best thing whether it may be coming or not.

A successful entrepreneur gets pertinent of the moment information in a particular burning subject and acts upon it ASAP. That means knowing what success and failure metrics look like with a timeline to measure the success or failure. Then, depending on the outcome already have the next step in place to move on to the next option in failure or press forward with a success.

Waiting for a magic bullet is not conducive to moving forward in a successful business. The key is to pick a problem, get the help you can on that subject, plan to make it happen, plan for what will come after implementation success/failure, then execute with the success/failure metrics and next steps in place.

The only way to do this is to stay focused on the problem at hand and put actual scheduled time to it.

2. Rising Above Your Fears and Doubts

Fear is the biggest enemy to succeeding in anything, let alone business. If you want to be able to run a marathon and never have before, you find out how to train for it, do that training and take a shot at it. You might not make it through the whole thing but you will have taken the shot and tried. If you stuck with fear and never dove in, then you would never know if you could do it and where you messed up in preparing to be a success in getting through the race.

Business is the same thing. It’s full of mistakes. If you can avoid mistakes, wonderful. But as long as you do the best you can to prep and then forget the fear and just execute knowing that a mistake is a chance to learn and not make the same mistake again then you are going to be just fine.

Even the best and biggest businesses take missteps here and there. Many times there are factors out of your control and things you could not have seen coming. It happens. No big deal.

By the way, as far as mistakes go that you can control, a lot of them are formed out of over complicating a situation. The K.I.S.S. principle truly is, and always will be, a great way to run your life and your business.

That leads into the next key.

3. Keeping Things As Simple As You Can

Like I just mentioned, over complication is human nature that adds to our fears and holds back success in whatever it is you’re trying to do. Some things are fairly complicated in nature but we still tend to complicate and over sophisticate them even more.

When setting up a process in your business, stick to the K.I.S.S. principle. For example, many people have a hard time executing a marketing system because they do too many things at one time and over complicate it. You can’t just try to market 3 different things in 5 different ways all at the same time.

Pick out the subject and pick one type of marketing campaign. Learn what you need to in order to make that campaign work, make the process (“the plan”), execute it, measure the results, fix it up and then move on to the next campaign for that one subject or apply the same campaign style to another subject.

Simple, right? But it’s rarely done. I see it every week with questions I get from clients and potential clients that sound something like this: “I tried to market all of my services like ABC said by doing XYZ and it was a complete failure. It took a lot of time and money and now I have to make up for it fast. What should I do?” Usually said with an air of panic in their voices and once again putting all blame on the source whether an expert or a peer instead of on their own poor planning and execution.

This is called working harder than smarter and is often coupled with spreading your time too thin as you pursue multiple directions at the same time.

Focusing on an issue and taking the fewest activities possible to be successful with the execution is the key. Doing too much will most likely result in marginalizing your results. Rich had a good quote on this by Confucius… "Man who chases two rabbits catches neither."

I think that quote sums it up pretty well.

4. Knowing Where the Money Is

Know your market. I drill this into people time and time again by first making them choose a few very distinct markets. It takes time and some thought, but it’s a must.

What do they need? What do they want? What are they buying? Why are they buying it? What criteria must they fall into to be able to pay for what they need and want and buy?

That’s where the money is and that’s what your best competition and most successful colleagues are doing… whether they are smarter than you or not.

When you know where the money is as I explained above, it is very easy to apply this to your services and figure what your market segments will bear to price it as profitable as possible as well as improve results and income quickly.

That’s it in a (fairly long) nutshell. The above are reasons why having the most and best information does not determine the winners in business and why more brain power at the top doesn’t automatically equal a better business.

Use your smarts to keep things as simple as possible, learn what you need to from a good resource for solving one problem at a time, plan out how you will solve it and execute without fear of failure while having metrics in mind. And of course, base your business direction and decisions on knowing where the money is.

Let me know if I can help. Comments and questions welcome below or via email as usual.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Did You Evaluate Your Clients Yet?

noreply@blogger.com (George Sierchio) — Fri, 07 Jan 2011 17:08:00 +0000

Times are still tough for many, but it’s no excuse to deal with clients that either are not worth the money (and I am assuming you are actually making a profit on them) or they nickel and dime you so bad that there never is profit (and sometimes a loss) involved or they are just plain rude people that get a kick out of exerting false power (that you let them push on you by the way).

Even the nicest clients in the world are not worth losing money over. And sooner or later you will come to realize that you are in business to make money and help your clients do the same. It's a two way street and life is much better when you do come to this realization on the "sooner" end rather than "later" when it's too late.

It’s a tough decision but the beginning of the year is a great time to apply the 80/20 rule and see who the 20% are that are creating 80%of your headaches and make a move to replace them to be more like the 20% superstar clients you have (or are looking to bring on board).

I know. Easier said than done in terms of replacing them. But remember this… if in a profit losing situation, they are costing you money. Doing more work volume for them (or bringing in more like them) does not turn negative cash into positive. The math just doesn’t work that way unless there is some kind of profit being made. Otherwise, you are just using up utilization time for billable work when it could be spent on good clients that deserve your company’s expertise.

Some options are to outright tell them in a professional way that certain things in the business relationship need to change. If you can’t do that or change is not in the cards then it’s a matter of dropping the hammer on the decision to professionally tell them you can’t provide services to them anymore.

Of course a fun approach that sometimes works is to first raise your rates now that the year has turned. Especially if part of the issue is that you haven’t raised your prices to them for a year plus. It’s your right to do that year after year(and even in the middle of the year if you wish) anyway and it may just turn the tables on the situation. Or they may just go away on their own.

The bottom line is that owning and running a business is stressful enough at times. And you aren’t in this to be a slave to your clients. You could have done that as an employee. You provide professional services just like your clients do and you need to make a profit. You also should not have to dread a constant scenario where anyone in your business (including you) has to deal with disrespectful, rude or just plain demanding clients.

There is no rule that says as a business owner you need to put up with this sort of non-sense. The customer is NOT always right in cases like this. They need you or they wouldn’t be a client in the first place. If they can’t pay for what you provide or don’t appreciate it or don’t stick to the agreed upon contract (you do ALWAYS use contracts for any work you do right?), then they are not worth the time and effort. Nor should you let them ruin your business and take down your personal life as well.

The time is ripe right now to do something about bad client scenarios and to take a good look at how you conduct your business from client management, to contracts, to pricing. Maybe part of the problem is your company. But either way just letting bad situations stay the status quo is certainly not going to fix them or make them magically go away.

When you allow yourself to get to the point of feeling comfortable with letting go of problematic/no profit clients, any bad feeling from the temporary loss of revenue will be nothing compared to the relief of not being in that kind of a stressful situation.

Have no doubt that being able to do this will make you truly feel like the owner of a business and your own destiny. And in the wake of that feeling, you’ll find a renewal in energy and excitement to move forward into quickly picking up a new good to great client while appreciating the relationship you have with your remaining clients.

Questions or comments, throw ‘em down below.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Classic Client-Provider Relationship Issues

noreply@blogger.com (George Sierchio) — Tue, 28 Dec 2010 21:17:00 +0000

Instead of posting a regular blog entry, for the end of the year I decided to put up a link to a video that just hits the mark on how the client-provider relation often ends up in the technology consulting and services world.

Although this humorous video depicts businesses other than the kind you are in, it shows you how ridiculous the behavior of some clients and potential clients really is and why you shouldn't put up with.

Check out the video below on client relationships and management:

http://www.dump.com/2010/12/13/the-vendor-client-relationship-in-real-world-situations-video/

I hope you found it funny and at the same time realize that if this is how your clients and potential clients act towards your business then you have some issues to take care of.

The three biggest issues being
- Attract better clients that respect your work
- Work in a fee based (to get paid upfront and on milestones) or recurring revenue based model (to get paid consistently and up front) as much as possible
- Make sure you have contracts for whatever you do to spell out the work, how much you are charging and how you are collecting the payments

Thanks again to one of my program members for sending over this great video. Good stuff, Dennis!

Hope you all have a terrific and safe New Year!

To Your Business Success-

George Sierchio
The Consultant's Coach

Year End Business Metrics- Part 2

noreply@blogger.com (George Sierchio) — Wed, 22 Dec 2010 04:57:00 +0000

On the last post I tried my best to get you to take a look into your metrics at one level or another and see how you made out this year. In case you missed it, I also gave you an opportunity to download a set of metrics. If you didn’t jump on that, you can click here to grab it.

Ultimately, what we want to do is take that information, set goals for next year, and use those goals as well as this year’s figures to determine where you need to execute some moves and budgets to make it all happen.

Let me explain that a bit better with a quick example.

Let’s say you determined that your EBITDA (not to be confused with Net Profit) was at 15% two years ago, then 12% this year. From that we can see that your profit margin is not exactly abysmal this year but it was better a year ago and at a respectable level. So the question to ask yourself and your numbers is; Why did this happen and what can we do about? Then set a goal to get back to 15% next year and work your way up from there.

Simple, right?

It actually isn’t all that hard and as an entrepreneur you need to think along these lines:

- If something important is not doing well, why?

- If something was good and is now bad, why did it happen and how can we at least get back to the way it was?

- If something is good then, what are we doing that’s making that metric good so we can keep doing it?

- And even if it’s good, can we make it better?

- If so, what is feasible as a new metric and how do we go about achieving that?

That’s your job as the Big Cheese from the one person show and up.

Want to talk about? Not a problem. Grab the metric guideline here. Then run some numbers and click here or send me an email to set up a 30 minute session to discuss it.

Something this economy has done, and will continue to do even as it gets better, is to knock out of the box anyone not willing to think like an entrepreneur instead of like a technician. You have a business, like it or not. And your clients want to deal with a business that is solid in foundation, can deliver the goods they need and are paying for, and will be in business come Monday morning.

That’s what the economy has taught them. That’s how they will protect their businesses. And it’s not going to change.

No matter what size your business is now or how you want it to look in the future, if you are not looking at your metrics in full force, the odds are you are leaving a decent amount to gobs of money on the table and the value of your business is going to come as a shock to your system when you’re ready to get out.

So your choice, whether you have a start up or a 20 year old company, is to actually operate this entity like a business or hope the economy gets better fast enough for you (and your employees) to find a job. I’m hoping that next year and beyond you’re aiming for owning a business and not being an employee of yourself or anyone else for that matter.

To Your Business Success-

George Sierchio
The Consultant’s Coach

Year End Business Metrics- Part 1

noreply@blogger.com (George Sierchio) — Fri, 17 Dec 2010 21:57:00 +0000

On the last post we finished up on preparing your marketing for next year. That also involved looking at some financial figures related to marketing when making your plan, but wait… there’s more!

Now we are ready to look into at more fundamental metrics, the goals you had set for them, and how you did on meeting those marks. Now if you didn’t set any goals or you didn’t quite know what metrics to even look at, that’s OK. At least you can check out the ones I have clients look at (and look at for myself as well) and have the figures you need for the second part of this post, which is to set next year’s goals.

Some of these important metrics can be found in accounting packages like QuickBooks, but many are not there. Not a problem though as the information you need can be drawn from your accounting software as well as time related apps such as a PSA and many can be generated through business intelligence dashboards that sit on top of your accounting package. For now, we will assume you have a way to track employee time well and you are using an accounting package.

I can’t go into great detail here, but I will give you the areas you should be looking into. And I will give you an opportunity to grab a comprehensive metric guideline if you wish.

The general areas to check your numbers on are:

Marketing/Sales- we talked about most of the metrics in the last posts such as costs to generate leads, cost to bring the lead through your entire marketing funnel and into your sales funnel, ROI on marketing costs. And although not financial related you should look into response rates in all aspects of each marketing campaign and conversion rates to a sales conversation as well as conversion into a sale.

Clients- Should include client revenue, profitability, lifetime value and revenue/profits generated compared to money spent on marketing activities and sales people.

Services/Products- Should be looking at each line of business in terms of profitability in gross margins and % of total revenue. Also related to this or Employees is time utilization related metrics.

Employee- Sales person profitability. Billable personal profitability, Hiring metrics (knowing when you need staff as well as having too much staff, employee work goals (for bonus structures etc).

Financial (things not covered above)- Days sales outstanding (DSO), debt to equity ratio, quick ratio, cash flows (this is truly a monthly metric), SGA as a % of revenue, actual vs projected revenue/EBITDA/net profit, EBITDA/net profit as a % of revenue, year over year and quarter over quarter changes is revenue/EBITDA/net profits. Of course you also want to look into how you did on budgets for chart of accounts expense items such as marketing, phones, utilities, education, etc.

Just a tiny list of good metrics, right? Actually, there is a lot more to this and some metrics may be more important to you than others, but these are entrepreneur’s tools. They can be done in spread sheets or with the help of business intelligence tools/dashboards. Most should be looked at monthly, quarterly and worst case right now at the end of the year.

The full list has the formulas you need to calculate the less obvious metrics as well as guidelines on some for the numbers you want to see. I’d be happy to get that to you, and even go over it with you and talk about the tools you can use to make this easy on you. Just follow this link to grab it.

But hurry. The year is ending quickly and as you will see in the next post; these numbers are needed to prepare for next year.

To Your Business Success-

George Sierchio
The Consultant’s Coach