#ownrlife:

So You Are Supposed to Sell

noreply@blogger.com (ownrlife) — Mon, 30 Mar 2020 13:13:00 +0000

Given our present COVID-19 market, owner selling has become essential. I will add a second article on these unique dynamics later today.

I am writing this to all the non-sales professionals who through luck or misfortune find themselves in a sale role. Congratulations - you became the important person in the company. Given you are working in a small landscape business with a hands-on owner, my previous statement might not be completely true. However, in the corporate world many a CEO has been dethroned by poor sales. One last thought, sales is a profession and if treated as one will prove fruitful. Imagine being able to affect your check every day rather getting paid what somebody else thinks you are worth?

In my 3 decades of selling, I have attended just about every sales program imaginable. In fact, I went to my last one two weeks ago. So let me boil the profession down into 3 simple parts.

The Big 3 - QSC

Qualify - double pareto to find buyers
Solve - solve problems and solutions in order
Close - incremental yes’s to a contract

Qualify, Qualify, Qualify! For our readers who entertain thoughts of being a chef know the number principle of cooking is to start with quality ingredients. The same with sales. Nothing is more infuriating than spending hours, days, or weeks trying to close a deal that never had a chance. This is especially challenging in small businesses that do not market. If you have no ongoing marketing activities don’t be surprised if your offer is unknown. When you try to sell to people that don’t know you it is called a cold call and has a success rate around 100:1 - 100 leads to close 1 deal. No fun and something thing to be avoided. Here are my rules of qualifying leads:

Don’t Sell, Find Buyers (Attract The Willing). There are people looking to buy, find them and stop trying to convince people ‘they-really-oughta-wanna’ be your customer.
The Double Pareto Cut. Take the 80/20 principle and apply it twice - given 20 leads, 16 are not buying and 4 are. Then apply it again to the remaining 4, identify the 1 and close that deal first - on your fast track. Work the other 3 as time allows but close the first. The remaining 16 - place them on a mail list and perhaps next time they will know who you are.

Solve Problems, not Sell Features/Benefits. Once you have the short list of buyers, split your focus into 2 steps - first is working them to understand the need or problem. Don’t believe what they tell you….because if you build it and it doesn’t meet their need - who is at fault? They are but you will get the blamed. Explore why they want what they want until you are comfortable that their solution will work. If it won’t, use your expertise to move them to a smarter alternative.

Your One-Two Punch for quickly moving suspects into customers:

Identify the Real Need/Problem. Use your expertise and define the problem/need. You will be surprised how many times their choices are wrong.
Design the Best Value Solution. Help them arrive at your conclusion. My experience is this is where you gain separation from the competition. In the process you have made them more intelligent consumers of landscape services and built a relationship that will lead to repeat business.

Close from the Beginning. One of the most profound lessons of my sales career is never over burdening the any single step with the need to close. If you look and act desperate, the prospect will smell it and walk. It also drives you to make concessions on price to close the deal. Nothing like paying a customer to allow your company to install a new irrigation system. A tight sales process can be condensed to just 5 Yes’s:

Yes #1 starts with the first 80/20 - isolate the buyers
Yes #2 is the second 80/20 - from the potential buyers - fast track the best candidate
Yes #3 is their acceptance of your analysis of the need/problem
Yes #4 is their acceptance of your solution
Yes #5 is signing the contract

The major idea on closing is this - by spreading the yes’s across several steps, you make it easier to move the sale through the funnel. The other and significant impact is it surfaces objections earlier. There is nothing more disheartening to have them walk away when you thought they were signing.

The real issue is not trust building because it is impossible until you have honored a promise. Trying to acquire new customers is about risk reduction. Your sales approach is to reduce the risk of buying so you can build trust and repeat buying because you have not only honored the promise but exceeded it.

Show Notes 6.9: Collecting Nuts for Winter - Your Moves

noreply@blogger.com (ownrlife) — Fri, 31 May 2019 12:19:00 +0000

Show Notes 6.9: Collecting Nuts for Winter - Your Moves

Cash Flow Management & Lowest Cost Producer

Your Goals:

Conserve cash and eliminate or restructure debt
Expansion made you sloppy - get processes back under control and take out all non-value

Cash Flow Management

1. Inventory is Cash Collecting Dust. When you buy raw materials the clock ticks. The goal is to base inventory purchases and levels on the JIT (Just In Time) demands of customers.

Base purchases on demand, not on a historical schedule never order raw materials until a purchase order is prepared on a closed deal;
Increase your “turns”, make it a high priority to double the number of times you turn over inventory per year;
Order in the smallest lots possible (without sacrificing discounts) and supply your projects with multiple deliveries per week.

2. Pay Suppliers at the Last Possible Moment or Immediately. Smart management of Accounts Payable requires balancing several issues at once – quick pay discounts, velocity of cash in and out the door, and improving your credit.

Quick Pay Discounts: whenever possible arrange for a quick pay discount that makes it worth your while to pay quickly – at least the same rate as the factoring discount;
Manage the Velocity of Cash: when discounts are not available or too small, slow down the outflow of cash – when Accounts Payment cycle is smaller (fewer days) than the Accounts Receivable Cycle you have negative velocity;
Using Commercial Credit: the balancing act gets complex, in commercial credit you don’t get full credit for paying on time – you maximize credit by paying before the due date.

3. Money Owed Over 30 Days is a Loan. You are not a bank, when customers don’t pay within the agreed terms (usually 30 days) you are loaning them money – that has to stop:

Invoice Accuracy – inaccurate invoices provide the customer a legitimate reason to avoid payment;
Invoice Follow-up– establish a follow-up date (5 days after mailing / emailing) to call customers and review the invoice to ensure accuracy and there are no obstacles to on-time payment;Factoring Your “Loans” – based on historical records, any customer habitually late over 45 days - sell their AR to a Factoring Company and receive 93% of the total within 24 hours.

Lowest Cost Producer

1. Analyze Current Business Practices.

Value Mapping – a method of documenting a process that determines the value-added by each step. Value is defined as (1) if you itemized the bill would the customer be willing to pay for the listed activity, and/or (2) is the activity necessary to either build it at a specified quality level or to comply with external requirements (safety, environment, etc.).
Document the Process – this is another name for Mapping a process. Take what was up to now informal and create a visual representation so it can be analyzed.
AS IS Process – what you are currently doing in a specific process. It is essential to have an accurate picture of the current state. Without it you cannot decide which improvements produced the greatest results.

2. Identify and Define Improved Processes.

3. Prioritize Process Improvements.

TO BE Process – how we want to do it – if we do it better than anybody else and use it as a competitive advantage, how do we engage the entire organization? This is where you can apply some simple principles that will provide exponential returns.

Balance – the impact of scheduling on a process. Efficiency starts with balancing production demands to remove day-to-day variation. It is about creating a schedule that makes the same production demands every day.
Demand – the impact of scheduling on a process. The next efficiency step is to ensure the schedule doesn't demand more than people or equipment should perform. This will eliminate the sources of safety & health issues and unforced errors – defects.
Waste – empowering front-line employees to identify and eliminate the 7 sources of waste. Balance and Demand are management imposed issues and only solved by management. Once you have Balance and Demand under control, you can charge the people doing the work to reduce or eliminate waste:

Show 6.10: In the Darkest of Night Reinvent - Your Moves

Show Notes 6.8: Riding the Wave - Your Moves

noreply@blogger.com (ownrlife) — Fri, 24 May 2019 12:43:00 +0000

Show 6.8: Riding the Wave - Your Moves

Existing Demand - Current Markets (New Expanded Customer Base) with New Offer

Your Goals:

Translate increased customer knowledge into new products and services
Expand Customer Base to decrease fragility (surviving the next downturn)

How:

Collaboration
Beta Products & Services
Generalize & Release

Collaboration

Improving and new product & service development is risky, time and resource intensive, and expensive. Instead of applying the traditional big company approach of R&D, reverse the process to D&R - Collaborative Development to build it and Collaborate Research from testing in a friendly environment to reduce risk, collapse time, and ensure the first version works without significant rework. The goal is to cement and deepen the relationship with customers by using their expertise to improve your offer and operations.

2 Methods

Bring the Client Inside: Market Research, Process Improvement, New P/S Development

Inside the Client: Market Research, Performance Improvement, Cost Reduction

Beta New Products & Services

Never, Never, Never (unless you are dead certain) introduce a new product or service that has not been built with an existing customer. Sometimes you can pitch new customer to go there but the odds are low. How this works: if you have followed the first two marketing/sales strategies of increasing your share of budget with existing customers to 100% and took over accounts from your competitors, and moved into other markets like this one - you have greatly expanded your base of customers . If you brought them inside or gained access inside their businesses, your knowledge has increased on how to make your products & services have greater impact and the bonus - given your core competence, what new product or service should be developed that has willing buyers?

Closing the Gaps

Market Research: changing customer tastes - the zeitgeist
Product to Knowledge: understanding how customers use the products/services for P/S improvement or development
Operations to Knowledge: internal lessons learning from servicing accounts to improve the offer

Generalize & Release

The most significant part of the beta testing phase is tracking: manufacturability (how easy is it to make or deliver), how well it delivers on promise (the feature/benefit proposition), and what changes will have to made to sell to all of your current accounts. One last thought and perhaps the most significant - fund this at a 100% level. Don't let scrimping on a few dollars lead to a bad launch; spend what you have to because the future is at stake.

3 Methods

Multiple, quick tests (soft launch) before freezing the design and making it available to the targeted accounts.
Based on lessons learned, generalize the product or service to ensure it fits a wide population and aggressively sell
Put all of your marketing spend (money and effort) in to gain as much market share as possible - you are running out of daylight.

Decrease Fragility

Given the location in the economic cycle, we are in the late summer / early fall stage. You are stocking as many nuts and seeds as possible before the economic winter or contraction. The more you can spread the risk cross multiple revenue streams the more you can survive the shock of losing major accounts.

Show 6.9: Taking Advantage of the Downturn - Your Moves

Show Notes 6.7: Coming Out of the Contraction - Your Moves

noreply@blogger.com (ownrlife) — Fri, 17 May 2019 10:59:00 +0000

Show 6.7: Coming Out of the Contraction - Your Moves

Anticipate Demand - Focus on Current Markets (Customers) with Current Offer

Your Goals:

Increase sales to pre-contraction levels
Gain 100% of budget

How:

Relationships
Data
Collaboration

Relationships

The foundation of a positive and ongoing customer relationship, it is based on the customer's level of satisfaction, a relationship built on loyalty. The goal is to take advantage of the great work provided to customers by managing the relationship, looking for barriers to good service, and dealing immediately with customer issues.

Closing the Gaps

Based upon our research and development of Customer Service courseware, there are 5 general Gaps or obstacles to achieving customer loyalty. Delivery, Performance, Management represent the 3 that most impact small business.

Delivery: Promise, Responsiveness, Competence, Empathy
Performance: Role Clarity, Job Fit, Authority, Technology, Recovery Policy
Management: Commitment to Quality, Task Standardization, Goal Setting

Data

Customers are one of the most valuable and under utilized source of real-time information. The process is reciprocal – (1) taking advantage of their market research and knowledge of your products & services and the competitors, (2) and sharing your market research and experience of improving your offer to them. The goal is to create a norm with customers on data sharing; you routinely provide them with information critical to their business, and they will reciprocate.

Closing the Gaps

Market Research: changing customer tastes - the zeitgeist
Product to Knowledge: understanding how customers use the products/services for P/S improvement or development
Operations to Knowledge: internal lessons learning from servicing accounts to improve the offer

Collaboration

Improvement and new product & service development is a risky, time and resource intensive, and expensive. Instead of applying the traditional big company approach of R&D, reverse the process to D&R - Collaborative Development to build it and Collaborate Research from testing in a friendly environment to reduce risk, collapse time, and ensure the first version works without significant rework. The goal is to cement and deepen the relationship with customers by using their expertise to improve your offer and operations.

2 Methods

Bring the Client Inside: Market Research, Process Improvement, New P/S Development
Inside the Client: Market Research, Performance Improvement, Cost Reduction

Moving Into Adjacent Markets

Markets (customers) that are close in proximity to what you already do or where you do it. The downturn has negatively affected your competitors; some are gone and some are weaker. The goal is to aggressively go after these accounts while the opportunity exists, but never put your core business (customers) at risk.

Where to Look

Similar Customers
New Uses for Current Products & Services
Similar Applications

How to Select

Strengthen your core business?
Probability of becoming market leader?
Does it give us or improve our competitive advantage?
Does this move preempt a competitor?
Probability you can sell and deliver into the adjacent market?

Show Notes 6.6: Surviving the Breaking Waves

noreply@blogger.com (ownrlife) — Fri, 10 May 2019 10:53:00 +0000

Show Notes 6.6: Surviving the Breaking Waves

Show 6: From Bowditch: "The entire boat could slide down a large enough wave, out of control. Taking a large wave over the transom could flood the boat, but riding a sea that lifts the transom could, in combination with your engine, push the bow under the back of the wave ahead, causing the boat to spin sideways (broach) or even flip stern over bow (pitchpole)".

Now that we are in the middle of the crisis and the waves of economic contraction are breaking, how you navigate is based on how you read the disruption.

Topics

Price = Value: Bad Decisions Are Cleaned Out

Panic

Price < Value: Everybody Pays, Even the Innocent

New Opportunities

Leading Indicators

Confidence: consumer confidence is at its lowest and therefore so is business and investor confidence. Hard to see the upcoming dawn in the middle of the night with crashing seas.

Employment: the U2 number (unemployment benefits) is soaring as well as the U6 (employable that are unemployed). Even as you approach the trough the numbers will continue to escalate. NOTE - LOOK FOR THIS PATTERN: CONSISTENTLY DOWN - evidence of the worse of the contraction.

Inflation: we have moved from inflation to deflation (prices coming down). THE BUBBLE HAS BEEN CLEANED OUT AND THEN SOME!

Credit: there is no credit, there is no capital looking for value, even the financial institutions, insurance companies, etc. are having problems. RECORD NUMBER OF FORECLOSURES AND BANKRUPTCIES - MOST OF YOUR BADLY COMPETITORS ARE GONE.

Interest Rate: this will sound counter intuitive but interest rates go up - even though demand is low, supply is even less. Those who can lend money don't want to unless...

Investment: Gold, Cash, and Bonds

Join the Alpha Network of Business Owners and receive the inside information on how to play chess with the economy and consistently win.

Show Notes 6.5 - Oh No We Are At The Top With Only One Way To Go - Down

noreply@blogger.com (ownrlife) — Thu, 02 May 2019 20:50:00 +0000

Show Notes 6.5 - Oh No We Are At The Top With Only One Way To Go - Down

Show 5: When I was at sea especially south of New Zealand in the Roaring Forties the fact you are at the Crest of a 40 foot wave is obvious. However when discussing the economy this is not always the case. Only the people closely watching the market realize the party is over and the lights are about to go out. Everybody else will wonder how that happened. How do you know this party is over?

Topics

Price > Value - The Bubble Pops
Distress
Revulsion
Price = Value - Bad Decisions Are Cleaned Out

Leading Indicators

Confidence: at first consumer confidence couldn't be higher but slowly it starts becoming apparent that the expansion is over. Businesses are usually ahead of this and their confidence has started retracting which impacts lender confidence.
Employment: the best is over and the U2 number begins to climb upward. A few indicators - jobless claims on the upswing and number of new jobs created below 150,000 per month. Remember 200,000 jobs is really break even. NOTE - LOOK FOR THIS PATTERN: INCONSISTENT UP & DOWN TO CONSISTENTLY DOWN - evidence of the contraction has started.
Inflation: inflation has topped and we are about to start a period of dis-inflation. As the demand for credit decreases, the money supply increases. There might be action by the FED to print more - historically they will wait until the next part of the wave to pull the rug out from under debtors. THE BUBBLE HAS BURST!
Credit: credit is starting to dry up. Typically at the crest Consumer and Commercial Credit is maxed - the debt load on consumers and businesses is at or exceeded sound financial principles. SINCE CREDIT WAS PART OF THE BUBBLE, LENDERS ARE PRICKING IT BY CALLING IN DEBTS.
Interest Rate: rates have topped and are starting to decrease. You will notice it first in short-term investment instruments like CD's (which are almost at zero), then you will see it the long term impact like Treasury Notes.
Investment: Stocks like Commodities and Blue Chip Bonds are the low risk places to place your bets. Money migrates to value and right now return is less important than risk.

Join the Alpha Network of Business Owners and receive the inside information on how to play chess with the economy and consistently win.

Show Notes 6.4 - You're Up the Face of the Wave and Approaching the Crest

noreply@blogger.com (ownrlife) — Fri, 26 Apr 2019 12:49:00 +0000

Show Notes 6.4 - You're Up the Face of the Wave and Approaching the Crest

Show 4: By now everybody, even the clueless realize the economy is expanding and it is time to take advantage of the opportunity. If you were following this model, the business should have recovered from any losses in the last contraction and experienced solid growth. During this stage of the wave the time is ripe to pull away from the competition and make it a record year.

Topics

Value = Price
Euphoria
The Crest

Leading Indicators

Confidence: consumer confidence is high and so is business confidence. Consumers have experienced enough of the expansion to believe it is real and businesses have responded accordingly. Consumer spending is beyond delayed purchases and is predominately DISCRETIONARY.
Employment: The U2 number (Bureau of Labor Statistics) has been decreasing and is approaching its lowest level since the last expansion; the number of unemployment claims being filed. The trend started off shaky but it now should be reporting consistent reductions. The U6 number (total unemployed that are employable) is also approaching its lowest level since the last expansion. NOTE - LOOK FOR THIS PATTERN: INCONSISTENT TO CONSISTENT BACK TO INCONSISTENT - evidence of the crest.
Inflation: all of the indicators of inflation are present. The FED has raised rates several times during the expansion, both because of left overs from inflating the money supply during the last contraction and an the imbalance between supply and demand; demand has exceeded supply, increasing prices, and that has increased production. WE ARE IN A BUBBLE!
Credit: Credit has reversed itself from the contraction. It is easy to get and there is a lot in circulation. Remember the relationship - increase in consumer confidence leads to an increase in business confidence that leads to an increase first in commercial credit, and then consumer credit to buy the supply lending institutions have funded. CREDIT IS THE BUBBLE!
Interest Rate: at some point in this part of the expansion the lending institutions are beginning to worry about the credit bubble and they begin to slowly raise rates - if they are smart. Usually the FED leads the way by increasing basis points. Interest rates PEAK AT THE CREST.
Investment: Stocks, Real Estate, and Bonds. Usually when you see both bonds and stocks being recommended at the same time that is a signal that "smart money" believes this expansion is about to run out of steam. You will know when the markets believe we are there - stock recommendations change from GROWTH to COMMODITIES - things must buy regardless of the economy.

Join the Alpha Network of Business Owners and receive the inside information on how to play chess with the economy and consistently win.

Show Notes 6.3 - You're in the Trough and the Wave of Expansion is Approaching

noreply@blogger.com (ownrlife) — Fri, 19 Apr 2019 02:53:00 +0000

Show Notes 6.3 - You're in the Trough and the Wave of Expansion is Approaching

Show 3: We will start the conversation when the economy is at its worst. You have just lived through a recession that almost killed your business and it did take out a few competitors. As your boat sits in the trough you see a rather large wave coming your way - it is the upcoming expansion. Today's show is about how to steer your business half way up the face of the expansion.

Topics

Responding to the New Opportunities
Preparing for the Upcoming Credit Expansion

Wave Periods

The amount of time between troughs - between the start of business cycles
Historically average time is 8 to 12 years

Leading Indicators

Confidence: starts with consumer confidence, as the economy improves, consumers become more confident that the recession/depression is finally over. They have been postponing buying decisions and there is significant pent up demand. Customers begin purchasing which leads to an increase in business confidence - finally they have serious buyers.
Employment: unemployment is high and the labor participation rate is at a low level. Government based social programs like welfare, food stamps, and WIC are at their highest. There are more people than open positions and therefore wages are flat.
Inflation: the first hints of inflation. Given common monetary philosophy in developed countries, the government has flooded the market with dollars in an attempt to jump-start the economy with social programs. That means the value of money has decreased in value. Additionally given the low inventory levels, the increase in demand will drive up prices. Remember price is a reflection of the balance or imbalance between supply and demand.
Credit: credit availability is at its lowest and the lending institutions are waiting on consumer buying and an increase in employment. Because nobody has any confidence, there is not a lot of demand for credit.
Interest Rate: the barrier to borrowing is not the interest rate (at this stage it is usually low), it is the credit score requirements. The supply of money far exceeds the demand for borrowing.
Investment: Stocks and Real Estate - the stock market is at its lowest level (within the biz cycle) and under valued. The same is true with real estate (residential and commercial). The credit bubble that busted in the contraction created a large inventory of properties.

Join the Alpha Network of Business Owners and receive the inside information on how to play chess with the economy and consistently win.

Show Notes 6.2: Elements of the Business Cycle & Inflection Points

noreply@blogger.com (ownrlife) — Fri, 12 Apr 2019 10:32:00 +0000

Season 6 - Show 2: Elements of the Business Cycle & Inflection Points

Show 2: What are the 4 elements of a wave or business cycle and the 4 major inflection points - what does it mean for your business? The purpose of today's show is help the business owner determine where is today in the business cycle and make the right decision for the business.

The right decisions is to remove all fragility from the business so you are protected from the black swan events that trigger a major downturn in the economy.

Topics

Elements of a Business Wave
Inflection Points
Wave Size
Wave Periods
Leading Indicators

Elements of Business Wave

Lower Face: the early parts of a new wave between the Trough and the Face's Midpoint; the beginning of an expansion;
Upper Face: the later parts of a new wave between the Face's Midpoint and the Crest, the end of the expansion;
Upper Back: the early parts of a dying wave between the Crest and the Backside Midpoint, the beginning of the contraction;
Lower Back: the later parts of a dying wave between the Backside Midpoint and the Trough, the end of the contraction.

Inflection Points

Trough: the lowest point between waves, supply still exceeds demand, price does not equal value - everything is under priced;
Face Midpoint: half way through an expansion, supply and demand equal, price equals value;
Crest: highest point between waves, demand exceeds supply, price is greater than value - everything is over priced;
Back Midpoint: half way through the contraction, supply and demand equal, price equals value.

Wave Size

In nature this is based on fetch, duration, and depth
In business this is based on government involvement in the economy - monetary policy, quantitative easing, spending focused on smoothing out the wave

Wave Periods

The amount of time between troughs - between the start of business cycles
Historically average time is 8 to 12 years

Leading Indicators

Confidence: consumer and business confidence about the immediate future, consumers willingness to buy, businesses willingness to build or make - increasing or decreasing, euphoria or fear;
Inflation: sustained increase in the price of goods and services due to monetary policy, destruction of worth - direction and velocity;
Credit: belief or trust the good provided in advance of payment will be repaid, based on the borrower or the state of economy - availability and difficulty;
Interest Rate: cost of borrowing established by the market or government - direction and velocity;
Investment: where is the best value for investment or making money from money - direction and velocity.

Join the Alpha Network of Business Owners and receive the inside information on how to play chess with the economy and consistently win.

SEASON 6 SCHEDULE

noreply@blogger.com (ownrlife) — Thu, 11 Apr 2019 16:11:00 +0000

SEASON 6 SCHEDULE

Simple concept and not too difficult to pull off - how do read the economic indicators to determine your next moves.

Show 6.1: Reading the Tea Leaves (5APR19)
Show 6.2: 4 Elements of an Economic Wave and Its 4 Inflection Points (12APR19)
Show 6.3: Element #1 - What is Happening (19APR19)
Show 6.4: Element #2 - What is Happening (26APR19)
Show 6.5: Element #3 - What is Happening (3MAY19)
Show 6.6: Element #4 - What is Happening (10MAY19)
Show 6.7: Element #1 - Your Moves (17MAY19)
Show 6.8: Element #2 - Your Moves (24MAY19)
Show 6.9: Element #3 - Your Moves (31MAY19)
Show 6.10: Element #4 - Your Moves (7JUN19)
Show 6.11: Charting the Economy - Making Your Moves Conscious and Repeatable (14JUN19)
Show 6.12: Retained Earnings Investment Strategy - Making Money from Money (21JUN19)
Show 6.13: Your Strategy Template - The RESZ (Regulatory, Economic, Scientific, Zeitgeist) Tea Leaves (28JUN19)

Show 6.1: Overview on Reading the Economy

noreply@blogger.com (ownrlife) — Fri, 05 Apr 2019 03:48:00 +0000

Season 6.1: Overview on Reading the Economy

Background

Part of our Market Services offer is an ongoing research service. This process requires a close examination of the economy to decide what forces are affecting your customers, and how will it affect their buying decisions. We combined several approaches (contained in this Business Primer) including stock picking; we built this economic cycle model.
The Economic Cycle

Based on the Wave Theory by Ralph Nelson Elliott, the economy can be viewed as a series of waves with crests (tops) and troughs (bottoms) with two faces – Expansion and Contraction. When you add the economic principle of price communicating value, we divided it into 4 conditions:

Expansion where True Value is Greater than Market Price
Expansion where True Value is Less than Market Price
Contraction where True Value is Less than Market Price
Contraction where True Value is Greater than Market Price

You can start anywhere, but for this model we choose the bottom as a starting point – a condition where Supply Exceeds Demand Which Suppresses Inventories and Price.

At The Bottom – Market Contraction Where True Value is Greater than Market Price

This location is the absolute market bottom where demand has reached its lowest point. Since the market uses price for information, the demand for most products and services is so low that everything is underpriced.

Situation 1 New Opportunities. The market downturn has cleaned out badly run businesses and their excess inventories – including yours and your customers. It is time to begin aggressively marketing to existing customers and similar accounts. You might have to continue price concessions, but selling solely on price is about to end.

YOUR MOVE - Anticipate Demand and Expand into Current Markets with Current Offer.

Situation 2 Credit Expansion. Since the downturn, credit has been difficult to acquire and not a smart decision. If you are in doubt about customer buying, why take on debt? The economy is recovering (a view not shared by everyone) and the increased demand is absorbing any remaining inventory. Credit is available and institutions will lend and businesses will borrow because customers are buying. Also the loss of competitors opens opportunities to expand into unserved markets / niches / customers. When the market starts expanding, it is time to take over your competitors space.

YOUR MOVE - Anticipate Demand and Expand into New Markets with Current Offer.

Midpoint – Market Expansion where True Value Equals Market Price

Supply Equals Demand with Rising Inventories and Fair Pricing. This condition shows expansion has reached stasis – Demand and Supply are in rough balance, the current market price for a product or service represents fair value.

Up to now the price & value were out of balance. Products and services didn’t command a price that equaled real value because of low demand. Now everything is changing. Demand is growing and will Exceed the available Supply. All of these drive up prices. This sends a message to everybody to start making or providing more and begins the bubble. Prices will inflate (price is higher than value) and lead to oversupply.

Situation 3 Euphoria. Good times are here again. Everybody has a short memory of the last time, but you know the bubble has started. If you got in early at Steps 1 & 2, now it is time to prepare the company for the downside. Take advantage of the common euphoria by expanding business with your existing accounts with a new product or service and further embed the relationship.

YOUR MOVE - Meet Demand and Expand into Current Markets with a New Offer.

At The Top – Market Expansion where True Value is Less than Market Price

Supply Exceeds Demand with Excess Inventories and Inflated Price. This is the opposite of absolute bottom, the economic cycle has reached its peak and now the weight of the wave exceeds its ability to maintain momentum. All the signs are there, soaring prices, inflated money, easy credit, expanding inventories, and many new competitors. The wise realize the party is almost over – the bubble is about to burst. As a business owner it is time to leave the table, cash in your chips, and get ready for heavy seas.

Situation 4 Distress. The smart have stopped expanding and spending and started conserving cash. They are cleaning up credit accounts with investors, creditors, and suppliers. Everybody else is reacting to what was obvious but they have no plans for surviving the upcoming winter. While they are wondering what to do next, the smart are ensuring seed corn for the next season is saved. The contraction will end and those ready to act early will benefit the most in the next expansion.

YOUR MOVE – Focus on Cash Flow Management, Lean Up the Organization by Reducing Fixed Costs.

Situation 5 Revulsion. For the businesses that didn't heed the warning signs of a contracting market, the true depth of this contraction is becoming obvious. Usually they focus inward on what should have been done and wasn't instead of making up for lost time. New sales are shrinking and existing customers are cutting back. The financial situation is becoming critical – outflow exceeds inflow drawing upon savings and pushing credit limits - only true if you have any retained earnings or credit.

YOUR MOVE – Focus on Cash Flow Management, Lean Up the Operation by Reducing Variable Costs and Lower Prices to Existing Customers with the Cost Savings.

Midpoint – Market Contraction where True Value Equals Market Price

Most business owners are praying the worst is over. Unfortunately given the economic policy used for the last 80 years, when the government tries to ‘cushion’ the landing the market is never cleansed. The bad assets and poor businesses are protected from the downturn which just makes the contraction longer and the expansion smaller.

An example from the last century. In 1921 the United States was in a serious recession and the incoming administration cut taxes and spending, but did nothing else. The contraction was swift and painful and was over in 12 months. Contrast that to the recession of 1929 that became a depression because the government pumped money into the economy to neutralize the effects. The United States didn’t recover until 1940 and that had nothing to do with economic policy. The United States was building munitions for England and France at the beginning of World War II.

Situation 6 Panic. Even for the well prepared, this time is challenging. Much like “it is the darkest right before dawn” analogy, everyone is wondering how long can we last? The badly run businesses are gone or folding during this period. Time to expand market research and track the early signs of expansion; begin your planning for the next growth spurt.

YOUR MOVE – Improve your Core Products & Services during the Slack Time.

Show 5.13 Chapter 13 The Core System

noreply@blogger.com (ownrlife) — Fri, 29 Mar 2019 11:44:00 +0000

Show 5.13 Chapter 13 The Core System

Your Operational Skeleton

Much has been written and said on this topic over the last 65 years, that's right 65 years. Introduced in the 1950’s, the concept is based on lessons learned by government planners in World War II. They had aggressive production targets to meet and developed a management process to achieve that end. Peter Drucker was part of that group and covered the topic in 1954 in his book on Management.

Since its publication, a whole body of work has developed to make this management approach accessible to large and small business. Here are some of the lessons learned:

It is a logical and linear method of planning for the future that can become too inflexible and promotes results at any cost.
It forces the executive or business owner to base their goals and objectives on market reality and communicate it to everybody so employees are in the game.

Here is how we magnify the positive and reduce the negative internally in the companies we run or have turned around:

Strategy Process. How to look at the economy to determine the right path to continuing growth?
Alignment Process. How to engage everybody to participate in the formation of business objectives and have line of sight to the plan.
Feedback Process. How to provide everyone timely feedback on performance and results to keep the business on track.
Reward Process. How to recognize and reward (including punishment) for individual, work group, and organizational contributions to success.

The Strategy Process - creating a goal directed company.

RESZ
SWOT
Balance Scorecard
Vision, Mission, Values

The Alignment Process

Business Goals - Future
Improvement Goals - Current
Alignment Meetings

Department Objectives
Work Group Objectives
Individual Objectives

Creation of the Plan with Budget

The Feedback Process

System Based
Individual Based

The Reward Process

Informal
Formal

Green Industry Pros Magazine Article #4 on Budgeting

noreply@blogger.com (ownrlife) — Fri, 29 Mar 2019 11:37:00 +0000

Green Industry Pros Magazine Article #4 on Budgeting

The last article covered Accounting & Invoicing with a reference to ABC or Activity Based Costing. Putting together an effective budget doesn’t require ABC but sure helps. We start this discussion with the types of budgets available to a landscape business owner and then focus on where to start. One last thought, a budget has two demands to be effective: accuracy and forecasting.

Types of Budgeting Systems.

Traditional: created for a period and uses the previous year as a starting point.
Zero-based: every year starts from scratch. Last year provides insights but instead you start at zero.
Flexible: ongoing adjustments based on sales forecasts and the impact on production projections.
Rolling: it takes a year long view and at the end of every period (a month or quarter) it is dropped and a new month or quarter is added to maintain a 12 month budget.

This should have you asking “which is the best for my landscape business?” My recommendation is to start in this order.

Traditional Budget. If this is your first attempt to create a budget, go simple. Take last year numbers and adjust as needed. Example - if the cost of materials or labor has increased make those adjustments. The key is to build an accurate forecast for demands on cash and credit so you have a historical base for next year.
Zero-based Budget. This is the budgeting system the government uses (don’t let that discourage you). Its power is not accepting that last year was right. In this system every year you determine what is needed.
Flexible Budget. This moves the budget from being fixed to include the dynamics of running the business. This approach increases the accuracy of revenue and spending forecasts.
Rolling Budget. This is when you have all the pieces right. Tied to a Flexible Budget, it takes your forecasting from just the next month or quarter to 12 months.

Start with either the Traditional or Zero-based System, then as your competence and confidence increases move to Flexible and Rolling Budgets.

Now the question moves from the system to its use. This is a quick overview, and we choose the choices most appropriate for small landscape companies.

Your Options: Master budget, Operating budget, Financial budget, Cash budget, Labor budget, Capital budget, and Strategic. Our recommendation is to start with the operational budget and then add the cash budget.

Operating Budget.

This is nothing more than taking the statements or reports discussed in Article 1; balance sheet and profit-and-loss statement and using it to project up coming months. This is simple, on a spreadsheet create the same categories as the balance sheet by the month. Place these in the rows (on the left side). Then across the top create 3 columns for each month: JAN2018A (this month last year), JAN2019F (your estimated numbers for the month), and JAN2019A (what actually happened). Now you are ready to track this month last year against this year, and what happened.

The payoff - you can ask why what happened differs from the forecast and make adjustments to the next month.

Cash Budget.

Just like the Operating Budget, this budget uses one of the big 3 financial statements - Monthly Cash Flow Statement. Create a new spreadsheet on the same document and do the same thing. Using the items on the Cash Flow Statement, place it in the rows on the left. Then along the top create three columns for each month - this month last year, this months forecast, and actual use of cash for the month.

The payoff - you can track use and ask the why question when something looks off track.

Hopefully we have made this sound as simple as it is. The challenge is the time commitment to keeps this up to date weekly. Once you do it, the power of budgeting is clear. The result - you can control how much you spend on what and when.

Next Article - Payment Systems

Show 5.12 Chapter 12: The Next Reinvention

noreply@blogger.com (ownrlife) — Fri, 22 Mar 2019 11:58:00 +0000

Show 5.12 Chapter 12: The Next Reinvention

"Tomorrow Has Arrived"

In Show 5.3 our theme was "Today is the Day" to signify no more delays and create urgency throughout the company. Now we should be at the 6 month mark in the turnaround and in reality back to normal operations. Except today's company is a very different operation.

Topics

Stages of Growth
Future Team
Back to Normal Operations

Stages of Growth

Growth2Capacity Plan. The 2 part plan was first discussed in Show 5.6. In this conversation the focus was on marketing and selling new found capacity to generate revenue to stay in business. Part Two takes the longer perspective; growing the business to the limit of the business model. Now you will be at that magical inflection point - Sell or Reinvent!

Future Team & Managing by Meetings

Weekly data sharing & analysis - performance against objective
Weekly 1:1 conversation on the data and their action plan (referral if needed)
Reinforce high commitment to performance objectives
Meeting objectives are always about THEIR decisions made and help received
Meetings are run by the team, not their superior or owner

Back to Normal Operations - the New Core Systems

If you are DIYing the Turnaround, your role was probably nothing more than a glorified technician or supervisor. Now with the majority of the turnaround in the rear view mirror, your role is more executive than owner. This theme was the topic of Season 4 and I recommend you review those shows and notes.

If I had conducted the turnaround, we would have installed and operated by a set of principles discussed in Show 5.2. The goal now is to prepare the company for my exit. In many ways you need to think the same thing. The step in readying the business for sale is to make it self-managing and the following are the finishing touches.

The New Executive Role - "what is your job?"

Planning - MBO
Negotiating Performance
Manage Visually
Manage by Meetings

Show 5.11 Chapter 11: External Factors

noreply@blogger.com (ownrlife) — Fri, 15 Mar 2019 12:13:00 +0000

Show 5.11 Chapter 11: External Factors

We start today's show backwards - what is the desired end result?

An accurate analysis of strengths and weaknesses, an accurate analysis of opportunities and threats.
The ability to create a yearly plan to mitigate or end threats and weaknesses, the start or enhance opportunities and strengths

The RESZ Model

Regulatory (Lawyer, Accountant, Payroll Processing, Government Representative)

Sexual Harassment Prevention
Paid Leave Laws
Federal Support for Retirement Plans
Faster Payments for Independent Contractors
Privacy & Security
Form W4 Changes
State Healthcare Reform
IRS Enforcement of Employer Shared Responsibility
New Rules from Department of Labor
NLRB Involvement in Labor Standards

Economic

Location in Business Cycle

Scientific

5G Technology
Use of BOT's
Social Media Marketing Struggling
e Commerce is Accelerating
SaaS taking over Small Business
Cyber Security
Autonomation

Zeitgeist

Internet bigger than TV
Predicting Future Crimes
Movement away from personal to shared responsibility
No confidence in media
Realignment of political parties
Freedom vs Security
Climate Change

Show 5.10 Chapter 10: Capital Investments

noreply@blogger.com (ownrlife) — Fri, 08 Mar 2019 11:29:00 +0000

Show 5.10 Chapter 10: Capital Investments

This is not about cash for operations because that doesn’t help secure financing for the future. We handled this conversation in Shows 5.2 through 5.8 on the short-term triage.

Our focus now is very different. Last week (Show 5.9) we covered how to identify the long-term capacity needs to grow the business. This week our attention turns to “How To Finance It.”

You cannot run a revenue flat operation, every business needs to increase revenue. It takes capital to grow and a funding solution that only enables you to gain the capital needed today is a not growth solution. In fact, a money today mindset will make it more difficult to build the right long-term credit structure.

The secret is being prepared for the required questions and analysis. Ensure you have a recent business evaluation from a neutral third party to support the numbers and projections. Any uncertainty will kill the good deals.

Key Concepts

Payback Period: how much time will it take based on the highest probability forecast to fully repay the investment?
Hurdle Rate: if that money was safely invested elsewhere, what rate of return could it receive over the period of the loan?
Multiple: over the period of the loan, what multiple of the initial investment can they expect?
Effective Credit Structure: what is the right mix of short-term, long-term, and equity financing?
Cash is your most precious asset, never spend it on anything that depreciates or does not produce value; example $10,000 cash purchase will produce $20,000 in the next quarter.

Having too much Cash on Hand can be bad because of missed opportunities to grow from Retained Earnings. Also it makes some owners stupid by funding projects that are too risky.
Our formula: Forecasted Expenses for 3 months - Available Funds from Lines of Credit = COH.
Lines of Credit are only for smoothing cash flow when sales are seasonal or unpredictable.
A Capital Lease is used for the long-term where equipment remains relevant over the period of the lease where it shows up on the balance sheet as an asset, and it has benefits and drawback of ownership - it can be depreciated.
An Operating Lease is used in the short term for assets that become obsolete quickly, it has none of the drawbacks or advantages of ownership

Capital Financing Options

Equity As Source of Capital (over $200k)

Public Equity (Outsider Stock Purchases)
External Private Equity (Angel and Equity Partners)
Internal Equity (Retained Earnings)

Debt As A Source of Capital (under $200K) (Note: negative impact on Balance Sheet)

Commercial & Industrial Loans/Leasing - not secured by real estate, ABL - Asset Based Lending (Commercial Banks, Commercial Finance Companies, Investment Banks)
Real Estate - collateral
Factoring - secured with receivables or inventory (short-term tactic)
Unsecured Debt

Revenue As A Source of Capital

Self Funding from Retained Earnings

Vendor As A Source of Cash

Vendors Own the Inventory Until Sold

Grants

Federal
State
Local

Lets review the bidding. Short-term financing is just that, a tool to get by today. When you have to do it, do it. Our focus today is once you have righted the ship and bought time to make the necessary investments, the game becomes building the right credit structure.

One last thought. In Show 5.8 we discuss the two types of cross-functional executive teams the company needs to grow: F or Future Teams and P or Present Teams. The focus on capacity and capital investment is two of the functions for P Teams.

Next week we move on the functions of the F Teams and the issue of monitoring External Drivers.

Show 5.9 Chapter 9 - Scalability

noreply@blogger.com (ownrlife) — Fri, 01 Mar 2019 02:53:00 +0000

Show 5.9 Chapter 9 - Scalability

Last weeks Show (5.8 - The Long View) Overviewed the 4 elements we investigate after saving the company:

Scalability - Show 5.9
Capital Investments - Show 5.10
External Drivers - Show 5.11
Next Reinvention (or time to sell) = Show 5.12

Today's Show - Scalability

Let's review where we have been. We walked in the door 2 weeks ago and have turned the company around enough to keep us in business for the next quarter. Since we have a new life, what do we do with it?

It starts with scalability. What do we mean by scalability? It is looking at all elements of the business and identifying obstacles to performance and growth. Then prioritizing that list based on the Stage of Growth to determine where the next phase of capital investments must be made.

All of that is beyond what we can cover today so here is the over view.

Core Processes

Strategic Planning

Level 1: Business Wide
Level 2: Departmental & Work Group
Level 3: Individual
Level 4: Vertical Alignment

Budgeting

Level 1: Incremental
Level 2: Activity Based
Level 3: Values Based
Level 4: Zero Based

Financial Accounting

Level 1: Record Transactions
Level 2: Actionable Reports
Level 3: Forecasting
Level 4: Return On Investment

Manageral Accounting

Level 1: Cost Allocation
Level 2: Cost Control
Level 3: Cost Planning
Level 4: Lowest Cost Producer

New Client Acquisition

Level 1: Informal
Level 2: Formal
Level 3: Embedded
Level 4: Agile

Customer Experience

Level 1: Transactional
Level 2: Positive Relationship
Level 3: Solution Provider
Level 4: Trusted Partner

Production (Service Delivery)

Level 1: Productivity
Level 2: Flexibility
Level 3: Leanness
Level 4: Horizontal Alignment

New P/S Development

Level 1: Champion
Level 2: Beta Tested
Level 3: Collaborative Development
Level 4: Market Defining

Attracting & Onboarding

Level 1: Eligibility
Level 2: Suitability
Level 3: Synergy
Level 4: Ownership

Managing Performance

Level 1: Performance Expectations
Level 2: Results Metrics
Level 3: Progress Metrics
Level 4: Balanced Scorecard

Based on assessing the level for each core process, prioritize and sequence the list. This provides the "buy list" for capital improvements. Sequencing becomes critical because you cannot and don't need to fund everything at once. As we will discuss next week - these improvements have to psay for themselves and finance the list of upgrades.

Next Week - Show 5.10 we will cover how to build the first list.

Show 5.8 Chapter 8 - Taking the Long View

noreply@blogger.com (ownrlife) — Fri, 22 Feb 2019 13:36:00 +0000

Show 5.8 Chapter 8 - Taking the Long View

Shows 5.3 through 5.7 focused on doing triage - find out what is wrong and fixing it immediately. Show 5.8 starts the process of taking the long view. You have saved the company for what?

I can’t believe Season 5 is almost over and we have arrived at Show 8. Today’s show is about the future after getting the ship righted and seaworthy. The question now and for the next 5 weeks is where are we headed and what is the weather?

What do I need to know and do?

Scalability
Capital Investments
External Drivers
Next Reinvention
Creation of P and F Teams

Scalability

Show 9 starts the process of building a long-term future; scalability - can we build on the current foundation (systems, processes, organization chart, equipment, personnel, etc.)? What is missing? What must we build right now to enable a future of sustainable growth?

Capital Investments

Show 10 looks at the holes that require major investments to grow the business. How to decide on what to finance and where to find the money. This is very different than a line of credit or an equipment loan, it is about the valuation of the company using large investments for leverage.

External Drivers

Show 11 changes the focus from internal to the business to external. Before the business owner creates a growth plan, what does the world look like in 6 or 12 months that impact our industry and customer buying decisions?

Next Reinvention

Show 12 asks the question "now you have achieved stated growth goals - do you sell the business or reinvent it?" This decision has to be made early so your capital investments positively impact the valuation or build a new foundation for expansion.

But before we start, let me add the core organizing principle for the long term turn around - creation of Present and Future Teams.

Executive Teams

This is a concept we developed from observing effective management teams in large organizations. Here the leadership was split into 2 groups - present and future. People who were inclined or by their position to blue sky were placed on the F (Future) Team. People who were inclined or by their position for the meat and potatoes were placed on P (Present) Teams.

P Team focus was on current operations and dealt with it at the strategic level - scalability of the business and sources of capital to invest in growth. This team had members from operations and finance.

The F Team focus was on future opportunities and dealt with it at the strategic level - external factors affecting the business and positioning for sale or renewal. This team had members from marketing and sales.

The business owner in small operations would be a member of both groups, in larger businesses the owner would join the group that represents their inclination. We have an entrepreneurial assessment that provides the business owner with feedback about the best choice.

These teams meet quarterly to review strengths and weaknesses of current performance (P Team) and future opportunities and threats (F Team). Conduct this research and advice provides the owner with information to improve decision making, sharing responsibility for growing the company, and developing an effective leadership group.

The December meeting was to create the following years business plan broken into business quarters, months, and if possible weeks. Blended focus between P and F Teams.
The March meeting was to track performance and adjust quarterly, monthly, and weekly goals as appropriate. Majority of the focus was from P Team.
The June meeting was much the same as the March meeting except opportunities and threats were also on the agenda. Blended focus between P and F Teams.
The September meeting was on performance to plan and how well is the company positioned for next year. Majority of the focus was from F Team.

Next week - Show 5.9 on P Teams and Scalability.

One last thought, if you are an Alpha, a take charge business owner that is tired of networking with people who don't get it, join us.

Join the Alpha Network of like business owners. It has 2 payoffs - access to our library of growth practices and the association of other alphas. Just click here to join.

Show 5.7 Chapter 7: Talent & Pay4Performance

noreply@blogger.com (ownrlife) — Fri, 15 Feb 2019 12:34:00 +0000

Show 5.7 Chapter 7: Talent & Pay4Performance

Show 5.7 focuses on how to create a culture that attracts the best people (and their best angels) and makes working hard a good deal.

Quick review of where we have been over the last 3 weeks. Show 5.3 summarized doing the Triage - you walk into a company that either turns around or goes under. What must you do in the next week or two to survive?

Show 5.4 focused on viewing the business as a bank. Because it was not well run, there are dollars waiting to be liberated if you know where to look. That money serves 2 purposes - keeping the doors open and funding improvements.

Show 5.5 took the same approach to capacity - how much more business can you do if the place was better run? By bringing processes under control and reducing waste or defects, you will find under used capacity part of its inability to operate profitably.

Show 5.6 focused all the companies marketing & sales efforts on selling excess capacity. By identifying the under-used products and services or segmenting customers, only sell what you need to achieve profitability.

Talent

That leaves us with this weeks show - what to do with existing employees. This is always a difficult topic and especially if you are doing your own Turnaround. Why? Because you will be confronted with your shortcomings as a leader. I will leave that alone and deal with individuals you might have contributed to the current situation as an outsider.

First you need to separate management (and leadership) from the workers. Front-line employees might have known what they were doing was contributing the current situation but they are powerless to change it.

My management questions. The questioning of people in authority is to determine if they have a future in the new business. They deserve some blame for the current situation but not all.

When did you know the company was in serious danger of failing?
When you came that realization, what did you do?
When this was brought to the attention of the owner or senior people in the firm, what was their response?
How did this knowledge affect your decisions and behavior going forward?
If you could do it over again, what would be different?

This list is not exhaustive, it is designed to open the conversation and allow for follow-up questions. Having the right team in place is essential to turn the business around. This line of questioning is to determine who will remain. My keys to that decision - how do thy problem solve, make and carry out decisions?

My approach with front line personnel is different. Part of my long term goal is to create a culture that makes stupid actions more difficult because employees are authorized to “push back”. I believe business is nothing more than a game and the only difference is the money is real. I need everybody in the game making better decisions in the short term so there is a future. The keys to that decision is how well does this individual fit the new culture?

This gets me to a key point. When doing a turnaround you don’t walk in with a list of people to fire or the number you want to get rid of. There is no set agenda before having substantive conversations. On the other hand you must be willing to fire immediately. If you find people who could have prevented this and didn’t, they need to be employed somewhere else. This is especially true in family-run businesses. Most of the time their positions are not based on merit, but connection. This is expensive fault you cannot afford.

One last thought on firing. Almost everybody in the company will have their candidates for separation. When you decide and announce it, have your facts clear as to the rationale. You are now setting the tone for the future.

Compensation, Recognition, Reward

And speaking of setting the tone, the last part of Show 5.7 is critical - how do recognize and reward. Most people in my business will tell you it will take at least 18 months to create a new culture, and although true, you don’t have 18 months. You only have today and tomorrow so how do I affect change now? By changing what you recognize (informally) and reward.

I take 2 tracks. First is to create company wide and work group recognition programs for the behaviors that help us make the change. If the future is based on doing the job right the first time, then how do I recognize those individuals and make this a good deal?

The second track is to fix compensation. I have found in nearly every turnaround that the situation had been bad for a while and most of the employees were not paid competitively. I start with doing a pay band study (easy and doesn’t take much time) and identify positions that are grossly underpaid. I make part of the turnaround rationale to bring people up to competitive levels. That is an interesting impact on their commitment. Last time we upgraded the base pay for about 20% of the positions. The other component is to create short term “Pay4Performance” incentives where we pay a bonus for the improvements.

This concludes the 4 week series on Short-term Triage. Next week - Show 5.8 is on overview of the long term plan to move beyond saving the business to its future.

Show 5.6 Chapter 6: Marketing & Sales

noreply@blogger.com (ownrlife) — Fri, 08 Feb 2019 13:46:00 +0000

Show Notes 5.6 Chapter 6: Marketing & Sales

Show 5.5 covered how to determine excess capacity, Show 5.6 focuses on selling new found capacity and increase profitability.

Two things to keep in mind as we go through today’s show. First every approach and tool we use are part of the overall Marketing & Sales function - there is nothing special. The second thing is we are only focused on opportunities created from capacity improvements.

I will use gWORX marketing research for 2019 as an example of a general approach. We use data from the Bureau of Labor Statistics on small business. It is a downloadable spreadsheet anyone can access. We then researched the latest data on small businesses with the highest profit margins in 2018 and used that to sort the BLS spreadsheet. We identified 15 types of businesses with a large number of enterprises and high profit margins to focus our marketing efforts.

Here is the difference with a specialized approach. By increasing capacity through cost controls (Show 5.5) and using the finding money in your business as a bank (5.4), the marketing spend is based on what will close the gap between today and 90%.

Examples

Landscape Business. I like using landscape businesses because the challenges of scheduling. The waiting time between assignments is known as windshield time and it saps margins. What if you only have 2 or 3 properties in an area then have to drive cross town for another cluster of customers? I reality for landscape businesses. What if we moved the afternoon route to the next day and created 2 anchor locations? In this Marketing approach you profile existing accounts, especially the high margin accounts, and then focus on the anchor location. We will market and sell within this geographic area. If you consider the cost savings from eliminating windshield time, you can offer a special discount for the first X months to close new customers. I wouldn’t give away over 20% of the cost savings.

Professional Businesses. I will use the management of professionals, the management of the office as an example that fits both services and production. Using the cost savings from bringing processes under control (the same thing as increasing capacity) and finding cash from your business as a bank, focus on high margin services that are under used. You have several doctors or lawyers on staff that are under-utilized, create a personal profile or persona for people needing their services. This is where all of your marketing efforts are directed. As used in the previous example, take whatever savings generated from better usage and offer short-period discounts.

The Tools

Create a profile, a buying persona for the targeted group. Your goal is to surround them with information so understanding how they make buying decisions is critical. If you are at a loss for how to approach this - ask the accounts you have and extrapolate for the entire group.
Segment. If there is more than one persona, segment this group into as many slices as possible.
Select Adwords for SEO. Purchase the right search terms and have your web master focus on gaining you above the fold placement on search engines. Upgrade the website as needed.
Social Media Campaigns. Post and promote on social media to each of the buying persona’s. Upgrade the website as needed.
Existing Accounts. Make a direct special offer to existing accounts to increase share of of business or help in finding other customers.
Create a sales incentive. Normally we would not do this but for this special situation - incentivize top line sales (revenue vs margin) with daily contests. We pay the sales people a bonus at the end of the day for closed deals.

Summary

All of these techniques are part of your marketing and sales tool box. The focus of this session is strictly to quickly find more business to fill excess capacity. Even with the proposed discounts the margins are better because most of these sales fall to the bottom line.

If you want to get on the inside and have a conversation with our team about growing your company, join the ALPHA NETWORK. Just click here and get inside. It doesn't require money - it requires a commitment to win.

Show 5.5 Chapter 5: Quality & Capacity

noreply@blogger.com (ownrlife) — Fri, 01 Feb 2019 13:48:00 +0000

Show 5.5 Chapter 5: Quality & Capacity

Customers do not mind how hard you work or what is the technology you used to create the product or service you are selling to them. They will evaluate your product or the service by looking at how well this is going to fulfill their requirements.

Determining Capacity

100% utilization of all resources = ?
What is your revenue today and percent utilization?
What will it take to achieve 90%

Attitude & Mindset for Quality

Lean is a way of thinking about production - making things or delivering services
Lean is about preserving value with less work
Lean is about being driven by Demand, not Forecasts
Lean is about each level having a role starting with management
Lean is about the flow of work
Lean is about a set of tools
Lean = cost reduction through the elimination of waste

decreased cycle time
lower inventory levels
increased productivity
increase capital equipment utilization

Role of Management - Scheduling

Leveling or Balance
Stop Overburden

Role of Supervision - Budgets

Project or Job Efficiency

Role of Front-Line - Waste

Transport - moving parts, products, tools etc. not required to make it
Inventory - JIT of cash gathering dust?
Motion - people or equipment moving inefficiently - ergonomics
Waiting - waiting for the next production step
Overproduction - production ahead of demand
Overprocessing - doing more than is required
Defects - doing it over

Show 5.4 Chapter 4: Cash & Costs (& Credit)

noreply@blogger.com (ownrlife) — Fri, 25 Jan 2019 13:31:00 +0000

Show 5.4 Chapter 4: Cash & Costs (& Credit)

I will try to do this with a little tongue and cheek but there is no avoiding it - you blew it and the reason there is no money in the cigar box is because of you.

Managing money is a mindset, an attitude and yours sucks. Now take the next 10 minutes of the show as we cover Attitude and Mindset to kick your arse and move on. Your head needs to be positive and in the game.

OK, we got that out of the way. The issue is simple, all the proper techniques won't work if how you approach the management of money doesn't change.

Attitude & Mindset

If you are not committed to change, don't start - just liquidate or sell it and move on
Stop being comfortable with failing
Own your mistakes and move on
Stop the distractions. Concentrate on costs and quality, take down fixed costs by 10%
You can't sell your way out of this because increase sales = increase costs
Redefine what you do best (the company's offer) and SUBTRACT
STOP THE BLEEDING in 3 months or less
GAME TIME AND YOUR NEW STYLE - a rapid series of small decisions - all subtractions, what are you going to stop doing
Talk to everybody: bankers, suppliers, employees, customers

Cash Flow

Inventory

Check on your turns per year and double it
Sell inventory aged over 6 months or 1 season
Everyday take out 1 day of inventory until it hurts
Have the supplier store inventory
Use their transportation system as a warehouse
You must have a "get right" plan

Accounts Payable

Determine number of +30 day accounts
Create a budget or get right plan for every supplier consistently over 30 days
Renegotiate your deals especially all COD requirements and early payment discounts
Add up all of the early payment discounts and COD reductions - consider this found money, add to the get right plan

Accounts Receivable

Determine the number of +30 day accounts
Contact late customers and determine how to get paid now
If necessary offer a discount for payment today (see 5)
Factor all accounts consistently over 45 days - 92-98% of AR paid in 24 hours is worth the charge
Bottom grade problem accounts by raising prices
Designate 1 day a week for only AR follow-up
Build an AR process that has a minimum of 2 touches between billing and payment
Add up all of the "loans" recoverable and consider this found money, add to the get right plan

Credit

If you don't fix this first, make it second
Bring down lines of credit first - this is your rainy day fund
Share your get right plan with creditors to regain their trust
If trust is gone, offer them 25 or 30% immediate payment to get clean, if they take it the remaining $$$ is found money
Look at all purchases over the last year and ask yourself the question - did it repay for itself, if not - don't buy it again
Add up all of the savings and consider this found money, add to the get right plan

Costs

The secret is subtractions, strip away anything that is not core - no savings is trivial
Reduce all spending by 10%, if that doesn't dig you out - make it 20%
Reduce your salary by 20% and pay yourself back based on cost reductions
Reduce the salary of all managers and supervisors by 5% and pay them back with bonuses based on cost reductions
The get right plan focuses on one element of the business every week - concentrate
Add up all of the savings and remaining lines of credit - consider this found money, add to the get right plan

Cash on Hand

Determine how many days are left before its over
Add up all of the $$$ found in the get right plan and determine how many days are left now
Look at utilization of equipment and sell anything under 50% - add to get right plan
Finalize the get right plan and announce it to everyone
Implement budgets and never turn back

Summary

Whatever comes out of these 29 potential actions becomes the new way of doing business. More than likely you have lost considerable trust and goodwill with all of the major stakeholders. If you gain it back from these emergency actions and then fall into the same money incompetence - the trust is forever lost.

Next Week

Show 5.5 (February 1) Quality & Capacity

Show 5.3 Chapter 3: Short Term Focus - An Overview

noreply@blogger.com (ownrlife) — Fri, 18 Jan 2019 13:34:00 +0000

Show 5.3 Chapter 3: Short Term Focus - An Overview

Overview

Season 5 Theme on Biz Growth Radio is DIY Turnaround; instead of hiring a turnaround artist, how do you do it yourself.

Show 5.1 was an overview of the entire process and outline of our upcoming book DIY Turnaround.
Show 5.2 covered the operating principles to build the "new" upon.
Show 5.3 is about what happens on Day 1 when you walk in the door and decide "today is the day".

Today's Topics

Cash, Credit, and Costs - days to broke
Product & Service Quality and Operational Capacity - productivity
ROI from Marketing & Sales - image
Talent & Compensation - performance

"Today is the Day"

What goes through my head as a I approach the first day with a new turnaround client? I have requested all of the relevant information on current operations placed on my desk. I don't have a managers meeting or some rah rah session with the employees, this all about understanding the current state of the business and what part of the patient to treat first. My head must be clear on the task before me.

This doesn't mean due diligence was not performed prior to taking the assignment. When reviewing the data there should be no surprises. What I must affect to be successful is how people think, what they believe, and how they behave. The first rule on thinking - all decisions are based on fact, not emotion or wishful thinking. I want everyone buzzing about the new guy and his day on the job - looking at the facts and asking themselves - "is he looking at me?"

Now as the business owner doing your own turnaround it is a little different, but you have the same task - change the discipline of business. What are the disciplines? Managing Cash Flow, Managing Production, Managing the Company's Image, and Managing Employee Performance. This is more challenging than my task - you are part of the problem.

During today's show I will overview these 4 disciplines and leave the specific "how to's" to succeeding shows.

Cash, Credit, and Costs - days to broke

If you don't get this right, stop and start again. If the company was doing well this would already be known and managed. The issues you are addressing are "How long before before we run out of money?" and "How much can I find?" The majority of small businesses at this late date have no idea and it is here the turnaround starts.

Key Questions:

amount of available cash
credit situation
amount of cash tied up in inventory
amount of cash lost in supplier discounts
amount of cash tied up in accounts receivable
amount of money necessary to operate per day
number of days until broke

Product & Service Quality and Operational Capacity - productivity

Now you have a handle on the cash situation, next analyze how much is being produced and what is possible.

Key Questions:

what is possible - if the company operated at 100% efficiency how much revenue can it generate
where are we - based on the 100% potential, what percentage is current operations
where are the constraints - what is preventing at least 90% efficiency, is it more sales or better utilization of current capacity

ROI from Marketing & Sales - image

Turn your gaze outward and determine where the company is in the customers buying decision.

Key Questions:

What is our image in the marketplace, for the people that know us what is being said
Are we unknown with the perfect customer and therefore never considered
Are we known with the perfect customer and part of the buying decision
Are we preferred with the perfect customer and it is our business to lose
Are we top of mind with existing accounts and able to upsell our offer

Talent & Compensation - performance

The last and now the most important part of the equation are the people working in the company and our image in the community with prospective employees.

Key Questions:

Are the right people working for us
What are our challenges for hiring the best available talent
Are employees committed to making the company successful or just trading time for money until a better deal comes their way
How does our pay and benefits package rank against similar companies in the area
Do we have any compensation programs that pay for performance

Summary

This initial approach is the science of due diligence and without having answers, I cannot prescribe the short-term course of action should be other than taking on the cash issue - that is always first. I (you) need to know long we have before the business crashes and that will drive the sequence of action.

Next Week I will take the Cash challenge and provide you with my methodologies for understanding the current situation and then taking immediate action. When I say immediate, I mean on day 1.

Join the Alpha Network

If you want the inside track on how to triage the business and then get it performing, you need to be in our network for alpha's - business owners that seek to do more than survive, business owners that want to take their dream and turn it into a market dominating operation. This is a free network where you work other alpha's and tap into GrowthWorx vast library of tools. I can offer it, it is up to you do take action - today. Click Join the Alpha Network to sign-up and receive access to our tools.

Show 5.2 Notes Chapter 2: Operating Principles for the New Company

noreply@blogger.com (ownrlife) — Fri, 11 Jan 2019 13:37:00 +0000

Show 5.2 Notes Chapter 2: Operating Principles for the New Company

Although this reads for the new company, the intent is your phoenix rising from the ashes - the company built on the same ground as the old.

There 4 Operating Principles that provide the foundation for success and growth:

Accountability
Feedback on Results
Peer Support
Planning as the CEO’s (you the business owner) Job 1

Why?

Over my 4 decades of business consulting with the large and the small plus years of researching organizational excellence, these 4 were found in every success story.

Accountability

What It Is

The obligation of an individual, work group, department, division, or the entire organization to accept responsibility for their behavior.

How Does It Work

All behavior is at a minimum based on expectations of consequences. It affects choice, control, and responsibility for one's actions. Most organizations do not tap into the vast potential employees bring to the job. Most studies on discretionary performance (how hard people choose to work) shows that only a 30-40% effort is required, the rest is a choice. In short, people decide to work harder than they have to and that cannot be forced or bribed.

Results You Can Expect

It starts with the balancing the chemical equation Responsibility must equal Authority. There is no greater formula for failure than holding people accountable for things outside of their control; it creates victims. The key here is Locus of Control. It is the person's belief system - are they masters of their own lives or just flotsam at the mercy of the waves. The more we can hire, develop, and support the belief they are masters of their own destiny - the better they will perform.

How To Implement

Line of Sight to Business Objectives - everybody knows what the company is trying to accomplish and they have a piece;
Measurement Skeleton - the company measures the right things to determine real-time progress and results;
Recognition & Rewards - positive and negative performance receives the appropriate consequences.

Feedback on Results

What It Is

It is the second leg of our performance chair. Once you have created, or in the process of creating a culture of accountability, it is the system for delivering the information. Feedback is communicated to a person or a team of people regarding the effect their behavior is having on another person, the organization, the customer, or the team. It is positive and negative.

How Does It Work

Knowledge of performance is feedback related to how a specific skill is performed. It gives feedback on the quality of execution of the skill and may come from either intrinsic or extrinsic sources. Knowledge of results refers to how successfully a skill is performed. It is always external feedback and may come from sources such as peers, leaders or the system.

It is nothing more than a feedback loop that provides timely feedback on performance and results.

Results You Can Expect

Increase in productivity (Supervisors and Managers average a 9% increase);
Increase in employee productivity (70% of employees will work harder);
Negative feedback is not necessarily negative (90% report if correctly delivered it will positively impact performance);
Improves goal setting and meeting organizational objectives (30% improvement);
Vertically and Horizontally Aligns the organization (vertical = people with business objectives, horizontal = processes with customers).

How To Implement

Automation - system feedback delivered continuously on performance;
Creation of dashboards for the frontline, scorecards for management;
All dashboards are updated continuously;
Visually manage the business - make everyone post performance and results.

Peer Leadership / Peer Support

What It Is

Peer leadership is leadership that functions “sideways”. It considers that all work groups have informal leaders who exercise as much control as those in formal positions. Peer support occurs when people provide knowledge, experience, emotional, social or practical help to each other and can take several forms such as peer mentoring.

How Does It Work

Every work group develops a set of norms or rules. These are informal but as strong as your company’s policy manual. It controls how hard they work, how they make decisions, how they fight, and who is in charge. Given how connected the immediate supervisor or manager is to the group (the degree of presence and contact), the informal leaders are usually more powerful than those you appoint.

Results You Can Expect

If your influence on the work group norms is successful, you can expect synergy. A miss used and understood outcome. It is not the wisdom of groups because many you encounter are not very smart. Synergy occurs when the performance of the group is greater than its parts like the best sports teams. Talent wise they are outmatched but find a way to win.

How To Implement

Assemble workgroups carefully (make it based on both skills and personality);
Manage by meeting (force people to work together through cross functional groups);
Create peer awards (let members of the work groups create their own awards);
Reward support (company wide recognition for the individuals who help others perform).

Planning is CEO Job 1

What It Is

You pay people to perform in the present; frontline for doing the work, supervisors for managing processes, and managers for delivering results - what do you pay yourself to do? The role of the CEO (owner) is success in the future.

How Does It Work

Free up your calendar to allow the thinking space to look at the near (next 6 months) and far (12 months) future. In the near future your role is to identify and solve strengths and weakness issues of the business. In the far future it is to identify and solve issues related to opportunities and threats.

Results You Can Expect

It will start with a less hectic workday where you are working from a plan rather than crisis to crisis. You have people in the organization to handle the crises that are the normal part of any workday. This prevents the urgent from stealing your time from the critical. It is also empowering for your managers, supervisors, and employees to be “forced” to handle it. It provides greater accountability we discussed earlier - expect a 30% improvement in performance of the organization.

How To Implement

Create 2 Teams - Future Team that supports your efforts to focus on opportunities and threats, and a Present Team that handles strengths and weaknesses;
Membership in the Team is based on role and personality - operations role on the Present Team, marketing on the Future Team, nuts and bolts people on the Present Team, big picture people on the Future Team;
Make the membership cross functional and from several levels;
Make the requirements for membership 10% of their work week, this will force delegation.

In closing there is no magic sauce to building a market dominating firm. However there are sound principles to build upon that have proven to work.

Next week: Show 5.3 Short Term Focus - An Overview

And make sure you join our Alpha Network where you can access this type of information on-demand; when you need it. https://gworx.youcanbook.me

Show 5.1 How To Turnaround a Business - An Overview

noreply@blogger.com (ownrlife) — Fri, 04 Jan 2019 13:19:00 +0000

Show 5.1 How To Turnaround a Business - An Overview

Season 5 - The 13 Shows (Chapters)

Show 5.1 How To Turnaround a Business - An Overview

During a Turnaround, Leadership & Management looks different:

Leadership is about PULLING people and the organization toward something better;
Management is about PUSHING people and the organization to new levels of performance.

This requires a vision of what it looks like when you get there and the 'burning platform' on why staying where we are will not work.

This starts with you the Owner. Hiring someone to do this is different from doing it yourself because the outsider has no attachment, nor are they guilty of anything. They didn't create the mess and therefore are open to all options. That is not the case for DIY. You did it and your mindset needs to own it. Also most business owners at this point in their company's history are suffering depression. You must move beyond feelings of guilt and embarrassment. If you are not positive about the turnaround and throw all of energy behind it - bring in an outsider otherwise you are chasing bad money with good.

Operating Principles

Now that your head is in the right place, start with building a foundation that should have been in place since the founding. The following are the 4 Principals we always build before fixing anything.

Accountability. Everyone has clear expectations for their behavior and results, and clarity on how it will be measured. This not only brings discipline to the business, it separates the good employees from the rest. People who perform don't mind being held accountable.
Feedback on Results. You need to force conversations between the people in charge and those doing the work. Not only does this make accountability real, it saves allot of wasted effort and time. Feedback is nothing more than discussing performance that is outside of expectations to bring it back on track.
Peer Support. I could put team building here, but it is more than that. It is about building a collaborative environment where employees help each other master current assignments and develop other skills. Supervisors and managers play a role, but it must start with the employees taking care of each other.
Planning is Owner Job 1. The long term success of anything is based on a plan to get there otherwise how do you organize and allocate resources? The owner must start thinking like an executive (Season 4) and remove themselves from the day to day business. This freedom is used for researching new market opportunities and building a plan to make it happen.

Short Term Focus

View this as triage. What is the current situation? Where are you hemorrhaging money, customers, employees etc? What is the root cause of the bleeding? Then fix it! We always start with finding the money laying around - inventory gathering dust, accounts receivable not collected, missed accounts payable discounts, and lines of credit. Our experience is the first time you aggressively go after these issues will add 10-20% more cash. We use those dollars to help fund cost reductions in production, marketing, sales, and people.

Long Term Focus

Once we have righted the ship and it making a profit, the focus shifts to our journey and the first port of call. The near future includes scalability - when growth starts what is getting in the way and how much money will we need. Part of the money issue is the source of funding - are we going to pay for this out of sales or look for capital investments? Beyond the near future is looking at the external environment for threats and opportunities. What is coming down the road we should prepare for before it arrives?

Core System

We started with operating principals and we close with what happens when those 4 are assembled together - Managing By Objectives. It is how we transform business goals and objectives into everyday behaviors. If the business is running on a MBO System, the turnaround is almost complete and you transforming an under-performing / zombie company into a market leader.

Next Week - Show 5.2 Implementing the Operating Principals

If you want to start your own DIY Turnaround, join our AlphaNetwork. It is for entrepreneurs and business owners that want help fixing their companies. There is no spam or upselling offers involved. It will get you inside of our Slack Community and access to help and tools. Joining is a great way of starting 2019 hard.

#ownrlife:

So You Are Supposed to Sell

Given our present COVID-19 market, owner selling has become essential. I will add a second article on these unique dynamics later today.

The Big 3 - QSC

Show Notes 6.9: Collecting Nuts for Winter - Your Moves

Show Notes 6.9: Collecting Nuts for Winter - Your Moves

Cash Flow Management & Lowest Cost Producer

Your Goals:

Cash Flow Management

Lowest Cost Producer

Show Notes 6.8: Riding the Wave - Your Moves

Show 6.8: Riding the Wave - Your Moves

Existing Demand - Current Markets (New Expanded Customer Base) with New Offer

Collaboration

2 Methods

Bring the Client Inside: Market Research, Process Improvement, New P/S Development Inside the Client: Market Research, Performance Improvement, Cost Reduction

Beta New Products & Services

Closing the Gaps

Generalize & Release

3 Methods

Decrease Fragility

Show Notes 6.7: Coming Out of the Contraction - Your Moves

Show 6.7: Coming Out of the Contraction - Your Moves

Anticipate Demand - Focus on Current Markets (Customers) with Current Offer

Relationships

Closing the Gaps

Data

Closing the Gaps

Collaboration

2 Methods

Moving Into Adjacent Markets

Where to Look

How to Select

Show Notes 6.6: Surviving the Breaking Waves

Show Notes 6.6: Surviving the Breaking Waves

Topics

Leading Indicators

Show Notes 6.5 - Oh No We Are At The Top With Only One Way To Go - Down

Show Notes 6.5 - Oh No We Are At The Top With Only One Way To Go - Down

Topics

Leading Indicators

Show Notes 6.4 - You're Up the Face of the Wave and Approaching the Crest

Show Notes 6.4 - You're Up the Face of the Wave and Approaching the Crest

Topics

Show Notes 6.3 - You're in the Trough and the Wave of Expansion is Approaching

Show Notes 6.3 - You're in the Trough and the Wave of Expansion is Approaching

Topics

Wave Periods

Leading Indicators

Show Notes 6.2: Elements of the Business Cycle & Inflection Points

Season 6 - Show 2: Elements of the Business Cycle & Inflection Points

Topics

Elements of Business Wave

Inflection Points

Wave Size

Wave Periods

Leading Indicators

SEASON 6 SCHEDULE

SEASON 6 SCHEDULE

Show 6.1: Overview on Reading the Economy

Season 6.1: Overview on Reading the Economy

Background

At The Bottom – Market Contraction Where True Value is Greater than Market Price

Midpoint – Market Expansion where True Value Equals Market Price

At The Top – Market Expansion where True Value is Less than Market Price

Midpoint – Market Contraction where True Value Equals Market Price

Show 5.13 Chapter 13 The Core System

Show 5.13 Chapter 13 The Core System

Your Operational Skeleton

Green Industry Pros Magazine Article #4 on Budgeting

Green Industry Pros Magazine Article #4 on Budgeting

Types of Budgeting Systems.

Operating Budget.

Cash Budget.

Show 5.12 Chapter 12: The Next Reinvention

Show 5.12 Chapter 12: The Next Reinvention

"Tomorrow Has Arrived"

Topics

Stages of Growth

Future Team & Managing by Meetings

Bring the Client Inside: Market Research, Process Improvement, New P/S Development

Inside the Client: Market Research, Performance Improvement, Cost Reduction