When business is booming it’s easy to get comfortable and rest on our laurels with the status quo.

After all, why not?  The status quo is (or was) working wonders.

But if we’re not careful, complacency sneaks in, and before we know it we’re knee deep in crippling habits that wreak havoc from within.

We all have excuses for not changing and you’d better believe companies are full of them! Do any of the following phrases sound familiar?

“We’ve tried that before and it didn’t work.”
“I didn’t make my numbers because . . .”
“Here are all the things that could go wrong.”
“I didn’t know you needed that.”
“I can’t get everything done.”
“It’s not my job. It wasn’t my fault.”
“I wish management would stop changing their minds.”

Excuses signal deeply embedded systemic problems within an organization’s culture. And while you can’t predict or avoid certain hostile economic events, many companies suffer from the same five crippling habits that inhibit change, progress and growth.

Is your small business one of those companies?

There is never going to be a “one-size-fits-all” model for business success. However, strong leadership can overcome each of these crippling habits and keep your company on track with improved business performance and profit.

Crippling Habit #1: Absence of Clear Directives

If you’re hearing (or saying) any of the following, then your company suffers from an absence of clear directives:

• “I can’t get anything done”

• “Everything is a priority”

• “I wish management would quit changing their minds”

• “I didn’t know I was supposed to do that”

As a leader, you need to make sure everyone who reports to you understands and stays focused on achieving the company’s most important objectives — those things that matter most and must get done.

At General Mills, the goal is to replace good with great. And one method used to accomplish this is to have ALL employees create “Individual Development Plans.”

So what about your business?

If your company’s objectives are not being met, do you know why? Listen and observe to determine what’s keeping people from doing what’s important, and then ask:

• Have you set goals that are specific and measurable?

• Can everyone in your company articulate their goals?

• Do they understand how their jobs directly support these goals?

It’s easy to discover the answers to these important questions. When I work with companies on improving business performance and profitability, one of the first things I do is walk around and ask people at all levels about the company’s goals.

If they can articulate the company’s top objectives, pull them up on a computer, or reference a sign in their office or a break room, and then follow up it up by describing how their work fits into those objectives, I know my job is going to be much easier.

Business leaders need to understand the positive impact clarity and focus have on business success.  In running your business, nothing can be vague, optional or left to chance.

Unfortunately, many employees don’t know their employer’s top objectives and they struggle to directly connect their work to desired outcomes.

If you’re concerned, simply listen and observe. Are heads down and focused? Are people having action and goal-oriented conversations, or are they surfing the Internet, rationalizing problems and reliving their weekends?

To turn things around and refocus your employees, put the objectives front and center — on meeting agendas, in ongoing written and verbal communications, and in marketing collateral.

Make your company’s objectives come to life in everything the company does.

Improving business performance starts with clear objectives.  Taking that first step will poise your small business for profitability and success!

Stay tuned!  Next time we’ll tackle the second business behavior to avoid: Crippling Habit #2 – Lack of Accountability!

image of keyboard: vertical-leap.co.uk

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2. Business Turnaround: Returning To A Path of Profitability
3. Top 10 Critical Business Challenges – Survey Results

Like it or not, this just seems to be our economic reality for the foreseeable future.

Unfortunately, you can’t just hit PAUSE until things improve. You’ve got a business to run!

Your job as a leader is to make the necessary adjustments to plow ahead and succeed.

So whether gas prices go up or down, the housing market improves or consumer optimism increases is all somewhat irrelevant to the small business owner.

While those factors may change the rules of the game, don’t let them alter your ability to manage a thriving business. You have to be willing to make some tough changes and ADAPT, but it doesn’t mean you can’t turn a profit.

Since it does no good to pretend conditions are better than they are, let’s first uncover the harsh realities of doing business and then look at six tangible leadership tactics to put you on the path to profitability.

With the right leadership skills, profitability for your business is not out of reach!

The Cold, Hard Facts

Along with declining employment, we also face increased gas prices, political uncertainty in Washington, as well as overseas, and overall rising costs for doing business. Oh, yes, and let’s not forget the credit situation which remains extremely tight. For small businesses in particular, the impact is draining.

On top of that, it’s simply becoming harder to compete. New businesses, created by smart, unemployed entrepreneurs, are popping up all over offering lower prices. And large companies (once competing up-market) now have moved down to go after smaller opportunities.

But enough doom and gloom, let’s focus on how you can navigate toward higher profitability by following a few simple leadership “Do’s and Don’ts.”

The Path to Profitability

There is something you can, and should, do to build positive momentum. Use this time to revamp your business policies and practices to operate with greater efficiency and innovation.

Most important, have the courage to “do good and do well” not only by your business, but also your employees and community.

It might sound simple, but in reality it’s one of the most challenging leadership issues you’ll face.

Forget easy, politically correct, or most comfortable — it’s about having the fortitude to make the right decisions even when they’re difficult.

Increasing your profitability is doable, but you can’t afford to take a “business as usual” approach if you expect to get anywhere. It takes guts to make tough internal changes.

To keep your small business profitable, you must lead first with integrity. Looking for the quick road to success, regardless of consequence, sets the whole company up for failure.

Leadership Do’s and Don’ts for Building Profitability:

Now is the time for action! Create a leadership plan to play through this economic downturn and position your company for better times.

• Do create a culture with a fierce commitment to meeting goals and objectives guaranteed to sustain profitability and exceptional employee morale. You need this in any economic climate.
• Do becomemore hands-on and pay attention to details. Don’t be afraid! In the end, it’s going to benefit your bottom line. And yes, this also applies to those of you who don’t like the details!
• Do hire people smarter than you. Once you’ve got the right people in the right positions, step out of the way and let them do their jobs.
• Do have the courage to make tough decisions and take calculated risks.
• Do build a collaborative work environment where employees’ ideas and talents are sought and respected, even if/when they’re not identical to your own thinking. Encourage collaboration, have an open door policy, and listen! It’s key to leading a profitable and visionary company.
• Do maintain a high ethical standard — ALWAYS!

Along with the “Do’s” are, of course, a few very important “Don’ts.”

• Don’t allow yourself to get comfortable. Great leaders are brave enough to grow, and as John Maxwell said, “If we’re growing, we’re always going to be out of our comfort zone.”
• Don’t believe that “Good=Complicated.” Experienced leaders understand the power of simplicity. Simple and easy initiatives often are the most successful.
• Don’t make it personal. It’s fine to be hard on performance, and you should be. In running a small business, you can’t allow numbers, commitments and objectives to go unmet. However, don’t take it out on your people. You want your employees to feel free to talk about both successes and failures. Keep your focus on the business problem.
• Don’t fall on the sword of, “But that’s the way we’ve always done things!” What worked in a booming economy might not be the best solution today. You MUST be willing to change. Continuing down the same road can ruin a business and drive a business owner to the brink of insanity. Errors, rework and the use of inefficient procedures and ineffective technology will bleed your organization of precious profit dollars.

Bottom Line:

Profitability eludes plenty of businesses these days. It seems like we’re all just limping along trying to stay in the game.

While some of these “Do’s and Don’ts” require gradual shifts in leadership strategy, many can be implemented immediately. All will help you on your path to profitability as part of a sound leadership development strategy.

The Key: Improving your business profitability hinges on your ability to avoid challenges that negatively affect your bottom line, and it starts with mindset. A willingness to walk away from the status quo can be incredibly difficult for business leaders. But you must do it!

As you begin to make some of these positive changes, I hope you’ll let me know how things are going. Together we can start conversations to help stir action and get this country moving in the right direction.

image of pause button: theragblog

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2. Business Turnaround: Returning To A Path of Profitability
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Don’t you love it when this happens:

You have a great idea, you gather all the resources needed to make it work, you implement your plan, and it’s a success!

You are a implementation and turnaround rock star!

But as time marches on things shift. And if you’re not completely in tune to those variances, it’s easy to look up and find your business plan completely off track.

But that’s Ok, every company gets off track. It happens.

The key is knowing how to figure out the problem so you can turn your business around quickly.

If you ignore the issues hoping they work themselves out, you can get yourself and the company in dire straits with no “good” way out.  Right now, a number of companies such as Dollar Thrifty Automotive and Radio Shack are seriously off track, and it remains to be seen whether they’ll be able fix their problems.

Returning to a Path of Profitability After You’ve Fallen Off Course:

• Reaffirm Priorities: First and foremost, you want to reaffirm the organization’s top priorities. Make sure you have the right people in the right jobs, along with clear objectives and measurements for tracking performance.

Assign ownership and then require employees to focus on achieving those top priorities. Now is the time for sharp attention to the things that matter most.  Don’t lose focus by taking on too many responsibilities.  Do what you do best, and do it well!

• Communicate: To refocus everyone’s efforts, make sure you are communicating effectively. Be clear about what you’re asking people to do, and you’ll eliminate false starts. And please, make sure you derive objectives from deep thinking, not half-baked ideas!

When you communicate clearly and get commitments, progress will follow.

• Analyze: Do you have a measurement system to track progress on all of your top objectives? If not, you need one. Measurements act as an early-warning system allowing you to re-prioritize and take corrective action when things change.

Once you identify problems, make sure you uncover the root cause so you don’t waste resources resolving the same problems over and over again. This approach reduces costs and allows you to focus on what’s most important — sustained profitability.

A Successful Business Turnaround Starts by Asking Yourself the Following 10 Questions:

• Do we have the right strategy and top objectives, along with the support of the entire management team? Your strategy must provide clear direction that’s easily understood by employees, shareholders and customers alike. If there’s any uncertainty, everything else is at risk.

If your strategy isn’t producing sufficient profits, then you must either reduce your costs or develop a more profitable strategy. Either way, take action! Don’t sit around waiting to “get lucky.” Ford Motor Company didn’t wait for a government bailout. Instead, they took action and avoided bankruptcy.

• Are you surrounded by smarter people? Consider each of your direct reports. If given the choice, would you pick that person again to be on your team and in the same position? Each of your direct reports should be giving you ideas you never considered as possibilities. Use this criteria to build your team and watch what happens.

• Do you hold formal monthly operations review meetings? This is one of the most effective ways to instill accountability and consistently achieve the organization’s objectives. It’s the perfect forum to review results, remove roadblocks and ensure accountability. These meetings will be the best barometer in assessing the efforts of your business turnaround plan.

• Are people focused on achieving the organization’s top objectives? This doesn’t apply just to your leadership team! Everyone in the company should understand how their tasks help the company meet its objectives.

Word of caution: When you start asking people what they’re working on to achieve the organization’s top objectives, don’t be surprised if you’re met with blank stares. It’s common for people not to know the top objectives or how their actions support them. Just because it’s common, however, doesn’t make it right.

If there is a change you need to make, then do it immediately!

Communication is the key to making sure everyone’s on the same page.

Work closely with your team so they know how to effectively communicate, and then hold them accountable. People need to know you’re serious about this, so don’t waiver.

Visibly post the top objectives of your company so employees are reminded of them every day.

Also, make sure managers meet regularly with their own teams to review progress against objectives. This ensures the entire company is aligned with the turnaround plan.

• Are you effectively delegating? When your business is far off course, it’s time to get as involved as necessary until you’re confident the situation has been corrected. However, be discerning.

It is uncomfortable to be managed too closely and can cause employees to shut down or back away. Be aware of your style. If you’re too involved, back off.

Learn to delegate and let people do their jobs. But if you need to make a personnel change, do it. Cut the dead wood and don’t rationalize.

• Are you helping people prioritize? No one can do it all. Help your company triage initiatives, and put an end to unnecessary work.

• Are meetings effective? Meetings should be purposeful. People should be solving problems and talking about how to turn the company around. If they’re focused on complaints, excuses and extraneous issues, stop them in their tracks. Explain how to effectively conduct meetings focused on achieving results, then hold them accountable for immediate improvement.

• Are you asking people what they need to be successful? When you ask someone to do something, also ask if they need anything to make the deadline. If so, deal with it immediately. When people fail to meet objectives or deadlines, remind them meeting commitments builds trust.

Everyone’s behavior needs to be focused on the success of the team, not the success of the individual. Recognize individual performance and success in context with how it supports the company’s goals in achieving a successful business turnaround. Celebrate and reward top producers for their achievements.

• Are you watching for busy work? Pay attention to the output from accounting, human resources and information systems. Are they engaging in non-essential work and generating unnecessary reports, or are their activities supporting the company’s top objectives?

• Do you always have time to plan? Are you always running to keep up? Are you missing commitments because you’re in too many meetings? Are you reactive instead of proactive? Do you regularly take your vacation? Does everyone seem to come to you for answers?

The higher your position, the fewer decisions you need to make. If you’re involved in small decisions, you’re not working on the right things.

Bottom Line:

When you can answer “yes” to the 10 questions above, then you’re on the right path.

Executing a successful business turnaround plan takes commitment on the part of your entire leadership team. You can’t do it alone, or without the buy-in of your business team.

Wherever you are in your turnaround efforts, don’t be discouraged. Companies of all shapes and sizes wander off track from time to time. While it takes hard work and diligence to ”right the ship,” profitability will be your reward.

Press on!

image of objectives: businessihub.com

Related posts:

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2. Improving Business Performance: 5 Behaviors You MUST Avoid!
3. Top 10 Critical Business Challenges – Survey Results

What do you think your competitors are doing right now?

If they’re smart — and I’ll bet they are — they’re using this time to fine-tune their operations and prepare for the future, not just waiting for it to happen.

You may think you can’t increase profitability in a slow economy, but I’m here to tell you that you can, and you must.

Now, you’ll have to make a real commitment to change if you want to be a front runner when things get better again — and they will get better — but you need to base your planning on a realistic view of your market.

In this post, I’m going to outline EXACTLY what your small business needs to do to increase profits, regardless of what’s going on with the economy.

How to Maintain Quality and Grow Sales Without Sacrificing Profitability

Profit Killers:

•    Errors, rework, inefficient procedures and ineffective use of technology

•    Intense pressure on prices

•    Increased competition

•    Extended receivables and write-offs

•    Maintaining high quality with razor thin margins

Everybody’s struggling with profitability as the nation works hard to recover. The result is a fiercely competitive market. Sacrifices have to be made, but be careful not to make the wrong ones. Realize that profitability is possible, even now, but it requires courageous change management to make tough internal changes.

Ways to Increase Margins

When markets turn, you can’t keep doing things the way you always have. This is where your commitment to change is vital to your profitability strategy. In fact, the most successful companies change before they are forced to.

Solutions to increasing margins and profitability can be simple or complex, but the hardest thing to change is your old company mindset. You’re going to have to peel away petrified layers and calcified attitudes, get back to basics, and adapt to reality.

Here are some ways to start making that happen:

•    Simplify your objectives: Focus on crucial goals and objectives. Once you know your priorities, make certain every employee knows the plan, understands his/her role, and feels like part of the company’s success.

•    Diversify: Rediscover how you originally established your company in your field.  Now do things that way again, only in new and innovative directions!  A fresh industry or product / service base will give you more opportunities for growth and profitability.

•    Assess the competition: Everybody is competing for the same limited opportunities, and some are slashing prices in a panic. Look hard at your competition, figure out where they have an edge, then implement strategies to neutralize their strengths and amplify how your solutions better meet customer needs. Don’t talk negatively about the competition. Instead create doubt by arming prospective customers with targeted questions to ask the competition.

•    Win/loss reviews: Create tracking systems to monitor the specific reasons why your company won or lost each engagement. You will quickly see the top reasons for each outcome. Stop doing things that cause you to lose, and replicate the wins.

•    Increase scope: Train your managers to spot fresh opportunities while working with clients. Teach them how to ask the right questions and when to involve other team members.

•    Closely review all time reporting information: Understand what drives costs through time and activity reporting, which will provide the measurements and information you need.

•    Implement a simple tracking process to capture the volume of repetitive problems such as rework, customer complaints, product problems, etc. Identify the biggest offenders and implement a process to uncover the root causes. Implement changes that will eliminate the root cause and prevent the same problems from recurring.

•    Eliminate excuses: There is simply no place for excuses.  Reward results and maintain accountability for failures.  It’s the leader’s job to be hard on performance and easy on people.

•    Get insightful client testimonials: Testimonials are highly effective in convincing potential clients to choose your company.  Testimonials should directly address the top three objections you hear from prospective customers. Ask clients to give you testimonials you can use to help win work, and get them on video if possible.

•    Remain vigilant on collections: Don’t be a bank for your clients. No payments due should be allowed to age beyond 90 days. Contract terms need to be specific and firm, and whenever possible include milestone billing and partial prepayment to maintain positive cash flow. Be flexible when you can, but don’t let your clients take advantage of your company.

•    Reevaluate your message: Make sure your marketing message is hitting the mark and saying what you want your customers to hear.  Each client has a specific need, and your marketing message must speak to that need. Test your message and make sure it works!

If you intend to stay competitive right now, your small business can’t afford to continue with “business as usual.” Playing through tough times requires active change management, rational profit strategies, cohesive team effort, attention to detail and laser-focus on meeting clearly-set goals. Playing to Win requires your dedicated hands-on leadership, so you’d better be up to the task.

If you want to see where your leadership abilities stand and get help improving your skills, read my Leadership Self Assessment post. By being a true leader, and training your team to lead, you will create a company where everyone is committed to winning. That spirit guarantees accountability and follow-through on your small business profit strategies, even in these hard times.

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I mean, shouldn’t everyone – including customers – expect a little give and take?

Well, yes and no.  While customers understand times are tough, they also recognize the added buying power now available to them.  This doesn’t mean loyalty will fly out the door in search of the lowest bidder, but it also means you can’t ignore the quality of your customer service.

During tough economic times, you can’t dismiss the value of having strong customer connections.

Maintaining quality customer experiences is crucial to the survival of your small business. And getting the right message across to your current and future customers will make or break you.

While it’s essential to aggressively manage costs during the recession, your business will be doomed the moment you…

sacrifice your customer’s buying experience. In fact, service and product quality should be elevated during tough times to build customer loyalty and grow revenue.

Knowing where to cut costs and improve service will greatly enhance your company’s success.

The key to playing through tough times is positive cash flow and a lean operation. To build and maintain your revenue streams, you need to keep your current customers, sell them more, and seek referrals. Except for commodities, no one survives on price alone. Those who try will eventually go out of business when times are tough.

So what’s the key to connecting with customers?  Integrity, honesty and communication.  Embed the following four principles into your business model to elevate the quality of your customer service and build sustainable customer connections.

1.      Keep Your Word

It’s really quite simple: To ensure customer trust and loyalty, stay true to your company’s promises.

With more competition and less buyers, the caliber of experience is key, so continue providing customers the quality products and top-notch customer service they are use to.

Fortunately, you can do both without spending lots of money!  Look for innovative ways to offer increased value on things with little cost.

Some suggestions:

• Include low book-valued items from inventory at no charge
• Offer discounts on future purchases
• Add features and functions already available with some of your other products
• Bundle products and services (involve the entire company to seek creative solutions and ideas!)

By making just a few simple changes, customers get more for the same investment, revenue improves and customer affinity grows. Be sure customers know when you provide increased value without a corresponding increase in price.

Whatever you do, don’t cancel traditional sales deals. This turns loyal customers off, and they’ll go elsewhere. Raising your level of communication during tough times helps build lasting connections and increase customer loyalty. What are your plans to increase the level of meaningful communication?

2.      Don’t Compromise Your Customer’s Shopping Experience

Put your client first. Don’t skimp on things that could sour their buying experience. Quality of goods and services must remain high, so don’t switch suppliers just because someone else can do it cheaper.

Remember, you usually get what you pay for, and your customers will notice!

If you need to reduce costs, talk to suppliers and see what they can do to help. Chances are, they don’t want to lose your business either, and they’ll work extra hard with you to offer better pricing, terms or upgrades.

Experience matters! Don’t fire your higher paid “front line” employees and replace them with cheaper, untrained labor.

It’s better to have fewer, higher paid professionals than a full crew of average talent. Now more than ever, customers expect a high quality shopping experience, impeccable service, and enthusiastic, knowledgeable sales and support personnel.

Case in point: Best Buy vs. Circuit City. Best Buy invested in its sales staff to make them product experts. Circuit City fired senior sales staff and replaced them with junior, untrained employees to save money. This, coupled with other ailments, led to their ultimate demise.

By maintaining quality, customers will respect your integrity and dedication to their needs, producing loyalty for years to come.

3.      Empathize With Your Customer

Show clients you understand what they’re going through. They want you to recognize that we’re all under pressure, not just you.

If you need to change your business model, be sure customers understand your motives. Show them that you want to be there for them now, as well as when good times return. Everyone understands hard times, and we admire those who take proactive steps to be there for us in the future.

But, don’t throw caution to the wind. Some customers will ask for special pricing and terms and, if possible, accommodate their needs. Before accepting such requests, consider asking for longer-term agreements to lock in future business.

When requests outweigh the value, it’s time to say “no.” It’s critical to cut costs during a recession, and customers understand that. However, finding ways to cut less essential expenses rather than vital ones is the key to playing through.

4.      Get the Message Out

During these tough times, it’s imperative to communicate the right set of messages to your customer base. This is your chance to show your humanity and develop closeness with your customer.

Let them know you understand their hardships and what you’re doing to lend a hand.

This is also the perfect time to demonstrate your competitive edge. While others cut back on people, marketing and service, you can step in and create confidence and certainty for your brand.

Your integrity and image will directly affect your success, now and in the future.

Keep ‘em happy!  Here’s a few simple ideas to build strong customer connections:

• Inform customers when products ship
• Provide advance notice of delays
• Send updates along the way
• Respond quickly to requests
• Meet commitments
• Limit surprises
• Clearly communicate return and refund information
• Follow up to ensure satisfaction
• Send a heartfelt thank you

Keeping customers happy by staying in tune with their needs will not only build loyalty but also allow you to capture more market share as less savvy competitors stumble.

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To continually increase your company’s performance and profit, small business owners must be able to manage, engage and retain customers. And while most understand this in theory, too often it’s missed in practice.

I mean, let’s be frank. Talk without action leaves you short every time.  So how is your business handling this balancing act?

Are your customer management strategies building relationships that help increase the bottom line? Or are you plagued by poor customer management that’s left you dealing with both immediate and long-term negative effects?

First, let’s take a look at the ramifications of failing to effectively manage customers.  Then, we can shift to the “How To’s” behind getting it right!

As you click to read more, you’ll find practical customer management tips to help your small business reach its goals. Striking the right balance between customer acquisition and retention can be tricky, but you can get there.

The Impact of Poor Customer Management

Maybe you’ve seen the sign that reads, “It takes months to find a customer…seconds to lose one.”  There’s a world of truth in that statement!

Losing “smaller” customers may not impact your P&L immediately, but the indirect and subtle ramification down the road can be significant.  For example, as a small business owner, consider how much money you spend on finding new customers. It adds up fast, doesn’t it?

Now, consider how much you invest on your current customers and compare the two.

Most experts estimate the ratio for acquiring new customers as being five times more costly than keeping existing ones.

Has this been your experience? From my years in business, I would say it’s more like ten times the cost of retention, double what the “experts” are saying.

Boiled down, though, all these stats and ratios simply mean this: You better be working harder and investing at least five, if not ten, times more in keeping current clients happy rather than trying to attain new ones!

To quantify what that means to your business, the loss of even a “small” customer means you’re out not only the lost revenue from that one client but also the money needed to replace that income with a new customer!

While it’s more difficult to quantify the future effects stemming from lost business, you can weigh the impact of missed opportunities from customer referrals. Among small businesses and less established organizations, referrals are an essential source of new income.

To use the MasterCard tag line: “There are some things money can’t buy.” Recommendations from satisfied customers — “priceless!”

In today’s economy where the average selling price is declining and the cost of sales is rising, it’s even more important for your business to adopt smart customer management strategies.

Providing excellent customer service and maintaining a high level of customer satisfaction allows your small business increased opportunities to remain viable.

The Domino Effect of a Disgruntled Customer

We all have our share of “prima donna” customers. Those who are temperamental, difficult to work with, scream the loudest and spend the least. Sadly, these individuals truly believe their behavior is justified and feel you are privileged to have them as a customer. In their eyes, they should always have priority.

While it may be easier to let these customers take their business elsewhere, rest assured the effect of a disgruntled customer is serious.

Failure to resolve issues can cause a disastrous domino effect of lost business if negative bashing about your company ensues.  And even if you parted on fairly good terms, a dissatisfied, ex-customer is more apt to readily and openly say negative things about your business.

Think about it. You’re a small business owner, so you understand the importance of positive referral and feedback. It’s a lifeline. But when was the last time you went out of your way to talk up a good company, as opposed to bashing a poor one? See my point? Just look around and listen. Even happy customers don’t make recommendations to others as frequently, or as forcefully, as jaded customers do in turning away potential business.

While the point is exaggerated in Pete Blackshaw’s book title, “Satisfied Customers Tell Three Friends, Angry Customers Tell 3,000,” the truth behind that statement applies.  According to a study conducted by PeopleMetrics, “on average, a disengaged customer will tell 3 more people to avoid a company and its products and services.”

Bottom line: Don’t get on the losing end of a customer complaint.  Work diligently to remedy the situation so you can move toward a successful end.

Tips for Developing Effective Customer Management Strategies

At the end of the day, we all want the same thing – to increase our bottom line. With exceptional customer management strategies in place, you can improve your company’s performance and generate more sales.  Here’s how:

• Find the right balance and focus between customer acquisition and customer retention: With the cost ratio for getting new customers (over keeping the ones you have) ranging from 5x-10x, the impact of not finding proper balance is even more critical to small business owners.  Dr. Claes Fornell, Professor of Business Administration, Professor of Marketing, & Director of National Quality Research Center at the University of Michigan, is recognized as one of the world’s leading experts on customer satisfaction measurement and customer asset management. He put it this way “…the first priority for any company should be to defend its customer base. Without it, the prospects for the future would be bleak.”

• Be very judicious where and how you spend your money: Let’s face it, most small business owners don’t have deep pockets and need to make every dollar count. To do that, it’s important to know your return on investment for every dollar spent.

• Diversify your customer base and avoid revenue concentrations: Just as the old saying goes, “Don’t put all your eggs in one basket,” be careful not to build your business around one customer. If a large customer represents a significant portion of your revenue, the effects of losing that client can kill your business overnight. Make sure your revenue stream comes from a variety of sources. Doing so will protect your small business during shifting markets and economies.

Managing your customer base should be a constant work in progress. Customers change, markets shift, and business demands get altered, so your customer management strategies should be a work in progress as well.

To establish a business, you have to work hard to attract and acquire customers. To stay in business and grow, you have to not only acquire new customers but also retain them, and that means continually improving your small business customer management strategies from top to bottom.

*Cartoon originally appeared on CustomersAreAlways

Related posts:

1. The Customer Connection: Balancing Costs & Customer Quality
2. Small Business Customer Service: Are You Doing Enough?
3. Customer Service Strategy for Small Business

For a year that was supposed to hold such economic promise, it certainly didn’t deliver.

In fact, most small business leaders I talk to still feel the heavy weight of uncertainty and question their ability for growth in this economic recovery.

The way I see it, we have two options:  become paralyzed by circumstances or adapt.

Like you, I’m also a small business owner and entrepreneur so I know the “sit and wait” approach is not even an option!

While there is much to consider in a down economy, let’s boil it down to basics.

Before you do anything else, you need to gauge your trust leadership by asking yourself, “Do my employees trust me and the company’s leaders?”  To assume the answer is “yes” does you no good, so be honest.  Want the truth?  Look closely at your company’s culture.

So how do you know if you’ve developed leadership trust?

Well, do you live by the Golden Rule:  Do unto others as you would have them do unto you?

More important, would your employees agree?  Because guess what?  To inspire loyalty and trust in others, you have to be trustworthy and loyal!

Seems simple enough, right?  With hidden political agendas lurking everywhere, it’s often easier said than done.

Our culture screams, “Win at all costs!”  But if you look at the 100 Best Companies to Work For, you find people-focused cultures, and it’s these environments that promote positive bottom lines.  In fact, I recently read Corporate Culture and Performance by Kotter and Heskett, and it revealed the following:

Over an eleven-year period, companies that emphasized all stakeholders – employees, customers and stockholders, and focused on leadership development grew four times faster than companies that did not.  They also found that these companies had job creation rates seven times higher, had stock prices that grew twelve times faster and profit performance that was 750 times higher than companies that did not have shared values and adaptive cultures.

I think the evidence is clear and compelling.

Companies that foster a climate of mutual trust and respect reap significant benefits.

So take a closer look at your company.  Knowing trust plays an important role between business success and failure, you want to make sure your company’s culture is on the winning side!

If you’re not sure how to inspire loyalty and trust or determine if your company has it, here are five simple behaviors to put you on the right track:

• Demonstrate uncompromising integrity: Remember, everything you say and do as a leader (including non-verbals) is being evaluated by your employees and others.  Your trustworthiness is measured daily against those words and actions.  Case in point, if the company is making cuts and performing poorly, it doesn’t play well with employees if you still take home a big bonus.

• Make and meet commitments: While this seems like something you’d just expect, you’d be surprised how many struggle to deliver.  If your company treats commitments as promises and delivers results without follow-up, you’ll build tremendous esprit de corps.  Bonus: When there’s trust, you can delegate with confidence and have more time to think and plan.

• Be direct and forthright: Forget being politically correct!  Let people know where they stand and what and when things are needed.  A first rate leader will clearly communicate and integrate company objectives, delegate responsibly and have low tolerance for missed commitments.  Tip: If you’re micromanaging, you need to delegate more effectively and strengthen trust and accountability.  Small business owners often find themselves in this trap.  It’s hard to let go of something you’ve poured your heart and soul into building, but you have to learn to delegate if you expect your business to grow.

• Slow down: Meaning, take time to explain yourself.  Make sure people understand what’s being asked of them.  If it takes a little extra time, it’s well worth it!  When employees understand the “why” behind your request, you empower them to provide solutions. Bonus: It removes excuses, reduces rework and builds relationships, as well as future leaders.

• Open the door: When you constantly work behind closed doors, you quickly lose touch.  Trust is built one-on-one and eye-to-eye, not via e-mail.  The “open door” may be an old policy, but it goes a long way toward helping everyone get their jobs done.

At the end of the day, accountability and results are what it’s all about.

Those who achieve goals, meet commitments, and treat people fairly along the way should play important roles in your business.  Those who continually disappoint, fail to deliver, or lie should be let go.

Let’s face it, if you can’t trust the people on your team, why have them?  And remember, this works both ways.  If the barometer on your trust leadership is low, what makes you think your quality employees will want to stay?

So be honest and ask yourself:  As a business leader, are you continuously building a culture of loyalty and trust in your organization?

Related posts:

1. Improving Business Performance: 5 Behaviors You MUST Avoid!
2. The Do’s & Don’ts of Leadership For Higher Profitability
3. Leadership Self Assessment – Are You the Leader You Think You Are?

It’s an audio and video recording from a workshop I recently held where I hear directly from a room filled of small business owners, just like you, state the biggest challenges they’re facing in today’s world. To be precise, It’s an excerpt taken from my four hour small business leadership training program where I taught leaders how to rapidly increase profits. At the end of the day we reviewed the list and everyone agreed that the program addressed 12 of the 16 biggest challenges listed below.

Whether you are trying to survive in today’s tough economy or striving to reach new heights,  the mutual goal is to progress and making money.

As someone who subscribes to the old adage, “Go as far as you can go and when you get there you can see further,” I believe that there is always room for improvement.

Especially in 2010 and 2011.

Sure it’s more difficult but not impossible. The first step is to identify the hurdles — and that’s exactly what we did in this audio recording.

Just take a listen, and you’ll quickly hear the SAME exact problems, frustrations and concerns that you have for your business – are the same problems facing other business owners as well.

I also included all the challenges I got from the participants at the end of the post.

So what do YOU think? Did they, or I, miss any? Feel free to post your thoughts below.

Or download the MP3

By the way, you’re not losing your hearing. The audio volume is low in order not to startle others when I begin speaking. Adjust your speakers accordingly.

Here are their biggest challenges:

• Finding talented people
• Organizational structure
• Keeping the plan relevant in a changing environment
• Execution
• Embrace necessary change
• Creative benefits
• Increase cash-flow
• Communicate goals
• Take market share
• Innovation
• De-commoditize
• Finding new markets
• Effective sourcing
• Professionalize people and the process
• Alignment
• Managing health care

Granted, the health care issue is a pretty large task to tackle, but in the coming weeks I will address these other small business challenges and more. Check back frequently for practical tools and techniques that will help you immediately improve your bottom line.

Related posts:

1. Top 10 Critical Business Challenges – Survey Results
2. Small Business Leadership on Economic Recovery
3. Leadership and Management Training Programs

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