Picking Blackberries and Opportunities

 Similarities in picking wild blackberries and finding opportunities in life. When you see blackberries every year the joy of eating tasty sour berries for the next few weeks is here. Yet they must be harvested.

 

Look first. Are there bears? If not choose your footing carefully. Blackberries are thorny. First place your feet carefully. Step on the shoots and position yourself close as reasonable. Stumbling or falling into blackberries is painful!

 

That big juicy blackberry you saw that made you go in there? Look up and pick it. Ripe blackberries come off with a soft tug. Won’t come, it isn’t ready. Leave it for next week or the next person. Don’t be greedy. More berries grow every day.

 

Then look left and right, when there is one there are more around. Look up, but don’t be wistful about the blackberries out of reach. Unless you plan to come back with equipment, harvest the one available now. Look down, so few people do. The sweetest blackberries are hidden in the shade. Use the leaves to help push thorns out of the way to find more.

 

What has this to do with opportunities? They are plentiful like blackberries. You don’t get the assignment or job you want? Find more opportunities. They exist in your company or business now. If not there are more around. In one county there are over 100,000 businesses.

 

Don’t race after the first opportunity without checking it out. Scams where people try to get you to buy something or steal your identity abound. One company interviewed with was trying to recruit me for sales. However they couldn’t answer the business question how do you make money? My wife was contacted for sales job that sounded like fun for any social 20 year old, but didn’t seem to offer any services. They charged for their software to work for them, that is how they scammed people.

 

Opportunities outside your core business skills look enticing, but investigate first. Are they a shiny distraction? Does it interest you because it is novel? Exciting? Look easy? What is the strategic advantage of this opportunity? Who are the competitors? We are never the only person to see them. 

 

Is it profitable opportunity? Looked at several restaurant options over years, and had friends start restaurants. Anyone can open a restaurant, little qualifications other than signing a lease. Long days, health regulations, advertising, challenges finding help, and tiny profit margins await you. Several couples divorced over strain of running restaurants, often followed by bankruptcy.

 

Be strategic. Know who you are, your talents and skills so you can explain how you can help. In sales you want to know how you benefit the customer. To harvest your opportunities plan where and how to spend your time. Learn their pains and how you can contribute to customer’s well being. Then your reward is a bountiful harvest to enjoy.

 

Simple Productivity

What does every company need from their employees? Productivity.

What does every business owner want for himself? Productivity.

What do superior performers desire? Productivity.

How can we get our company to be more productive? Better processes, better procedures, better quality, better throughput.

So how do we get there? Simplify.

Have you looked at your processes and procedures recently? Your co-workers have to look through pages to get what information they need. Why can’t they be written in plain English with pictures rather than legalese?

Then look at your business from your customer’s eyes. How hard do you make it to order from you? Where can you make it simple?

How did Japanese automakers grow their market share? Their customers did not choose every individual option like American automakers. They offered standard and deluxe models with options included. The customer’s main choice was color. Inventory and pricing were streamlined, and they focused on making the models that were selling. Result - increasing profits. 

Where can you simplify today?

Business Owners Need Fans

The average business owner is not flush with cash. If they still have their best customers, the orders are smaller, and he has to offer lower prices. Half their small customers have gone out of business and the business owner had to at their debt. The average business is hurting for income and profits.

If the owner has any cash, he is waiting for the next crazy idea to come from DC. Taxes will go up next year 4%. Cap and Trade (Tax) will export more manufacturing jobs overseas. Who knows how much health care will cost in a few years.

Look at states that have better economies. Texas, Oklahoma and North Dakota have lower unemployment and generated two thirds of all new jobs created over the last three years. Why? Business friendly regulations, stable taxes, governments within budget, limits on litigation awards, and respect for taxpayers.

Canada is doing well in this global recession. Why? Business friendly regulations, lower taxes, limited government spending, limits on litigation, and lots of legal immigrants. Same thing that built the USA. Canada also avoided the real estate bubble by not allowing very low down payments nor subprime lending. Smart regulations unlike Fannie and Freddie offerings.

If DC wants to improve the economy, the government has to be fans of business owners. Not vilify them. What business needs is stability. Cut government spending and borrowing, don’t add more regulations, and limit tax increases. Then businesses will start investing, expanding and hiring. Until then we are starting down the path of the Japanese lost decades.

Eliminating Sales Quotas May Stimulate Profits

The Stanford Graduate School of Business recently reported on a study conducted about the effectiveness of using sales quotas to motivate and reward salespeople. Based on an experiment at one Fortune 500 company, the researchers concluded that removing the sales quotas resulted in a 9% increase in overall revenues. 
http://gsb.stanford.edu/news/research/Nair_sales.html

Jim McIngvale is the founder of Gallery Furniture store in Houston, Texas. Many years ago, he called on W. Edwards Deming to help him improve his business. McIngvale often tells the story about Deming telling him to change his salespeople from commission-based pay to salary. After failing to convince Deming that it wouldn't work in the retail industry, he gave in and changed his pay practices and put his salespeople on salary. In The New Economics, Deming wrote about the results of the change. " . . . steady increase in sales. Older salesmen now help beginners. Salesmen no longer try to steal business from other salesmen. they now help each other . . . sales go up month by month. Moreover, profit per square foot of floor space advances even faster." McIngvale agrees.

Like so many elements in business, it goes back to effective leadership and hiring practices.

My question is What motivations are you offering your people by your rewards? Too many companies do not reward initative or superior success. Do you?
Steve

Businesses Need to Plan for the Recovery

It is about the opportunities, not the problems. We are in a good sized recession, and the uncertainty is making life difficult for business owners and managers. Orders are down as customers order smaller quantities, or no longer have demand for some products. Credit is in short supply, and cash is king.

Even worse is the drumbeat of bad news shouted from the TV, and on front pages of magazines and newspapers. They are trying to scare you to look or listen for better ratings. Hello, this is about the size of the 1982 or 1975 recession. Not the Great Depression 2 or even the end of the world.

Today is not about the fear. Business is about the relationships, especially with the customers. Business is about being better than the competition. Business is about finding our niches, and serving the customer. Business is about making a profit through service.

So what can you do differently to improve profits?

Can you offer 2 for 1? Make twice as much and lower your prices? Develop a low cost version? Add more products to sell to your customers? Redesign dated products? Bundle more services together?

What about when the recession ends? What products or services would you like to develop now to be ready for the next couple years? Who do you need or want on your team? What skills do you need to train your staff to have? Don’t you think this is the best time to prepare?

We have to be careful, but business will go on during and after the recession. Will you be ready?
Steve

Scroll down to Anticipating the Credit Crunch for more ideas to increase profits.

About the Market
Personally I am not ready to declare the bottom of the market, and it may be further off than we would like. However there are reasons to think we are closer to the end than at the beginning. Housing has already corrected about 40% from the peak of the bubble. The Dow has dropped from the $14,000’s to the low $7,000’s. For other hints see Irwin Keller’s article below.


Signs of life
Commentary: The economy's worst may be past
By Irwin Kellner, MarketWatch
Feb. 24, 2009

http://www.marketwatch.com/news/story/evidence-mounts-recessions-worst-past/story.aspx?guid=%7B71467556%2D3683%2D4018%2D906C%2D7FFC8A3F9E8C%7D&dist=TNMostRead

Note Marketwatch Links are soon broken. If the link does not work, go to
http://www.marketwatch.com/
Search for Irwin Kellner

A Geeky Remedy For Recession Blues

Forbes has a wonderful article by Christian Lindholm about the power of design in results, and what sells in a recession. Highly recommend reading it

http://www.forbes.com/technology/2008/09/16/iphone-nokia-design-techsolutions08-enter-cx_cl_0917design.html?partner=technology_newsletter

It has been too long since I have written, so expect some new postings soon. Basically would like to comment on the economy.

Enjoy,
Steve

What To Do During 2008 Recession

Hate to be the bearer of bad news, but the credit crunch is bringing a recession to the US in 2008. If you are managing or owning a business, now is the time to plan for this year’s recession.

Are you familiar with derivatives, CDO’s, credit swaps or the subprime mortgage market? They have been the latest way banks, hedge funds, insurance companies and other investors tried to increase yields by bundling loans together. The problem is they have not properly accounted for the risk, and not enough reserves are in place for when these investments fall in value.

So people who lend money do not have enough money to lend more. Credit will increase in cost, and less will be available for business to borrow. This will slow the economy, and consumers are not able to borrow to finance more purchases.

What do we do now?
First of all keep perspective, no recession lasts forever. They are normal parts of the business cycle, and there are several steps you can do. It may be mild or a full depression, but the actions you will take are similar. You just may be forced to take more actions in the event of a depression.

Hang on to cash
If credit is hard to get, you are going have to fund expansions internally. The Stock market may not fund you, and lenders are nervous. Be prepared by watching spending and cutting overheads.

Know what makes you profit
Most people know volume of sales, but few allocate expenses fairly to each product line. It is easy to spread personnel, advertising, and overheads over all sales. It makes more sense to know which products or services cost more and what they make. Allocate almost all personnel to product lines, allocate inspectors and freight to materials, and then spread the remaining unallocated personnel and expenses over all labor and material expenses. This will show where you actually spend your resources, and how much each product or service costs. Then figure out your profit margin.

Re-price products to make a profit
Sales have to make money. Even advertising loss leaders have to increase sales to be worth doing. So evaluate which products or services create value, compare to competitors, and don’t just be the low cost provider. Less sales may make more sense for some products and services. Especially if you are losing money per sale. Price accordingly.

Kill weak products or product lines
Redesign or rationalize product lines. Let good products eat weaker products. You want products to go after competitor sales (or increase your profits), but not just because we always sold that. Can you buy someone else’s cheaper?

Design better products
Design is often the deciding factor in sales. Good design has value in attractiveness and functionality. Don’t blame the sales team for a poor product or service. Create better, faster and new services. Make products have more value. Create new looks and new markets. Growth is finding opportunities. Make sure you design to win.

Sell more to existing customers
Offer additional services and products to your existing customers. Your customers are valuable. Don’t lose them to competitors, but make yourself their partner by adding value to them a discounter can not match. Sit down and find out where their pain is. Look where you can grow servicing your best customers. Bring ideas and contacts that will grow their business. They will remember.

Find new customers
Don’t quit marketing or advertising. Find competitors to your existing customers. Especially find the young growing business that may become prime customers.

Export
The US dollar is falling in value, so find new customers in other countries. China, India, Dubai and Asia are growing in wealth so are great markets to open. Europe is now cheaper to sell to. Take advantage of your value by finding representative in these markets.

Make advertising show results
Get their attention. State your benefits clearly and believably. Get feedback. Motivate your customers to do something. Make sure your advertising is in line with your strategy.

Hire people who will contribute to bottom line
Keep your winners and make them partners. Always look for designers, engineers, sales, and leaders to make your business grow. The advantage of a recession is less competition hiring the best people.

Review your strategy
Does your current strategic plan match the changing economy? Be realistic, be opportunistic, and believe you can succeed. Others will just try to shrink their business and may hurt themselves. You can actually grow market share by being aggressive in going after business by creating value.

A recession is really just normal business. Just be focused on what needs to be done like normal, and do the hard work that gets missed when you are growing fast. Your people will overcome a recession if lead to face the problem. It is up to you to lead.

Real Strategy Versus Planning

Too many companies do their year end planning and call it strategy. Often the discussion at these meeting is simply how to incrementally improve the business. Everyone predicts they will sell slightly more product this year. It is a good business practice to have long term resource plans, but that is not strategic business development.

Real strategy is focusing your business. Strategy is finding potential opportunities, and enabling your resources to produce and sell new products, and services to grow.

Continuing operations have to be profitable and products updated. Equally important is to discontinue or outsource products and services no longer key to your success. The important idea is to concentrate your resources where the profits are. Work less and make more.

The best opportunities are market disrupters. All innovation flows from the unexpected combination of two or more things. You need to spot and exploited a change whose time has come. Not necessarily being the first mover, but be the first to get it right.

Steve Jobs says, “I am going to wait for the next big thing." Then he develops a position to take advantage of the opportunity. Look at the iPod. Lots of people in and out of the industry knew about music downloading, and people knew that MP3 players were coming along. The music companies and the music retailers had asset positions that were being threatened, and didn’t want to act. It was not a fantastic leap of imagination into the far future. He found a set of ideas that needed to be quickly and decisively acted upon.

A value denial is a business opportunity. Every change and innovation creates new value denials. These are products or services that are both desired and feasible but are not being supplied to the market.

What makes a business unit healthy? Operating efficiently and having a good strategy. A good strategy, in turn, is one that is responsive to change and that builds, builds upon, and stretches the resources that yield competitive advantage. Be focused on going after changes.

How do you actually plan strategy? For that, you need a small group of smart people. Strategic insight is essentially the solution to a puzzle. Puzzles are solved by individuals or tight-knit teams. With big groups and complex processes you can select the better solution to the puzzle, and you can get consensus and buy-in and even commitment. But that comes later.

Start with a SWOT analysis. It is time to look at your strengths, weaknesses, opportunities and threats. Basically as a group evaluate your business internally and externally. Where do you have advantages, and where do you have to improve? What opportunities are there and what weaknesses do you have?

Write three coherent paragraphs about what is changing in your industry and why. Having to link your thoughts, giving reasons and qualifications, makes you a more careful thinker and a better communicator. No bullet points.

Other questions to ask include: Where are the profits too low? Are the margins low? Can we increase margin with a new design? Can we partner with a competitor? Does someone else do it better? Can we minimize expenses on mature products? Do we just raise prices and give up market share? Do not underestimate the inertia of buyers. Can we sell part of the business without damaging the whole unit? How will the customers react?

Speculative judgments are the essence of strategic thinking, and they can be the starting points for taking a position. Strategic thinking is essentially a substitute for having clear connections between the positions we take and their economic outcomes. You have to determine where to invest in projects with a goal.

Companies create competencies by making bets, and putting the right resources in place to develop those competencies. Companies get good at something by doing it, and that give you a sustainable advantage.

You job is to figure where your resources are best spent. The most important job of any manager is to break down a situation into challenges that subordinates can handle. Absorbs a lot of the ambiguity in the situation and gives less ambiguous problems to others. That is the heart of strategy.

This article is based on the research and studies of Richard Rumelt.

Getting Projects Done

When you want something bigger than a task done, something that will take longer than a couple days, you are getting into a project.

The main secret to success is to properly define the project. It is amazing how hard it is to complete something where you don’t know what it is suppose to look like!

So what does success look like? Define it. Is it a new product release with all marketing materials. Is it a new service as a business profit center? Is it increased profit margins for existing products or services? Are we changing the company culture? Is it a combination of several of these? Focus by defining what success will look like.

Focusing on defining success will motivate you to do break down the step of a project, overcome the problems that will, stay with a project until completion, and enjoy the fruits of success from getting projects done.

New Products and Services

The most important thing in business is to create profitable products or services. The problem is after a while, everyone copies success. So how do you keep your growing profits when margins are under pressure?

Think about it, and we will discuss it in a future post. Email your questions to problem1solver@gmail.com and we will discuss it here.

Suggestion: How can you better serve your clients or customers?
Steve