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What To Do If You Want To Start A Business

Many people dream about “being their own boss” and, perhaps, you’re one of them.

Others find them forced into self employment and starting a business because they were made redundant from what they thought was a secure job and either, are struggling to get another job or don’t want to go through their recent traumas again.

I started my consultancy/training/coaching business in 1995 and I’ve never regretted it even though I had a few nights where I’d wake up in a cold sweat, wondering what I was doing.

The Different Ways You Can Become A Business Owner

There are many different routes into becoming a business owner:

  1. Starting a business from scratch on your own.
  2. Starting a business with a partner.
  3. Buying a business on your own.
  4. Buying a business with a partner.
  5. Buying into an existing business, perhaps because the existing business owner either needs more cash or wants to reduce his or her hours of work.
  6. Buying a franchise.

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Is Business Coaching Right For You?

Business Coaching can work very well for many business owners but the big question is…

Will it work for you?

The honest answer is that it depends on:

  • You,
  • Your situation,
  • The business coach and how he or she fits in both with you and your situation.

This is why two aspects of what a coach offers are particularly important at the beginning:

  • Try before you buy sessions – personalities can clash and you may find that a particular coach is a poor fit for your personality or issues. This is why I offer a free Business Second Opinion Session to talk about any issue holding back British based business owners.
  • Some kind of guarantee – this shares the burden of finding the right fit between you and your coach. The coach shouldn’t see his or her task as “selling coaching hours for a profit” but as “helping business owners to succeed.” I expect to be paid from the improved results and not before.

What Is Business Coaching?

My simple definition of business coaching is that it’s helping you to get from where you are to where you want to be. [click to continue…]

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What Is Causing Your Sales Problem?

If your business is finding it tough to win enough sales volume to give you the profit level you want, you may be trying to solve it the wrong way.

To get the best improvement in results, you need to tackle the right problem in the most effective way. Sometimes, business owners can make faulty diagnoses of the underlying issue and this happens particularly when the business owner is under too much pressure.

If you don’t focus your time and attention on the key constraint or bottleneck, you’re likely to get disappointing results. (see The Theory Of Constraints For Small Businesses)

This diagnose the problem to prescribe the right solution is a similar process to your doctor uses to make sure that his prescribed treatment is tackling the most likely cause. For example, there are many different reasons for a patient having a headache – from eye strain to general tension to too much alcohol… all the way through in severity to a brain tumour or a fractured skull.

Sales being too low is a symptom but, without looking in detail, it’s not clear what the underlying problem is and therefore it’s not clear

What Causes A Business To Have A Sales Problem?

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The Theory Of Constraints For Small Businesses

The Theory of Constraints (TOC), as originally developed by Eliyahu Goldratt and introduced to the world in the business novel “The Goal“, has produced some remarkable successes in big companies, showing huge improvements in the three main measurements:

  1. More Throughput (T) – this is effectively increasing sales less the direct cost of sales without any questionable apportionment of shared costs.
  2. Lower Operating Expenses (OE) – reducing the other costs of the business.
  3. Lower Inventory and Investments (I) – reducing the money tied up in the business whilst also improving due date performance and cutting lead times.

This has been achieved by focusing improvement efforts on the main constraint or the weakest link in the chain. Quite simply, this is where you can get the biggest bang for your buck.

Just to be clear, a constraint is something that stops you from reaching your goal. For example, consistent customer service problems may stop a business from reaching its goal to increase profit. [click to continue…]

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What To Do If Your Business Is Stuck Or You Feel Stuck

First let’s look into the problem of being stuck as a business owner:

  • What does it mean if a business is stuck or of a business owner is stuck?
  • What are the symptoms of being stuck?
  • How does “being stuck” fit into the cycle of business growth and decline?
  • What can you do to move from being stuck to being unstuck?

What Does It Mean If A Business Is Stuck Or If A Business Owner Feels Stuck?

If a business is stuck, it means that it has lost its forward momentum:

  • The rate of growth in sales and profits has slowed down, stalled or perhaps even gone into a small decline.
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  • It’s become harder to convince customers to buy because you’ve lost key factors of differentiation that gave you an edge over your competitors.
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  • If you don’t get unstuck, your business is likely to go into decline and the future of your business may be threatened. The amount of time you have to take corrective action depends on the buffers you’ve built up in  terms of cash and reserves of profit and the rate of decline in cash and profit.

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Have you ever noticed that, almost always, if you want to buy some milk from a convenience store, medium sized supermarket or a huge superstore, the milk is usually stored against the back wall.

In my local Asda, Tesco and Morrison’s, the milk is right at the back. In the Sainbury’s, it’s in an aisle close to the back.

Milk is a popular item and it is something that many people buy. You’d have thought that, for convenience, a shopper friendly store would have a refrigerator quite close top the entrance so that people who only want milk can grab it quickly.

I can’t think of anywhere that happens.

Instead the supermarkets force you to go deep into their store and past a large number of end of the aisle promotions offering BOGOFs or twofers. These “bargains” inevitably tempt many to slip something extra into their baskets.

Supermarkets may argue that it mains sense for them to put milk at the back for reasons that don’t involve hijacking your wallet.

Milk is heavy and therefore hard to transport. Of course so are cans of coke, bottles of beer and wine but they are rarely kept at the back.

Then there is the fact that milk has to be kept refrigerated so putting the refrigerators near the exist is likely to push up their costs because of heat coming in from outside. I’m not sure that excuse is genuine. I can think of stores with a nice convenient refrigerator full of ice cold drinks near the checkout points.

We also know that high margin, easy to forget items are deliberately put by the tills along with some tempting impulse purchases. Batteries are by the till but they will be a high price, high profit brand. The same applies to headache pills. the store doesn’t have generic paracetamol or ibuprofen but the branded alternatives. The same drug but three times the price.

This Is Not A Rant About Supermarkets

Can you learn from these “best practices” of supermarkets and apply similar lessons to your business?

It’s probably simple if you are also a retailer. You may be able to think of “essentials” that can be spread out around the store to get people in deep. You may also be able to think of a few tempting high margin impulse buys that solve a problem or satisfy a desire.

What about other types of business? Can you apply this logic or is customer convenience the driving force?

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How To Measure Marketing Activities

Marketing is a critical activity for any business that is not in a monopoly supply position or operating in a marketing where demand overwhelms the ability to supply. But how can you measure marketing and know if it is working?

“Half the money I spend on advertising is wasted. The trouble is I don’t know which half” is a famous quote from John Wanamaker, a department store entrepreneur in the late 1800s and early 1900s.

One hundred years later, it’s still a sentiment that many business owners and senior managers can relate to.

The Two Types Of Marketing

I normally talk about the two types of marketing being the difference between search marketing and outreach marketing:

  • Search marketing – making sure your business is found when a customer or prospective customer is looking for suppliers.
  • Outreach marketing – reaching out to target potential customers to encourage them to take action to contact you before they begin searching more generally.

Today I want to refer to a different two types of marketing activities:

  • Brand building – promotional activities to increase the awareness of a brand name and (hopefully) the brand positioning, i.e. what the brand stands for and means.
  • Direct response marketing – actions taken to encourage a customer to make contact with you immediately.

There is some crossover since direct response advertising can also help to build brand awareness depending on the extent to which the business name and any slogan is emphasised in the promotions. [click to continue…]

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I’ve had three people ask me how to sell (more) premium priced watches online.

This popularity is part of the problem. It appears to be an attractive market to be in from the seller’s perspective with an interesting product and a high transaction value. However some of the underlying issues make the opportunities for success very limited including how comparatively easy it is to set up a business selling watches online.

Winning The Watch Buyer’s Confidence & Trust

I can’t emphasise enough the importance of winning the buyer’s confidence and trust. Premium watches are an expensive purchase for most people and they have a natural fear that things may go wrong with the transaction. You know if you can be trusted (or not) but they don’t.

The easiest way to understand is for you to put yourself in a similar buying position where you are spending a few hundred pounds online. It doesn’t work so well if you’re using imaginary money but you may get part of the way there but you won’t have the risk of loss.

I’d try two types of products

– an unbranded item where you have uncertainty about the quality.

– a branded item, where, if genuine, the quality shouldn’t be an issue but where you have a nagging doubt on whether you can get a better deal for exactly the same item elsewhere.

This will give you a feel for something I call the buy / don’t buy scales. It helps you to weigh up the issues that encourage someone to buy and the concerns that hold back the purchase decision. [click to continue…]

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As marketers I think it’s vital that we understand the buying decisions of our prospective clients and customers. I’ve used the idea of the Buy / Don’t Buy Scales in my coaching to help understand what tips the balance towards or away from a purchase.

Imagine an old fashioned set of weighing scales where you weigh one item against the other, and the heavier side tips down.

That’s what I think goes on in the mind of a buyer and a recent book, Why People (Don’t) Buy: The Go and Stop Signals by A. Chakravarti and M. Thomas (available from Amazon.com or Amazon.co.uk) has helped to clarify and extend my own model.

The Buy / Don’t Buy Scales

Have you noticed how some buying decisions you make are so obvious that they need little thought, how other possible deals just scream out “No” and some leave you conflicted and unsure. You want but you’re nervous and the more you think about it, the less clarity you get in your mind.

This is the Buy / Don’t Buy Scales at work in your own mind as you consciously and unconsciously weigh the factors that are in favour of buying and the factors against buying.

The presence of that feeling of uncertainty sometimes shows that there’s some resistance in the scales. Buying is not a case of knowing which side is heavier but feeling that the buying side is significantly heavier.

Let me explain, if you’ve got the buyer’s equivalent of 10 kg on one side of the Buy / Don’t Buy Scales and 2 kg on the other, say in favour of buying, the scales tip decisively. The decision to buy is clear.

It would be the same if it was the other way around only this time, the decision would be not to buy.

However, if you’ve got the equivalent of 10 kg on one side and 9 kg on the other, the resistance in the scales means that there is just a gentle tilt one way. Your mind knows that it’s a close decision and that makes you uneasy.

Tilting The Buy / Don’t Buy Scales

As marketers, we want to tilt the scales in our favour and we have two options:

  1. To load more reasons on the buy side of the scales.
  2. To take away or reduce the issues that are weighed against the decision on the don’t buy side.

It’s hard to understand just how much resistance is involved with the individual’s buying scales i.e. what the ratio of buy / don’t buy factors has to be or what the difference in factors needs to be.

It’s clearer if I stay with the idea of using weights. The 10/2 scales was clearly a buy but different buyers may view that balance in different ways:

  • One person may see the ratio as important – at 10:2 or 5:1, it’s clearly impressive and crosses the threshold, which for the sake of argument may be a ratio of 3:1.
  • Others may see the difference in weights as the vital issue – the 10:2 balance gives us 8 kg extra in favour of buying. The needed threshold for a clear buying decision may have been a difference of 5.

So if we’ve got the current scale reading 10/9, we have some restacking to do.

For the buyer who wants to meet a ratio threshold of 3:1, we can see the challenge in one of three ways:

  • Increasing the buy side by at least 17 kg so the scales read 27:9 or better. That’s a big increase on the buy side.
  • Reducing the don’t buy side by at least 6 kg so the scales read 10:3 or better. Proportionately that’s a big change but may be easier to do than pushing so hard on the buying side.
  • We can do both by adding items that improve the assessment of buying by 5 kg and by reducing the factors that count against buying by 4 kg. This gives us a new scales balance of 15:5

For the buyer who wants a difference in the ides to exceed a certain side, the changes are much smaller.

If the buyer needs a difference of 5 to buy, we can see the challenge as one where we change the 10:9 balance by:

  • Increasing the buy side by at least 4 to make it 14:9
  • Decreasing the don’t buy side by at least 4 to make it 10:5
  • Or changing both by a little to give us the needed gap, perhaps of 12:7.

What should be clear is that we’ve got one type of buyer who is much harder to convince than the other. This comes down to personality as well as the buying situation.

Some people are more cautious and more risk sensitive than others. They take more time to reach a decision and need more convincing along the way.

It’s also much easier to be less sensitive to risk if the purchase item is small relative to the buyer’s income and wealth. Buying something for £10 is relatively minor and it doesn’t matter much if things go wrong. Buying something for £10,000 is much harder unless you have a lot of money.

Some Factors Will Stop The Buying Decision

Some factors aren’t just good to have or good to avoid, they are essential to the buying decision.

I’ve talked before about order winners and qualifiers. Qualifiers are factors that are needed to get you into the game and without them, you’re not a contender.

Factors that cause disgust are typical examples.

When you’re looking for a hotel, there is a general assumption of cleanliness. It’s a qualifier and if there’s clear evidence that the room is dirty (e.g. stained bed sheets, half eaten food on the bedside table etc), you’re going to recoil in horror. There’s a level where you won’t drop below.

Buyers want to be confident that they’re going to get good value for their money and a wide range of factors go into creating that confidence. You can get away with missing a small number provided your product or service is rare and hard to find. Missing a lot of factors that create confidence or having factors that destroy confidence will kill the deal. Again there’s a level where lack of confidence becomes a disqualifier.

No matter how much you try to stack the buy side of the scales, this huge weight is stuck on the don’t buy side that can’t be shifted.

 

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Maximise Your Return On Time

It’s common practice to think about maximising your return on money invested and to have some kind of measure to track it but do you consider how to maximise your return on time?

The twin problems of:

  • Lack of time; and
  • Having too much to do;

are common issues for business owners and they can contribute to the business getting stuck in a rut. The business owner wants to move forward but seems unable to take the actions necessary.

This is why the thinking in the Stop Start More Less Matrix is important. It recognises that, to do something new or to do more of something good, you have to buy time from yourself.

Time is finite. No one has more than 24 hours in a day or 168 hours in a week.

Your task is to get the most out of the hours you choose to work in those 24 hours. In other words, your aim is to maximise your return on time. I first blogged about Return On Time in June 2009 while I was thinking about the importance of respecting the attention and time of your customers. [click to continue…]

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