Defending your business

Business is not easy and we (business owners) make it harder by making what will later seem like silly mistakes. Hopefully, we learn lessons from those mistakes, much less a bit more often.

That isn’t necessarily the hard part.

Sometimes, business gets tougher because we get the wrong kind of help. The kind of help I’m speaking of includes things that your clientele and staff might do or say, things that get published in the news, or even changes to regulations that don’t affect your business directly, but affect how your clients run theirs.

One of your jobs as owner is to anticipate and build defenses against situations that could threaten or even destroy your business.  You should anticipate these things, defuse them, prepare for them, and work around them.

Anticipating these situations is what allows you the time to defuse, prepare for and work around them – that’s really what defending your business is all about. Most of these situations will present themselves whether you like it or not. The secret is being prepared for them in advance.

Clients and Prospects

Most client and prospect related situations can be avoided with proper sales and service training. A number of these will come to you in the form of sales objections, misinformation, price shopping and other things that your marketing is designed to deal with.

Reacting to these situations in the moment will often produce a solution that hasn’t been well thought out – and usually hits profit first, while setting precedent you don’t want to set. Anticipating and training for these things will prevent the need to react rashly in most cases.

Media, Industry and Gurus

It’s easy to place the blame on the media – particularly today when some news outlets act more like news creators and take part in less than authentic clickbait campaigns to get your attention.

Media includes far more than the local or even national papers. It includes the trade organizations and industry groups that affect your market, and the “guru” types who command attention of your market.

The key is to be monitoring everything you can that relates to your business, your clients, your clients’ business and any external entities that affect them. There are plenty of automated tools out there to make this easy.

Monitoring isn’t enough. You have to lead the market by taking a position on what’s going on. Some will follow, some will not.

Regulatory Changes

There are a couple of angles to consider.

One is for the business that simplifies the act of dealing with government agencies of any kind, at any level. These businesses also live and die by the frequency and volume of changes in those regulations.  It can be a bit of a roller coaster ride.

Ideally, you need to make sure that these regs aren’t the sole reason your clients do business with you. If your model is designed and totally depends on the ability to help those who need to work within the regs and nothing else, you’re at risk. Rather than depend on a single revenue stream, use the knowledge you’ve gained about these client and their business to find ways to help them in addition to the ways you help them deal with regulatory challenges.

Another angle is all about staying on top of the changes that affect your clients and leading them in the direction that keeps them out of harm’s way. Any efforts you make to combat these issues are a different, and perhaps simultaneous, path while the rest of your efforts are still at work.

Equity

One particularly strong way to defend your business is to build equity into your business model.

You might think that you can’t do this because you don’t deal in real estate or stock, but that just isn’t so. If your business model allows you to know that you have sales booked for the next 30, 60 or 90 days (if not beyond) – that’s the sort of equity I’m speaking of.

Having those sales booked in advance, regardless of how you’ve done so, gives you the flexibility and freedom to make better decisions when defending your business, because you aren’t thinking about how you’ll make payroll next week when making those decisions.

Defending your business is one of a business owners’ strategic responsibilities. What are you doing to defend yours?

I love companies with slow computers

How much money do you waste by making your staff wait for computers?

For slow networks?

For slow internet?

For slow computers?

How hard do you make it for them to get their work done?

How many times has a hotel desk clerk apologized to you at check in time because their computer was not behaving, was slow, or was down? I don’t travel all that much, but I hear this fairly often.

How many times do you get similar messages from retail employees, or from customer service reps that you’re on the phone with?

Regularly, for me.

Is your staff’s productivity hamstrung like this? What impression does a recurring “I’m sorry, my computer is slow, thanks for your patience” message leave with your clients?

I love companies like this – when they’re competition for my clients. Don’t be one of them.

Focused on the holiday, now or the future?

It’s that time of year when business owners are pulled in many directions. The end of the calendar year has a way of doing that.

Some of us are focused on the year we’ve had, some on this month’s performance (which could make or break the year), and some on the future.

While all of those things are important, it’s a good time to remind you of the difference between “working on vs. working in the business” and how important ON vs IN is to getting your business out of what feels like survival mode.

Working IN the business

Almost all of us do this to some extent. What exactly does it mean?

Working IN the business is about taking care of today’s production and quite often, dealing with the crisis of the day – whatever that might be. It’s about making sure clients are happy, products and services are getting delivered – and in some cases, taking part in that creation/delivery.

In short – this is you, the owner/manager, working as an employee of the business. There are times when this is essential and in the smallest of businesses – the solo business owner – it’s how you generate revenue. The thing you need to be cognizant of is making sure working IN time doesn’t become a substantial majority of your work time month-in, month-out, even if you’re the only one there.

If you’re an employee reading this, I hope your employer’s owner and manager(s) spend more time working ON, than IN, but this isn’t always possible. Sometimes, everyone has to knuckle down and get work out the door.

If you’re an employee who thinks they’re doing this – see what you and your peers can do to take even one thing off their plate without being asked. Every little bit helps. If you’re worried about overstepping your bounds, ask.

If nothing else, asking the question should send the message that you have the best interests of the business on your mind.

Working ON the business

Working ON is what allows the business to worry less about what’s happening next month, much less next week or tomorrow.

Why worry less? Because you’re doing enough working ON to be pretty confident that things are booked for that day, week and/or month.

How does a business worry? When you wonder how you’ll make payroll next month, you worry – and it’s reflected in your comments and actions. When employees notice things that tell them money is tight (or really tight), they worry – and it’s reflected in their comments and actions.

These comments and actions reflect on your business. They send a message to your client, your banker, your family (and your staff’s families) and others.

Working ON includes planning and executing, but it’s also very much about communications. Making sure everyone understands what will happen next month and the month after, how those impact the rest of the year’s plans is critical to getting everyone on board.

Are you simply too buried in working IN to work ON this month? If so, take a minute to make an appointment with yourself in your calendar later this month or early next month. Spend that appointment time planning your year so that this time next year, you’re spending more time working ON more so than working IN.

Some examples would be worthwhile, eh?

Since I talk about this fairly often, some examples of “working ON” would be useful.

Spend time on asking yourself these things:

  • What can be systemized?
  • What should never be systemized?
  • What can you do to take the risk of purchase off of your client by providing them with a meaningful, no “but clause” guarantee that they’ll trust?
  • Who are our best clients, how do we keep them, sell more to them, and find more like them?
  • Who are our worst clients and how do we get rid of them? You know who the painful ones are.  Either fix what’s wrong or get rid of them. They can poison your business.
  • How can we avoid having letting the market and your customers beat down what we do into a commodity?
  • What upsells and follow up offers can we make at the time of purchase that make sense based on what the buyer bought. Remember, the hottest buyer in the world is one in front of you. Did you satisfy ALL of their needs and wants?

 

Your systems should focus on your clients

Do your systems serve your internal customers or all of them?

By internal customers, I mean your accounting department, the staff on the shipping dock, customer service representatives, sales people and so on.

Systems that serve your internal customers do things such as accept, validate and record orders, track commissions, automate shipment notifications, manage inventory and a multitude of other things necessary to make sure that orders for products and services are properly fulfilled.

These systems (investments, really) serve your “real” clients as well, but in many cases their service to the client is indirect. I say indirect because your client rarely sees this service, even though they benefit from it. These systems enable your staff to serve your clients, keep track of where their package is and keep track of the fact that they’ve paid their bill. That’s service they benefit from – even if it is indirect.

Clearly, these investments are valuable. My assertion is that these systems don’t often focus on the client’s needs, even though they ultimately serve that client.

For example?

You knew I’d have an example or two.

You’ve probably seen a cryptic medical bill at some point. These bills have improved vs. the bills of five or ten years ago, but they could still be easier to read. Focusing on client needs might mean making the effort to create a customer-focused bill where info other than the total amount due is intelligible to the patient and their family.

A recent cold snap snuffed the battery in my wife’s car. When I went to replace it, I had to take it to a different store in the national (but locally owned) chain where I buy auto parts. Because the store’s systems are focused on internal customer needs, they were able to see inventory in stock and tell me which stores in the area had the battery I needed. While that’s useful information to help me get a new battery, it fell short of the staff’s needs and my own.

Unfortunately, they had no way to access my purchase information from a few years ago so that they could provide the appropriate discount on the new battery, since the old one expired during the warranty period.

The last time I bought a battery from these guys, they calculated the discount from the date on the battery (ie: the month and year that are picked off at the counter when the sell it to you). This time, that date was considered irrelevant. Further, I was scolded for not having a three year old receipt (which I probably have, but haven’t found).

I asked for advice to avoid this in the future, since I was used to the prior system where the pick-off date on the battery was what the trusted. The guys at the counter suggested that I tape the new receipt to the battery so that I’d have it next time. It seems like a good idea, but tape plus battery plus Montana weather times three or more years tells me that reading that receipt might not be so easy in the future.

Where’s my warranty discount?

The discount was trivial and really isn’t the point, but the situation provides a good example of a business system that primarily serves internal customers. The store that sold me the new battery has the ability to check inventory of the store where I bought the old battery and get a part from that store – both of these features primarily serve internal customer needs. A missing internal customer need that would also serve the external customer would allow store personnel to confirm a purchase at another store in the chair, as well as track the purchase for warranty purposes.

You’ve seen this before. Pharmacies are able to track prescriptions at any of their stores and refill them in any other store even if the original was called into a pharmacy thousands of miles away. To be sure, there are laws covering the record keeping of these purchases, but they could make it much more difficult to buy in the second location than they do.

Why do they buy from you?

The point is that your clients have a choice. If your internal systems make it easier for your clients to buy, redeem, refill, obtain service, and buy again…. they’ll likely buy from you.

The magic triangle of small business

Take a look at any reality show business turnaround and the story is always the same: Quality, customer service, management.

It’s the magic triangle of small business, much less the formulaic basis of most business turnaround reality shows.

What’s a bit stunning is that people actually wait around for the reality show hero and their crew to show up before they take action to clean up the mess they’ve made – and even then, it’s orchestrated by the show. Sure, there’s some money and some not-so-good publicity involved, but most of the time, they’d be ahead financially and publicity-wise if they simply took care of business without waiting for the show people to arrive.

Think about what these people would do if they showed up at your business tomorrow.

They’d taste your food or try your product or service. They’d see how clean the place is. They’d monitor your service. They’d look at your books. They’d ride around with your delivery rigs.

Yes, these are the same things you should be doing in one way or another.

Management

Sometimes other things find their way into the success equation of a good small business, but they’re almost always rooted in the magic triangle. Some of these things are a part of management.

For example:

  • Cleanliness… is management.
  • Hiring…. is management.
  • Knowing your numbers…is management.
  • Knowing who your clientele is, and isn’t…is both management and marketing.
  • Focusing your marketing and client care on exactly the right people…is management.
  • Being focused on the quality of what you produce and sell is management, as is how you deliver it.

Quality

Think about the things you’ve seen in other businesses that made you angry, disappointed or made you wonder “Who’s running this place?” Consider the service you’ve complained about.

Is any of that happening at your business? How do you know? Have you called the last several customers you lost? Are you even aware who they are?

What about the last few new customers? Do you know who they are?

If you don’t know the last few you lost or the last few you got, it’s tough to check in with them and ask how things went. If you can’t do that, you’re probably guessing or assuming how things are going.

Is there a TV truck out front yet?

The phone

Think about the last time you were served well over the phone. Or about the last time you had a terrible phone experience with a business. Remember how you felt? Remember the “I’ll never use this business again” thought process – or something like it.

Now, with that thought cemented in your mind – are you sure that your business isn’t having those same kinds of issues with customer calls? Are you positive?

Have you called your business lately as a customer? Have you talked to anyone who has? If the answer to both questions is no, how do you know that your clients are being properly cared for by phone?

Try calling your accounting department and asking a question about an old invoice. Once the conversation is done, ask them to send you a copy of the invoice.  Do they refuse? Does the copy ever show up? These are the kinds of things that set customers off on a daily basis.

Call your sales and service departments as well. How does that go? Try being a “good customer” as well as a “bad” one. How does the experience change? Are they following your training? Speaking of, are they being trained?

Onboarding

What’s your new customer “onboarding” process like? Is it consistent? Does it set expectations for how things will go after that? Do you train them how to do business with you?

What’s your process like? Think about the process that other businesses have put you through, or used to welcome you into their “family”.

Which do you prefer? Yours, or theirs? If you prefer the ones you’ve experienced elsewhere, is there a reason why you haven’t adopted parts of their process and made them your own?

Pay attention to the magic triangle and everything that it touches. Don’t wait for the TV truck to pull up – it may not arrive soon enough.

Has your client list heard from you lately?

As we head into retail’s peak shopping season, the big question is “Will my clientele buy…again?”

Have you had any contact with them since last November or December? The people spending money are in your client list, right?

Client list?

If they aren’t on your client list (or you don’t have one), how would you tell them important news when they aren’t on your site or in your store?

Without an accurate list, the only way to attempt to reach them is by spending a ton of money on advertising that isn’t guaranteed to reach your existing clients.

While you may want to advertise anyway, the message you craft (note the use of the word “craft”) for your clientele about this news should be different than the message received by the general public (or your market, if you’re  business-to-business)

Think about it. How would you tell them these things?

  • We’re moving.
  • We moved.
  • We expanded our facilities.
  • We added a new location.
  • We closed an old location.
  • We’ve expanded into these great product lines that are perfect for you.
  • We got rid of a product line that wasn’t up to our standards.
  • We’ve hired someone who is an amazing subject matter expert on (whatever is important to your clientele).
  • We bought a competitor, now we have even more great locations and consistent product and services. For those who are clients of the competitor, here’s how we’re different, better, etc.

Your client list is an asset as much as a building or your checking account. If you aren’t building it, it’s difficult to keep a connection with your clientele. What will keep them from randomly going to someone else?

The medium you use to reach them doesn’t matter. Reaching them is what matters.

What do I say to them?

What’s changed at your store in the last year? What’s new in the last year?

If “Not much” is your first instinct in response, consider these questions:

  • What service, product, customer care, processes, payment methods, shipping, return (or other) policies have changed?
  • What are people buying this year that they weren’t buying last year? Why? Is the reason important to your clientele?
  • What isn’t selling this year that was last year? Why? Is the reason important to your clientele?
  • What have you learned in the last year that can benefit them?
  • Do you have new staff members that can help them?
  • What new equipment do you have that allows you to serve them faster or better?

Would those changes be jarring to someone who hasn’t been in your store in 10-12 months? Warn them in advance than surprise them when they walk in the door or move to your checkout page.

But Mark, I don’t have a store

That’s OK. The question is at least as important for you if all of your sales are done by phone, online or in a mobile storefront (think “food cart”).

If you sell on Etsy, on your own site, via Shopify or Facebook or at local events like the farmer’s market and ballgames – how will they remember you when it’s time to buy if they haven’t heard from you in months (or longer)?

What do I say?

I covered that above, but it’s important enough to discuss in general terms because you will eventually feel like you’ve run out of things to say.

At that point, the temptation will be to do one of these things:

  • Send something, any old thing, just to stay in touch.
  • Send ads when you can’t thing of anything else to say.
  • Send nothing.

All three are a bad idea, but the first two are the worst.

The first one often results in a shrinking client list because they aren’t receiving anything meaningful from you.

The second one requires care. If you are sending useful, actionable information often enough, then an occasional ad email or footer on your regular emails is OK. What you don’t want to do is forget why you built the list in the first place and start advertising 100% of the time.

The third one is not ideal, but it beats the other two.

The key is to communicate with meaningful, useful info. You may think you have nothing left to say, but the reality is that you’ve forgotten more about your business than they’ll ever know.

Given that… Be helpful when you contact them. It’ll pay off.

Selling to everyone

Selling isn’t about the shine; it’s about what happens when the shine has worn off.

Will your (or your clients’) management will think positively of you a year from now because of an investment you championed?

They’d better.

Sales calls: How they react

What’s your reaction when a salesperson calls?

Are there any salespeople who stand out from the crowd that you don’t want to talk to? If you’re a salesperson and you don’t get sales calls, ask around your company about the nature of the sales calls your management receives. You could learn a lot about the calls you make.

With a few exceptions, here are the reasons why I react the way I do to your sales call:

  • I don’t know you, even though you act like I do.
  • I still have a bad feeling about our last deal and you act like that didn’t happen.
  • I don’t need anything right now, but I am willing to listen to new stuff – just in case – IF you make an appointment.
  • You don’t have an appointment. Message received = You don’t respect my schedule or my time.
  • I’m the wrong person or we’re have zero need.
  • Last time we talked, you gave a generic presentation suited to all businesses, rather than one fine tuned for my business needs.
  • Your last presentation was like drinking from a firehose.
  • The financials from our last discussion were generic and didn’t identify the payoff period.
  • Your assessment of labor cost savings (despite my objections/feedback) is inaccurate and/or you tend to ignore the additional costs incurred by implementing your solution, such as management costs.
  • You are out of touch with what’s going on with the product side of your business, such as open issues, deliverability delays, implementation costs / timelines.

Sales calls: How they want to react

What people would like to feel when you call is “This person is a champion for our company. They only call when there’s a likely win ready for me, or when I need to know about something new in the industry that might affect our business.

You get to that point in your clients’ minds in part by asking yourself questions like these:

Why am I qualified to propose these solutions?

Do I have testimonials not only for my solution and company, but for the job I’ve done helping my clients?

My prospect / client fits us well because…

We are a good fit for our prospect / client because…

Have you reviewed the alternatives to your solution? If so, what are the pros and cons of each and why is yours the best fit for us?

Is my company a market leader? Not just in revenue, but in vision.

Is my company cranking out the same old thing to milk their cash cow, or are we also thinking about what our clients upcoming needs and producing something to address them?

Can my solution, my company and my proposal help my clients solve problems without causing them to lose momentum?

Selling to everyone means selling to anyone

When you produce financials to sell your deal, you have to do the math and show your work, just like a high school test. Your proposal’s payback, implementation timeline and life cycle must reflect the client’s reality and your company’s ability to deliver.

The challenge is that every department views ROI differently. Today, you’re often selling to everyone in your client’s company.

A proposal citing the accounting and tax benefits will interest Accounting, but will resonate with Manufacturing / Shipping people who are concerned with process efficiency, throughput, MTBF and similar metrics?

Without buy in from everyone involved, your sale will be harder than it has to be.

Everyone involved“? The discussion that sells the CEO and CFO will differ from one that gets Manufacturing on board, much less the one that gives the warehouse manager the tools necessary to get their staff on board.

Why should you care about whether the warehouse is on board?

Because they can kill a purchase, even though you never hear it that way. No CEO will tell you that Margaret in Accounting killed the deal or that the guys in the shop / on the dock thought the solution made no sense.

A final question: “Have you produced in-context materials for the client’s departments that help the client’s management sell the proposal to each department on their own terms?

Does your business reality match theirs?

If you happen to pay attention to any of the business turnaround reality shows on TV (I see them on rare occasions), you’ll know that the pattern is the same for most of them – regardless of the type of business.

Typically, there are some quality and cleanliness problems, a management issue or two (or five),  a lack of performance that’s often attributable to training and consistent systems and processes, and last but not least, a lack of attention to the numbers.

In some rare cases, the businesses seem to be more of a hobby or an escape than an actual business – a situation that never escapes the consulting expert, and always infuriates them.

On the rare occasion when I see these shows, three things always come to mind:

  • How could they have let the situation get this bad?
  • How could they not see these obvious problems, much less fail to address them?
  • How do business owners who read my stuff feel when seeing these shows?

If you haven’t seen one of these shows, here are the things you should be looking for in your business’ reality.

Filth

One of the universal failures of the businesses in these shows is that they’re consistently filthy. Some are worse than others, with some downright unbelievable.

The reason this can get out of control in your business is the gradual creep of muck. You get used to a certain level of clean and it never again seems to be the kind of clean you’d want to see in a place you’d visit.

My wife and I visited a Cajun restaurant in the south earlier this year and found the dining room’s tile floor filthy. It was hard not to wonder if they simply got used to the dirt.

How are you doing on the filth factor?

Management Vacuum

Another consistency of the businesses profiled in these shows is a partial to total lack of management.

Sometimes, the problem is the owner(s) acting as if the business is a hobby (and often creating a massive distraction – much less money suck), while in others, it’s a failure to delegate and then use the time savings to actually manage the business. Managers in these businesses often have owner-instigated conflicts that prevent them from exerting any authority on day to day operations – making them ineffective at best.

Do any of these situations sound familiar? Ask your manager(s) about it. If you sense hesitation…

Systems and Processes

One of the most common problems in these businesses is a lack of order and consistency.  Many of them have no point of sale system or have nothing more than a cash register to balance at the end of the day.

In the episodes where food and drink are part of the business, food and drink costs are always out of control and highly variable from serving to serving and drink to drink.

They not only have inconsistent production (and thus inconsistent quality), but they also tend to have no measurement / tracking / purchasing controls in place. They have no idea how much they’re spending on food and drink or if they are even turning a profit.

Key to the resolution of these problems is creating systems to manage and track materials, sales and purchasing. Yes, I know… this seems like Doctor Obvious speaking, but you would be surprised at the times this has been missing from businesses in these shows (and in my personal observation).

Do you know how much that $8.95 meal costs your business? Don’t serve food or drink? You still have production costs of some kind.

Training

A tightly integrated issue with systems and processes is staff training. Inconsistency in these businesses starts with a lack of systems and processes and ends with inconsistent (or non-existent) training of the staff.

A universal component of the reality-show-fix is a combination of new systems, processes and staff training on those systems and processes.

Systems and processes combined with training breed consistency, which breeds quality.

Watching the numbers

Beyond cost of production numbers, a common issue for these reality show businesses is a disconnect between what the business is doing sales and cost-wise and what the owner(s) / manager(s) think the business is doing.

Do you know what your real numbers are?

What’s the reality at your business?

Constraint and risk avoidance

How do you manage constraints and risks?

The two significantly impact your company’s ability to stay alive, much less grow.

Constraints appear in many different forms: people, equipment, capital, cash flow and mental bandwidth are just a few.

Being constrained by hardware actually makes it impossible to do the things that you want to do as a business.” – Amazon.com CTO Werner Vogels.

Computer server hardware and manufacturing gear like a CNC machine or 3-D printer speeds are constraints that could prevent you from keeping up with demand, much less expanding how much and how many different things you can deliver.

While Vogels’ comment is a little self-serving, it doesn’t make it any less accurate, nor does it change that Amazon Web Services’ (AWS) has commoditized server hardware and eliminated server capacity as a constraint.

Constraints are risks

If you look closely at them, constraints are risks because they limit your ability to grow, deliver and respond to client and market demands.

When you can’t address those demands, your business risks not only the loss of critical staff members and clients to competitors, but potentially deadly stagnation.

Stagnation creates problems with design, engineering, delivery, creativity and new product development, as well as staff retention and sales.

Scalability problems are a common symptom of hitting constraints. Are you dealing with increased delivery turnaround times? Do you have increasing customer service or professional / consulting services response times?

If you think about what prevents you from delivering 30% more product next quarter, it usually comes down to scalability-related constraints.

Raw material availability, production capacity, quality control, engineering/design and other staff and/or manufacturing limits can all cause you to hit a wall where you simply can’t produce more, creating a situation that feels like walking in quicksand. Increasing price pressures are a form of risk that can push those limitations even further.

These issues can be growing pains, but more often than not, they indicate too little time is being spent running the business.

Spend less time running the business?!?

Yes, absolutely.

When you spend too little time running the business, it’s often because you’re spending most of your time on production-related duties.

It may seem counter-intuitive for owners and senior managers to spend less time doing production-related work, but you simply cannot spend all time on these things without putting your management obligations at risk.

For example, it’s your job to make sure that the business can handle the increases in production that your marketing and sales efforts are working toward. Most managers can’t do that when they are solely focused on production.

You can’t lose sight of your primary obligation to manage risk and eliminate constraints in your business, any more than you can prioritize a nice tan over the health of your body’s circulatory system.

A visible constraint changes behavior

A good example of a visible and behavior-changing constraint can be seen in change at Apple.

One of the unique aspects of Apple new product delivery during the Jobs era was a lack of vaporware. Most tech companies have gotten into a habit of announcing a product months (or longer) before delivery, wasting the media attention these announcements create.

When Jobs took the Apple stage in June and September to announce new products, he frequently finished his pitch with an availability date of “Today.” This took advantage of the excitement his announcement created by allowing buyers to purchase and take delivery minutes after Jobs left the stage.

That significant advantage changed in the last two years at Apple, making them like everyone else.

Staff and mental bandwidth

Most businesses have a backlog of physical tasks, workload and services. This isn’t a bad thing, unless the backlog is so big that your ability to promise and meet delivery times has you months out.

Most clients can’t or won’t wait that long. For service-oriented businesses like tech businesses, mental bandwidth can create significant problems for delivery and deployment, as well as constraining the ability of management and design teams to spend time on “the next big thing”. Stagnation results.

These constraints point directly at your ability and willingness to delegate. You and your staff have to be able to focus on the tasks that they perform at levels no one else can reach.

The bandwidth question to ask is “Is this work that no one else can do?”

Big Data, Small Business

Last week, we talked about questions.

Questions tend to produce answers and more questions, which can result in a pile of stuff that overwhelms a small business.

As a business and client base scales, these questions produce data that you can use for guidance, decision making and to ask even better questions. Again, this can result in a pile of stuff (data, in this case) that overwhelms a small business.

A common reaction to this phenomena is to ignore the data, or to be so overwhelmed by its volume that you can’t discern anything from it. Entrepreneurs tend to want to do it all and if they can’t do that, doing part of it seems like a failure. It isn’t.

Identifying your big data

Let’s look at one of the questions from last week’s post and see which ones are likely to produce decision-making data.

How does this impact our key performance indicators? Examples: cost per lead / new client / sale / deployment, support load, lead time, etc.

This implies that you already know your cost per lead, cost to acquire a new client, cost per order/sale, cost per deployment, average lead time per product/service and the support/customer service load your products and services require. Not gut feel, but actual numbers.

Actual numbers are important because our gut is often right when it comes to strategic decisions and the like, but it seldom has a clue when it come to numbers like cost per lead – particularly if you’ve never watched it.

Lead cost, sources, media and campaigns

For example, what impacts cost of a lead at your business?

Lead source is a good place to look.

You might get leads from referrals (cheap and strong, warm leads), from local TV ads, from local newspaper ads, from different media in your education-based marketing, from the phone book (yes, some businesses still depend on those leads), from direct mail (likewise, still quite productive if used properly), from your website, mobile app, and so on.

Each of these have different creation and distribution costs. Each will produce a different lead flow, much less volume and types of client. While in the beginning, you’re likely to lump all of this data together, at some point you need to break them out by media and eventually, by campaign.

You’ll want to do that so that you can answer questions like this:

  • How do you know which media produces the most profitable clients?
  • How do you know which campaign (and on which media) produces what number and type/quality of client?
  • How do you know if a particular campaign works well on one media, but terribly on another?
  • How do you know which media (or campaign) tends to produce clients that are high maintenance to the point that you tend to fire them or not accept them in the first place?
  • How do you know which media produces the best (however you define that) clients you have? Is there a specific type of campaign that does this?

From time to time, an owner will tell me that their businesses doesn’t do any marketing so this kind of thing doesn’t help their business. If that’s really true, you’ll usually have referral sources that produce more and better leads than referrers do.

Would it be helpful to know who is sending you the best referrals?You probably have a gut feel on this, but are you sure that it’s accurate?

Thinking back on those questions

Given the detail on the one question of cost per lead, you can see how this can become overwhelming in a hurry. Don’t fall victim to that. Take it a step at a time.

You may start with another metric. Cost per lead is important for almost everyone, but it isn’t always the best place to start.

When you ask questions like “How did the pilot program go?” – it might provoke follow up questions about the data collected during that pilot which would support the “How did it go?” question.

If those answers aren’t backed with data, then that might provoke you to add data collection to your pilot projects in the future. This will take more time but it will produce better answers that don’t depend on gut feel or a need to be right.

Better answers are what we’re looking for.