Category Archives: Business Growth

5 TIPS FOR BUSINESS GROWTH IN 2018

Let’s start the year off right. Whether you are an owner, manager, or advisor, here are five tips for business growth in 2018.

  1. When thinking about business growth, think about getting better, not bigger.

The word “growth” has two definitions: (1) To become bigger; and, (2) To improve, or become better.

All businesses — no matter how large or small — are at their essential core collections of systems and processes. Those processes are: Sales, people, accounting and finance, and operations. And strategy and leadership are systems as well.

More often than not, owners and managers focus on external factors as being their obstacles to growth. For example, they see too much competition as the barrier to more sales. They might respond with aggressive price cutting. Instead, focus on internal factors — such as systems to identify and satisfy unmet customer needs — will do more to profitably increase sales than discounts.

Thus, our first business growth tip: Keep in mind, better produces bigger.

  1. Don’t mistake symptoms for problems.

Too often owners fall prey to mistaking symptoms for problems. The symptom, such as a cash shortage or high employee turnover, inflicts pain.

Owners need to dig deep into the company’s systems to discover root causes of the pain. Cash could be short because of inadequate processes for collecting receivables. Employee turnover could be high because of improper training and counseling of unit managers.

As simple as finding the real cause of a problem sounds, often the quick-fix is pursed. Unless the root cause of problems is identified and addressed, growth potential will not be realized. Owners need to run to — not from — problems, and dig deep for the systemic cause.

  1. Accounting is your friend, not foe.

Many owners utilize their accounting processes only as much as is necessary to file taxes, satisfy lenders, and know profits or losses. Using accounting processes to their fullest extent can provide powerful tools, which in turn can steer businesses toward growth.

The real power of accounting comes from a robust use of budgets and forecasts to manage the execution of business and strategic plans. And from a sharp analytical look at operations, pointing out hidden opportunities and deficiencies to be addressed.

  1. Take advice from outsiders.

Human nature is such that proximity diminishes objectivity and prospective. Emotional attachments, biases, and prejudgments get in the way of independent, clear thinking.

Increasingly, owners are relying upon informal boards of outside advisors. Or they engage business coaches or consultants. The benefit of this business growth tip: Objective thinking and viewpoints, that often lead the way forward toward growth.

  1. Create a culture of accountability.

The best formed plans and strategy mean little unless they are well-executed. Successful execution requires a culture of accountability. Everyone needs to know and understand what is expected of them. And to be committed to the concept that they agree to deliver on promises made.

To support the culture of accountability, systems and processes must allow for measurement. Remember the old sayings: If you can’t measure it, you can’t manage it.

New Years’ resolutions come and go. But stick by these tips year-round, and your odds of your being on a path to building a more profitable and valuable business 2018 will be increased.

 

 

 

 

Five Questions Business Owners Should Ask in Q4

5 Questions Business Owners Should Ask in Q4

For most businesses, the start of the fourth quarter is here. That means it is a good time for owners to reflect on the past, and plan for the future.

All businesses – large and small – are at their essential core a collection of processes and systems. The primary ones being: Sales, people, accounting and finance, and operations. And, although we may not think of them as systems, strategy and leadership.

The five questions owners should ask now all go to improving a businesses’ processes. Approaching this diligently can produce healthy, stronger enterprises: Businesses that can withstand whatever curve balls the economy, competition, or changes in technology and trends throw their way.

So, here we go.

  1. Does your accounting do more than simply tell you where you are?

Most businesses don’t get bang from the buck out of their accounting systems. Owners too often view accounting as a necessary evil. Something to get the invoices out, bills paid, taxes done, and inventory counted. And of course, to know how much money was made or lost last month.

Valuable, well-functioning firms make effective use of the accounting process. Owners extract critical information to guide making management and growth decisions. They skillfully use forecasts and budgets to execute on growth plans. And they use leading-indicator metrics to stay ahead of the curve.

Is Q4 the time for you to take steps to make your accounting process work for you, and not you for it?

2. Is your sales process effective in all its relevant channels?

Often, businesses with well-functioning accounting, people, and operational processes have less-well functioning sales processes.

You should examine the following:

  • Whether processes for receiving referrals from current and past customers are optimized, with all employees participating.
  • The process which produces sales goals and quotas, to assure they are realistic, achievable, and even desirable.
  • Methods for compensating sales people to be sure they are aligned with the results you are seeking.
  • The metrics used to manage sales activity, with an eye on the alignment of behaviors and activities, and desired results.
  • Whether all sales and business development channels, including referrals, social media, cold and warm calls, trade shows and conferences are effectively being utilized. 
3. Do your employees go the extra mile?

One of the most important drivers of growth and value in a company is its culture. Experts at buying businesses say culture is one of the first things they look at in a potential acquisition. Is your company culture one of going the extra mile, or taking short cuts?

Cultural changes are not easy, but also not impossible. It takes leadership, and a strong talent management process. Remember, people processes are far more than simply HR.

4. Can you distinguish symptoms from problems?

The odds are, you have a pretty good idea of the pain points in your company. But often, symptoms are mistaken for problems. It is important to dig deep – perhaps relying on the Toyota method of asking the “five whys” – to get to the core root cause of a problem.

The true cause of much corporate pain is often buried deep in a systemic or process problem. Finding and fixing those problems will make companies fundamentally healthier businesses. And ones that can not only grow, but also weather storms and change.

5. How do you utilize leaders in your organization?

Many of the most impactful leaders in organizations are not the ones at the top, but rather those in the middle. They are the ones who set examples of behavior, attitude, and technique for others to follow. For better, and for worse.

The first step in effective utilization of leaders throughout the company is recognition of how important these leaders are. The next step is being sure to nurture, support, and recognize those who lead for the good. And to counsel, and sometimes remove, those who lead for the bad.

Related is the question of how you as an owner function as a leader. Are you the conductor of an orchestra, getting the best out of all the players, so that together you make beautiful music? Or, are you in essence a one-man band?If you stop playing, does the music die?

If  after asking yourself the questions above, you expect to be disappointed by this year’s results, you have strong motivation to make things better next year. And if you are happy with the way things are turning out, you have equally as strong motivation to keep things moving in the right direction.

When you honestly and objectively answer these questions, you should be pleased by some answers, and disappointed in others. This is the time to run to — not from — problems. Address the weak spots before they become weaker.

Have a great fourth quarter. And an even better next year.

To learn about how to obtain our complementary, confidential business growth and improvement consultation, read here

 

Network and They Will Refer? Think Again

Referral Effectiveness

Are referrals important to the growth of your business? If so, do you network like crazy, believing that if you network, they will refer? Maybe they do. But if business is not pouring in, perhaps you should take a closer look at the nature of referrals and your referral process. And you should be thinking about referral effectiveness.

At its core, any business — no matter how small or how large — is a collection of systems and processes. Each of a company’s processes must function optimally, and must align with the business’ strategy, business model, and other processes.

To improve your company’s referral effectiveness, you need to understand the types of referrals, a referrers reasons for making a referral, and types of referral sources. And a few other things, including return on networking investment. So, let’s start.

Types of Referrals

Broadly speaking, there are three types of referrals: Responsive, pro-active, and problem solving.

Responsive Referral:

If you ask your CPA if he can recommend a lawyer to write a will for you, his referral would be responsive. It responds to your specific request.  

Proactive Referral:

Much different than the responsive referral is the proactive referral. The proactive referral requires a level of knowledge, effort, and risk for the referrer. Thus, proactive referrals are harder to receive than responsive referrals.

An example: Over lunch with his CPA, a client expresses dissatisfaction with his liability insurance broker. The client does not ask the CPA for a referral. She simply gripes. The CPA would need to exercise a level of proactivity to suggest a broker he believes might better serve his client.

Taking the example a step further, assume the client never complains about the insurance broker.  Instead, during the course of preparing his client’s tax return, the CPA happens to notice that the insurance rate his client is paying is higher than the rates paid by other clients. The CPA could be ultra-proactive, and recommend a broker he believes might charge his client less.

It is critically important that you understand the type of referral – responsive or proactive – that fits your business model. This depends upon the type of business you are in. Your target referral type will dictate your referral strategy, and define your process.

If your business serves a wide range of customers with an easily understood service, such as real estate brokers, electricians, or dentists, you likely depend upon responsive referrals. People ask those they know and trust to refer someone they have had good experiences with.

Niche or specialty businesses, or those that provide services or products not easily understood, likely depend upon proactive referrals.   

Assume, for example, your business provides contingency-fee cost saving services, such as energy cost audits, to companies with more than 100 employees. No business owner, CEO, or CFO is going wake up in the morning and decide he or she needs your help. You solve a problem your customers don’t know they have, until someone tells them. Thus, you are dependent upon proactive referrals. You need another service provider to take the initiative to recommend your service to their client.

Problem-solving referral:

The problem solving referral solves a problem for the party making the referral. It helps them with their problem, as well as their client’s. Example: A lawyer who’s client falls outside his expertise might make a referral to the appropriate expert. This solves both his client problem, as well as his own.

Reasons for Referrals – Referrer’s Motivations

Why would anyone make a referral to you or your business? Human nature is such that we often assume others would make referrals to us — when the opportunity presents itself — because they want to help us. That may be the case. But more likely and more often, people make referrals to help themselves. Not to help you.

What is your potential referrer’s need that can be fulfilled by making a referral to you? Although often difficult to do, you can become very effective at securing referrals if you become good at identifying and satisfying referral sources’ needs. To do this, you need to understand their motivation for making a referral to you.

Take our CPA-referrer in the responsive referral example above. When the CPA responds to his client by making a referral to a wills and trusts lawyer, he of course helps his client. But he also helps himself by bring value to his client, and by creating a “referral debt” from the lawyer he refers his client to.

It should be obvious that a referrer’s needs will be much deeper to make a proactive referral than to make a responsive one. For this reason, in developing qualified referral sources, focus on understanding how you can and bring value to them. This takes effort, time, and skill. Your goal is to make referral sources, especially proactive referral sources, feel that you are doing them a favor when they make a referral to you, and not the other way around. 

Referral Sources

In addition to understanding referral type and referrer needs, an effective referral process requires tailoring process to different referral sources.

For many business, by far the most valuable referral source is current or recent customers or clients. Yet often, this gold mine for referrals is overlooked. Your referral process should make it a high priority to turn your customer based into your sales force. There are a variety of techniques to do so.

Beyond your customer base, are employees and former employees, business that provide related but not competitive services, and even competitors. Part of your referral process should be understanding and then rating of all potential referral sources, with specific plans and goals for each.

Finally, it is important for you to weed out potential referral sources, that when examined, are “fools’ gold:” Sources that in reality have very low probability of providing you with referrals. As with anything else, you need to be mindful of your time budget for networking, and spend it wisely.

All the Rest

Beyond the foregoing, it is important to keep in mind that any referral is a function of four things:

  • Willingness to refer: Your source is open to make a referral. There are plenty of potential referral sources who are happy to eat the food you buy, and drink the drinks you supply, but are not willing, for reasons often not well understood, to make the effort to make a referral. When you find a good referral source, make a verbal commitment to make a reciprocal referral with the right opportunity, and obtain a verbal commitment.
  • Ability to refer: Mere willingness is not enough. Some people in some companies do not have the authority to make referrals on their own. Just as you need to qualify customer leads, you need to qualify referral sources.
  • Opportunity to refer: A willing and capable referral source needs the opportunity to refer, and depending on their business, position, and experience, may have many or few such opportunities. In rating referral sources, always consider the opportunity factor.
  • Referral visibility: If a long time has passed since you last had contact with a potential referral source, odds are good that despite willingness and ability to refer, you will be out of mind when the opportunity occurs. A constant drip of email newsletters, and an organized “stay in touch” campaign can help keep you top of mind to guard against referral invisibility.

Finally, you want to keep referral return on investment in mind. Does the return on the time you spend networking justify the investment? Are you searching for referrals that align with your business strategy? In other words, is your hunting likely to catch the kind of business you wish?

So, if you thought obtaining referrals was as simple as attending some networking events, perhaps you have a different view now. While you must offer exceptional customer service and quality products, it takes more to make your referral work. Develop your referral process with the same care you apply to customer and client service, and networking could pay dividends sooner than you think.

(c)  2017 ALL RIGHTS RESEREVED RKG Consulting Group, Inc.

What Does This Boulder Have to Do With Business Growth?

Boulder in the Road

The Answer is: Plenty.

Attaining steady, sustainable business growth is the Holy Grail for owners. Some owners — even in competitive, mature industries — manage to win the gold. They rack up steady sales gains year after year. Others, in growth fields with a continual rising tide, struggle to get ahead.

Why do some companies cruise down an open road to business growth, while others’ revenue charts look like a roller coaster? Or worse yet, like a lightning bolt hitting earth?

Problems vs. Symptoms

The answer lies in the ability to distinguish symptoms from problems. And then, in digging deep to find and fix the obstacle or obstacles standing in the way of growth.

The problems that impair business growth almost always lie in a company’s business model, strategy, processes, systems, culture, or governance.  A study by senior advisors at the global consulting firm Bain & Company concluded that over 90% of the time, company growth is impaired by internal, as opposed to external factors.

If attaining sustainable growth is as easy as finding the obstructions caused by systemic or process problems, why don’t more owners do it? The reason is deceptively simple. Human nature has endowed all of us with blind spots and biases.

Familiarity and close proximity rob us of the objectivity needed to clearly see the problem. Some people possess the prescience to overcome this, but most do not.

In other cases, owners see the problem clear as day, but due to biases fail to grasp the full extent of the matter, or hesitate to take action.  The typical case is that of an owner’s relative employed in a critical function, but not doing the job.  Most often, it takes an outsider’s view point and objectivity to see both the problem, and its consequences.

Common Obstacles to Business Growth

The most common root cause problems that we see standing in the way of growth are:

  • Incomplete, inaccurate accounting and management reporting information, preventing good decision-making.
  • Salespeople and reps not well-coached, struggling with time management, and operating without useful data and metrics.
  • Company cultures hostile to change and innovation.
  • Lack of effective operating governance — and a clear understanding of employee responsibilities, expectations, and goals — and processes for monitoring progress and holding people accountable.

Getting to the core root cause obstructing growth requires a systematic and methodical deep dive. Once the core problem is accurately identified, solutions are often not difficult to implement.

Thus, owners and their advisors need to be mindful of their specific boulders in the road to growth. Until core obstacles are removed, all other efforts to grow will not be fruitful. But remove the obstacles, and it can be an open road.  

If you have any questions or comments on this post, contact us, or send us an email at info@rkgconsultinginc.com.