Do You have Effective Sales and Marketing?

Last time, I talked about companies that may not have enough capital to succeed.  The second common way that businesses fail is around poor Sales and Marketing.  I want to differentiate the two functions.  The job of Marketing is to get people or businesses to express interest in your business.  This is the creation of Leads or Prospects.  The job of Sales is to take those Leads/Prospects and convert them into Customers.

A metric to think about in this mode is the “Cost of Customer Acquisition” (COCA).  The way to figure this out is to divide the spend on Sales and Marketing by the number of new clients.  If you spend, $10,000 on Sales and Marketing and have 100 Customers, then your COCA is $100.  This number is important because it defines how much value each customer costs you incrementally.  If you are selling a haircut for $20, then $100 COCA is a bad number.  If you are selling Luxury Yachts, $100 is an awesome Cost of Customer Acquisition.  A good COCA is very dependent on the business.

One thing to note is that various Networking and Referral Marketing systems are relatively low cost from an out-of-pocket standpoint.  However, time needs to be considered.  For example, I am a member of BNI.  BNI recommends that you spend about 3.5 hours a week on meetings with other group members.  If you have an hourly rate of $50/hour, then this costs $175/week or $700/month or $8,400/year.  Without pocket expenses, this is really $10,000 per year.  There is nothing wrong with spending $10,000 on Sales and Marketing if you get your money back.

So, when we are talking about having an efficient and effective Sales and Marketing process in your company, calculate your COCA.  You can break this down and see what your cost for different Marketing Channels is.  You can look at your Sales Conversion Rate for your Marketing Channels.  With that information, you can begin to understand if you are being effective.
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Advertisements

Do You Have Enough Money?

We have been walking through why Small Business fail and this is one of the big questions.  In a technical context, I would argue that most startups are undercapitalized.  They don’t really have enough money to start their company and struggle before it can become profitable.

Why is that?  So many people that I talk to don’t have any financial background and have little interest in learning.  This means that they are unable to create an estimate for the startup costs of their business.  I normally run into them when they have an idea and ask me to work for a percentage of the company or for free/barter.  I know that you are now thinking, “Is it that he has not been able to demonstrate a value proposition?”  That may be true some percentage of the time, but I know many cases where they just did not have the money.

Let me give you an example.  I met with a Woman who wanted to start an Alzheimer’s Care Center.  This center would be located on a farm so that they could grow their own food.  This was to provide the residents with animal interaction and organic food.  I asked if she had a property in mind.  I was not sure that such a property would be available for sale and she might have to build.  I also was unclear on the insurance and liability issues involved by mixing two industries as she wanted to.  Her plan was to keep her full-time job and run this facility.  She needed her job to pay bills while this facility was starting up.  In the back of my head, I expected that this would take $5M – $10M to start.

Now I recognize that this is an extreme case, but I have a multitude of lower end examples.  They ask for my help in developing and sometimes writing the business plan.  When they find what I charge for this, they turn white and say thank you.  I know that I am not unrealistic in what I am asking.  They are asking for anything from 10 – 100 hours worth of work and want me to take less than $5/hour.  If you are in that situation and cannot afford to get professional help in areas like bookkeeping and website development, then you need to consider whether you are doing the right thing.

So, if you don’t know how to create a budget and estimates for a 2 – 3-year ramp-up phase of the business, then expect to hire an expert (like me) to do them.  Unless you are my personal friend, don’t expect my help for free.  If you cannot afford that help, do something else until you can afford it.

Thanks, and have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

A Formula for Change

In pursuit of understanding why business owners are not always able to fix their businesses, I want to start with a Formula.  In fact, it is called Gleicher’s Formula.  This is a way of judging whether any change will happen within an organization.  Let me use what is a simplified form called the Dannemiller Version:

D  x  V x  F  >  R

Where D stands for Dissatisfaction;
V stands for Vision;
F means Fist Steps;
and R is Resistance.

Now if I apply this formula to most business books, they are really clear on the Dissatisfaction.  Most of these books are single topic-oriented about how to grow a company or have better employees or have customers lining up for your products and services.  Readers will self-select books around topics that are of interest to them.  There are over 20 Millions solo entrepreneurs in the United States, so there is a good sized market.

The Vision is generally pretty clear as well.  “Would you like to be able to never advertise your Products, Click Here to Find Out How!”.  Some books are not quite as clear about this, but they generally miss the point of Vision anyway.  Vision is all about how whatever change impacts the rest of your life.  Nobody wants to address this, because it is intensely personal.  A book can not interact with a business owner and find out how their life is different because of a change.  So, instead, it is all puppies and rainbows.

Finally, most books are very unclear in First Steps.  They talk about a grand idea of some sort.  But leave the implementation of the idea up to the user.  It is one reason that I actually have a very small number of books that I recommend to people.  I want to recommend books that don’t just sound good but give you a roadmap for implementation.  And it is an implementation where books very often fall short.  Well, it is not really their fault.  Books fall down because things happen in our business and our life.  Momentum gets lost and there is nobody to force us to carry on with implementing a change.  The change becomes forgotten and washes away.

So, you can see how many well-meaning books can simply fail to get results.  This is true even if they offer excellent ideas and information.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Books about Business

I was thinking the other day about Business Books.  I have read many as have many of you.  Lots of innovative ideas, tips, and thoughts are in these books.  So, I ask myself:  “Why do businesses still fail?”  I think this is a fair question.  I want to explore this notion over the next several posts and talk about it.

I want to start with my business.   I work with several smaller businesses and meet many more.  When most people talk to me about their business what they want is a different result.  That part I understand.  They want More Revenue, Better Employees, More Time, or a Business Exit.  Pretty simple.  What many of them are unwilling to do is change what they do.  It reminds me of the saying by Albert Einstein, “The definition of insanity is doing the same thing repeatedly and expecting different results.”

Transformation of results is about Change.  Change is a much scarier prospect than failure it seems.  The good news that Change is a way to make things happen.  You can take control of what you want by planning a Change.  All good Coaches of any sort want to look at what will be achieved and helping people define that.  That is why we all focus on Goals and Vision.  Get a person or a business to define what they want and make it meaningful for them.  Once that is done, we just must help come up with a reasonable plan and ensure that there is progress along that plan.

I think that Sports Coaches are all about that.  What makes one team better than the other?  Talent is a key factor.  But so is motivation and the willingness to work toward a common goal.  We have all seen groups of people be a team.  We have also all seen them be a group of individuals.  That ability to get them to pull in one direction is Leadership.  Helping a group become a team and pull in a common direction is what a Coach does.  This includes Business Coaches like myself.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Annual Plans:  Why Have One?

We have just started Q4 of 2017.  That means it is time to start looking forward to 2018.  In my view, that means the development of an Annual Plan.  This is somewhat different than a Business Plan because it has a lot of tactical details about how 2018 will be executed.  But we will come to the contents of a plan in another post.  Today, I want to talk about why we have one.

The first reason I want to give you is what I call “The 7% Problem”.  What is that?  It is the Operating Expense Inflation that businesses go through year after year.  When I used to measure it at Advanced Fibre Communications it was 7%.  It is the answer to the following question:  If I do nothing, how much Operating Expense will I have next year?  I found that costs went up about 7% year over year.

Now, I am quite sure that you have a different number.  But I bet it is not that far off from 7%.  Even in my own business today I saw a 20% rental increase on my office year over year.  So, this can happen to the smallest of businesses.  When you have employees, remember you have to give people raises.  Raises impact Worker’s Compensation and other Insurance costs.  In any case, you need to expect your costs to increase over time.

“The 7% Problem” is all about what you are going to do about it.  Are you going to increase Revenue?   If so, how and how much?  How about Operating Expenses?  Can you reduce them?  How about Costs of Goods Sold?  Is there a way of lowering them?  In any case, all of these things require Change to your Business and the way it operates.

That leads to the question:  If I am making a Change, how do I know it is working?  And that is the point of the Annual Plan.  You take last year’s business and you overlay it with specifics about the changes that you are going to make.  Most importantly, you build metrics around these changes.  This becomes part of your dashboard for next year.  You can review your progress against the metrics and figure out how to make them work or do something else.  You need to make these plans living documents to use them to help your business.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Financing Your Business

Over the past 4 years, I have written on occasion about Funding and Financing Sources for a Business.  This will be a series about Financing and how to view it in your business.  The goal is to talk about various stages of funding for different kind of companies as well as the various types of players.  The thing is that this is so vast a topic that I will probably miss something.

The there are two issues that will be at the core of everything else: Your Business Plan and Return on the Investment.

There are people that will not want to understand Your Business Plan, but they are not going to fund most Businesses.  You need to be able to describe to people how you are going to make your Business work.  That is the point of the Business Plan.  But the part here that is front and center is the Financial Part of Your Business Plan.  People will expect at least 3 years of realistic Financials with some narrative with them that helps explain why your Financials will be that way.  Most people often don’t think through their Financial considerations in any detail.  For example, How many customers do you need to make your Business match the Financials that you have presented?  That question alone leads to a line of question involving Products, Marketing and Sales that help make a Business Plan tick.  So, there are several threads that you can follow through your Financials to make the narrative of Your Business Plan.

Now, the important part of the Return on the Investment is the addition of the word “the”.  I am not talking about how you are planning to improve your Business results.  I am talking about how your investors are going to make money.  When you talk to investors, that is what they actually care about.  The Business Plan is simply a vehicle to describe how your business will grow.  There is a difference in that translating to how the value of their investment will grow.  There is another difference in how that translates to the investor being able to exit their investment and get all their capital back and make a return on top of that.  You also need to ensure that you have the risk associated with the investment being comparable with the potential return on the investment.

If that is too much text, then let’s make it simple.  You need to tell people what they are getting and how you are going to grow the value of their investment by executing your business.  Remember, you are competing in a market for this funding.  You will find that investors have choice.  And it is your job to align with them to get their investment.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

The 4 P’s of Leadership: You

May 22, 2017/

We have talked about Leadership and my 4 Ps model of Leadership:  Products, Process, Plans, and People.  The last post before we wrap up on this topic is the most important person in this whole equation.  That would be You.

You can be the kind of leader that grows and develops your Business.  The kind that focusses their energy in alignment with their Vision and their Plan.  You can tune your Business Processes to make them work more efficiently.  You can deliver Products and Services that your Customer want.

Many of you believe that last and want things to stay the way they are to allow you to deliver them.  But status quo is not something that works forever.  We want things to be the way they used to be and long for the good ole days.  Those days are gone and we need to create the better days ahead.

And that is what this process and model is about.  Creating your future.  What do you want out of your business?  Are you on a path to get there?  If not, then what are you going to change to make that happen?  If you are not sure how to change, then you need to hire help to get that change in place.  I see so many owners who don’t like the way that their business works for them.  But it can be different.  If you are not sure about that then look around.  Does one of your competitors have a business that works the way that you want yours to work?  If so, then the business you want already exists.  That means that you can do it as well.

Your Vision for your Business is something you need to share.  Share it with your employees and partners and customers and prospects.  Tell them what you want to achieve for them and for you.  Tell them why you are great.  Then most importantly make sure that your Business delivers on what you promise you want to do for your customers.  I call this your Brand Promise.  Make sure everyone involved knows what this is.  Make sure that you and your employees deliver on your promise.

It is never easy.  There are bumps along the way.  But if you believe in what you are doing then those customers that believe as you do will come to you.  It is you as the most important person that can lead your Business into the future.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Visit the FocalPoint Norcal Forum – We have many tools for helping your Business!