But Must if they Want to Be Rich and Successful

Most people go into business because they are good at something, frequently a technical skill whether it be as a lawyer, an electrician, a vet or a builder. 

Such people usually make what Michael Gerber called - The Fatal Assumption:  if you understand the technical work of a business, you understand a business that does that technical work.  

They are looking to sell a product or service they have, and hope to find a market for it.

But as the famous marketer Dan Kennedy said, “Hope is not a strategy!” 

The problem starts with whether they asked the right question before they went into business?  My guest today believes there is a million dollar question that most business owners can’t answer, that if they could answer it, it would literally open the financial flood gates…

The answering of this question is the reason most million dollar and billion dollar companies exist and enjoy the kind of success they have.

He say it works in any industry or niche…and it works for big business and small business…

My guest today is Mal Emery from http://www.malemery.com/

For those of you who don’t know Mal, as a Perth based entrepreneur, he won national recognition with his ‘Street Smart’ money making strategies, helping people in hundreds of different categories and industries to turn their businesses into money making machines.

In Australia, Mal Emery has been dubbed the “Million Maker” and the “Napoleon Hill” of the 21st Century for his uncanny ability to show ordinary folk where the money is in business.

Arguably he is responsible for helping create more first generation millionaires and multi-millionaires in business than anybody else in Australia.

Mal is a “self-made from scratch” multi-millionaire, bestselling author, business coach and mentor to 1000’s of business owners and Coach of the Coaches nationally and internationally.

He has raised himself to the top of 4 professions – marketing, sales, speaking, coaching, consulting and mentoring.

Well known for his remarkable ability to think outside the square, he ventured into his first business at the age of 22 when along with several other staff members he was fired from a job with ACI Crown Coning, which stifled and frustrated the already budding entrepreneur within.

This led to a discovery of a latent passion – for business!  Over the last 42 years, he started, bought built and sold approximately 25 businesses using his proven potent style of marketing.

His latest entrepreneurial offering being a child care centre built from scratch in 2016, and more recently, one of the largest coaching and consulting business on the planet.

No one else in Australia can claim to have opened the door to the money vault and turned up the money metabolism for others more than him.

This is not just for braggadocio but to impress upon you the value of listening to Mal’s street smart marketing advice.

Besides, let’s face it, if you’re going to learn from someone, you have to know if they really know what they’re talking about.

He has had 5 books in bookstores that have sold like hotcakes including “Your Right to be Rich” and “EXPOSED – Zero to a Millionaire in Three Years or Less in Your Own Business!”, “EXPOSED – Recession Proof Your Business and Income”, “7 Keys To Making $100,000 in 100 Days” and “Your Marketing Sucks and You Know It”. Amway even made ‘Your Right to be Rich’, the book of the month & ordered 7400 copies.

Mal answered 4 questions on “The Million Dollar Question Business Owners Can't Answer but Must if they want to be Rich and Successful".

1.    What is the million dollar question?

2.    Why is that question so important?

3.    What is the answer to the million dollar question?

4.    What is the next step?

To get more information or resources follow Mal on his website at http://www.malemery.com/ and get his free report “How to get Hundreds of Thousands of Free Publicity for your Business”

Some more takeaways you will find useful

The key question – what should a business owner be selling?

Prospects do not have system for buying, they only have a system for not buying – e.g. I need to sleep on it, or I need to ask a friend, I’m only looking etc.

If the prospect has a system for not buying, you need a better system for getting them to buy.

Rig for success by having a system for everything.

You need to sell the prospect what they want most, and not necessarily what you have for sale.  You might need to create what they want most.  Selling then becomes a whole lot easier. 

So ask them, research, do a survey, and come up with the “unique customer buying advantage”.  You need to point out the point of difference for the prospect.

Most people go into business for the wrong reason, e.g their passion, or their trade.  People buy a solution to their problem, and not your product or service.  With all the clutter and noise in the marketplace, this approach works less than it ever did.

You need to reverse engineer your business, based on what are the prospects biggest fears, frustrations, wants, desires and needs in your market, not necessarily what you have on display.  These are emotional factors, and the most powerful of these is fear.  Fear gets us into action. 

Enter the conversation people are having. 

Have you asked the Million Dollar Question?

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and why it is not working.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand where there profits really come from, where they’re leaving money on the table, and where their sales are costing them profits.

If you would like to discuss with me how you might do that, book a Strategy Consult here



© Copyright 2017 Adam Gordon, The Profits Leak Detective 

How to Gain High Value Clients Part 2

Referred customers are better customers.  We’ve been looking at why you should make referral a systematic part of your promotional program and how you should go about it.  In “The Simplest Way to Get More Business” we discussed the “why” you should have a referral program, ”how” to go about it, and the ”mistakes to avoid”.

I then interviewed Rashid Kotwal from Revealed Resources.  In Part 1 of our interview (How to Gain High Value Clients) Rashid discussed the importance of high value clients and what they can mean for your business.  High value clients are few in number, but provide the greater part of your sales, and profits – the 80/20 Rule.

And clients you get from referrals are more likely to become high value clients.  After all, a client who thinks enough of you to refer you is unlikely to refer you to a dud.

Do you just stumble over them, accidently, or are there things you can do to make life a little more certain?  The answer to that question is YES

Getting High Value clients is about opening doors, deepening relationships, and closing the business.  Finding, and keeping, high value clients can make such a difference to your sales, and cash flow.

In Part 2 of our interview (“3 things you must do to get new high value clients”) Rashid looks at how to use a Referral Kit to win high value clients, and the role “constant communication” plays in winning such clients.  To do so he answered two questions.

1.    Why businesses need a referral kit (read lead magnet), and

2.    How to use constant communication to move people down the sales funnel until they’re ready to buy.

There is a mine of more information or resources on Rashid’s website, https://revealedresources.com/

They include:

A Free Book on “10 Strategies to Attract High Value Clients”

His Accelerated Business Growth Program: http://www.revealedresources.com/accelerated-business-growth-program/

Practical tips - www.revealedresources.com/practical-tips

Just need some ad-hoc marketing, sales or business advice? Our 2 Heads Sessions will help get you on your way without long term commitment. http://www.revealedresources.com/two-heads-are-better-than-one-business-performance-improvement-program/

Client Interviews & Testimonials: www.revealedresources.com/testimonials/

Free Marketing Course: http://www.revealedresources.com/free-marketing-course/

Some more takeaways you will find useful

  • When asking someone for a referral, you need to be specific about the person or business you are seeking to be referred to.  It certainly isn’t “anybody”!    You need to be able to narrow down the targets you are seeking.
  • The person making the referral is likely to be busy, and not inclined to make the sale for you.  Providing them with a “Referral Kit” which contains the material you would initially send out to a prospect, allows the referrer to just give them to a prospect to educate them.  That kit needs to warm up the prospect, or do the sale for you.  It takes away the sales pressure the referrer might feel.
  • Alternatively, ask your referrer for a list of names that meet your criteria, and a letter from them that you can send out.
  • The minute you give a referral, you are transferring trust.
  • Constant communication is required to move people down the sales funnel.  There are a number of steps, and they all involve education:
    o    There are those who don’t know they have a problem, until it confronts them;
    o    Once they become aware of the problem, they are looking for possible solutions;
    o    They then narrow down the supplier/s they want to deal with;
  • Constant communication moves people down from ‘slight awareness’ to ‘I’m ready to buy’.  It has to be designed in such a way that it maps out where the prospect is in that journey.
    o    The person who is just starting to look needs something simple.  It might be a Fact Sheet (The 7 Things you Need To …..).  It might only be 1 – 2 pages.
    o    Once the prospect is on that list as a potential client, you keep giving them a little more information to start to build “know, like, and trust” until they are ready to buy. 
  • The “90 Day Rule” – if a prospect hasn’t heard of you within 90 days, they will forget you.  You must communicate with your prospect at least once every 90 days.  Once a month is better.
  • Another mistake often made, is failing to tell the prospect all the things you can do for them.  If you don’t tell them, they won’t know.

If you would like to be part of my referral program

And receive my reward, “The Profit Leak Detector – Tell Tale Signs to put Cash Back in Your Business”, contact me This email address is being protected from spambots. You need JavaScript enabled to view it.and give me the business name, contact, email and phone number of the people you are referring, and I’ll immediately forward this valuable booklet.

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

Attract, Convert, and Retain

You will know not all customers are created equal and have no doubt heard of the 80-20 Rule; 80% of your sales will come from 20% of your clients.

Of course it is never an exact 80 – 20 relationship, but the principle is very true; a few high-value customers will provide the large part of your sales, and profits.

That’s easy to say, but how do you find, and keep, high value clients who can make such a difference to your sales, and cash flow.

Do you just stumble over them, accidently, or are there things you can do to make life a little more certain?

The answer to that question is YES, and that’s why I interviewed Rashid Kotwal from Revealed Resources.

For those of you who don’t know Rashid, he works with Business Owners and Managing Directors in industries ranging from Professional Services Firms, to Construction and Manufacturing, who want to both rapidly and sustainably grow their business revenue and profit.  He also works with sales managers and teams in both the B2B and B2C area to shorten sales cycles and improve conversion rates.”

His speciality is creating strategies to attract, convert and retain high value clients; that top 4% which give you 64% for your business.

Getting High Value clients is about opening doors, deepening relationships, and closing the business.  To do so, Rashid creates marketing systems which attract and engage your ideal prospect, moving them down the sales funnel until they’re ready to buy. 

Rashid answered 3 questions on “3 things you must do to get new high value clients”. 

1.    What are some quick mechanisms businesses can use to open doors?

2.    Why businesses need a referral kit (read lead magnet), and

3.    How to use constant communication to move people down the sales funnel until they’re ready to buy.

In this video, Rashid answers the first of these.  Look for answers for the next two in next weeks blog.

There is a mine of more information or resources on Rashid’s website, https://revealedresources.com/

They include:

Some takeaways you will find useful:

People don’t like to be sold, but they like to buy.  If they are serious, buyers are likely to go online and do some research before they go to the market.

When a buyer does find a possible product or service, they need to find if it, and the supplier (you), suits them.

You need to have something to start a “conversation” with the buyer and help sell you as an expert.  That “something” is called a “Lead Magnet”.

You also need to be able to explain what you do in layman terms, to make the prospect comfortable.

The content (articles, white papers, case studies etc.) you produce should set you up as an authority figure in your field.  The more quality content you produce, the more people will trust you, and come to you.

If you are in the B2B field, LinkedIn is a useful way to open the door to the type of prospect you are interested in.  Search for such people and ask to be connected.  Don’t make the mistake of commencing the interaction with sending them ME-ME material.  Constant communication is important, so send them useful material that you source. 

Educate and provide value before you start to move the prospect down the sales funnel.

Then lead the conversation into promoting what you provide.  For that, you will need to introduce a Call to Action in your communication.  You do have to sell.

If you would like to be part of my referral program

And receive my reward, “The Profit Leak Detector – Tell Tale Signs to put Cash Back in Your Business”, This email address is being protected from spambots. You need JavaScript enabled to view it.and give me the business name, contact, email and phone number of the people you are referring, and I’ll immediately forward this valuable booklet.

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

But often the most Overlooked

We all know the most effective form of promotion is Word of Mouth.  It’s effective because when someone we know and trust tells us about a product or service they use, and recommends it, if we have that need we will more than likely buy it.

The weakness of WoM is that it is spontaneous, unplanned and not in our control.  But it can be.
You can take WoM to another level, and systematise it, through …….. referrals.

What are Referrals in Marketing?

One of the most overlooked areas of growth comes from your current clients.  But you shouldn’t leave it to chance.   The key is to develop a system which is repeatable.  I’ll get to that in a minute.

Referral marketing is a method of promoting products or services to new customers through referrals, usually word of mouth. Such referrals often happen spontaneously but businesses can influence this through appropriate strategies.

Referral marketing is a process to encourage and significantly increase referrals from word of mouth, perhaps the oldest and most trusted marketing strategy. This can be accomplished by encouraging and rewarding customers, and a wide variety of other contacts, to recommend products and services from consumer and B2B brands, both online and offline.  (Wikipedia)

Do you have a “referral system" in place for your existing clients?  You should. Let’s look at “why”.

Why you should have a referral program

Referred customers are just better customers: They have 20% higher Average Order Values (AOV), 25% higher Lifetime Values (LTV), and are overall 25% more profitable than customers from any other channel. An article in eMarketer notes: "If you're not running a referral program, you're falling behind your competition."

Referrals are the lowest hanging fruit for business sales, but odds are that your company is one of the 80% of small businesses that don’t have a referral program in place.

Existing customers are far more profitable than new customers; there is no acquisition cost, they buy more often, and because they like and trust you and what you offer, they don’t see buying larger a risk.  But just as importantly, they are likely to be “raving fans”, happy to refer you to others.  The key is not to leave that to chance.

Tom Hopkins, author of “Sales Prospecting for Dummies,” says that no other lead source converts to sales at a higher rate than referrals, which close at 60 percent!

They Create Better Customers – referred customers have been proven to yield higher profits. Plus they are more likely to remain a customer or be a repeat buyer. A study conducted by Goethe University Frankfurt and the University of Pennsylvania found that referred customers provided a 25% higher profit margin, and were 18% less likely to leave.

Here are 7 reasons why referrals make sense:

•    It’s a manageable process.  Because of your relationship with the referrer, you can influence the prospect

•    The process can be automated or semi-automated, freeing you up

•    Referrals complain less, and are more enjoyable to work with.  They come with a degree of “know, like and trust” because of the referrer.

•    They are mostly not price shoppers, so there is a bigger opportunity to charge premium prices

•    They have a longer client life cycle, in that they are more likely to stay with you.

•    Like existing customers, they make more frequent purchases

•    Their acquisition cost is low

How to Establish a Referral Program

Identification - Go through your client/customer list and identify the 80/20 customers, that 20 % of customers who provide 80% of your sales, and profits.  And identify those who have been with you for some time.  They are the most likely to give you referrals.

Of course, the best time to approach a client for a referral is when you have just completed a significant service for them.  This will of course depend on the nature of the business you are in. 

Because they are repeat customers, that 20% are loyal and likely to give you a referral, or more likely, a number of referrals.

But you have to ask for the referral, otherwise you are relying on traditional, haphazard WoM.

The approach – there are two principal ways you can approach your client; a phone call, or an email.  Which you use will depend on how well you know the client, and how recent the transaction has been.   The closer, in both senses, then use a phone call.  Otherwise use an email.

Remind them of the transaction, (see Follow Up below) and their reaction at the time.

Essentially you are asking for other businesses they know of who might be able to benefit from your services.  Obviously, you would want to exclude their competition.

Again there are two different approaches you can follow:

  • Provide them with a template letter/email they can send out to the people they nominate.  Take as much work out of the process as possible by supplying the template for them to customise.  You do need to ask them to copy you in so you know who they have approached.
  • Ask them to give you the contacts for you to approach.  Keep it simple; business, contacts name, phone number, email address.  You could put this in an attached form, or put the form in the body of the email to make it easier for them to respond.  Obviously, you need to gain their approval for you to use their name in your approach.

Develop a template you can use over and over again.

You should have a second template for a follow-up reminder to encourage the client to take action.  They may have been well-meaning and intended to provide you with some names, but chaos can always intervene.

Offer a Reward – people are busy, and you like to say thank you for their willingness to assist.  It doesn’t have to have a great monetary value, but it should be useful or have some gift value.   They receive the gift when they have given them the referrals.

You should let them know their contact will also receive a similar gift if they take up your services.  This will help relieve any feeling of awkwardness your client may feel in providing their details.  It’s also a way of reinforcing the behaviour so you receive more referrals down the line from the same person.

Remember to say thank you again – when the referrals come in.  Give them a quick call, a personal touch.  It’s another chance to reconnect.

Keep records - as part of your “Referral System”; who you have contacted, when, follow up, when, results. 

There are some other things you can do that will encourage referrals, such as:

Be Memorable: Go above and beyond.  Blow customers away with a simple gesture.  A harbour cruise company I knew in Darwin would give ladies stepping ashore after a cruise a single stem orchid or rose.   You can bet they would remember that, and the cruise.  And you can also bet they would mention it to their friends.

Follow Up – An opportunity that should never be missed.  We’re all guilty of this.  Make a phone call or send a card to customers a week or two after you have delivered your service.  Thank them for their business, and let them know you hope they’re finding things now. The simple effort of reaching out will earn you big points and help gather valuable information.  This is when you could also ask for some referrals. 

This approach is also useful in asking for a testimonial, but let’s not confuse the issue at this stage; one step at a time.

Referral Mistakes

Several things can kill your Referral Program;

•    Not earning the right to ask for them – bad service kills off referrals.  The only referral you are likely to get is “Don’t go near them!”  Bad news travels fast.

•    Not asking for them – not having a program.

•    Relying on Word of Mouth – not systematizing your program.

•    Not tracking and measuring the number of referrals

•    Not thanking people for their referrals, and again when they are successful

•    Assuming all you get, is all you can get.  Do this well, and well and you’ll get more referrals down the line from the same client

•    Believing that all you need is a good product or service – it won’t happen unless you make it happen.

•    Relying on only one main source of leads for your business.  “One” is the most dangerous word in business.

If you would like to be part of my referral program?

And receive my reward, “The Profit Leak Detector – Tell Tale Signs to put Cash Back in Your Business”, contact me here and give me the business name, contact, their email and phone number, and I’ll immediately forward this valuable booklet.

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

Now we all make mistakes

Sometimes they are small, sometimes they are significant, sometimes they are, in effect, terminal.

As someone once said, the person who never made a mistake, never made a decision.  Danny Iny put it well, “If we don't take risks, then we stagnate.  And stagnation is the beginning of the end.” 

In business, the usual risk we take is when we seek to grow our business, both in turnover and, more importantly, in profitability. 
That risk may be in introducing a new product, or product line, in diversifying, or in location.

In my client’s case, it was the latter - location.    She wanted to get in front of more people, a bigger market.  She operated a small, specialised retail business with a street frontage in a general shopping area – all other small and varied retailers.  People had to know she was there, foot traffic was, for want of a better word, average.

The opportunity came up to take a vacant shop in a shopping mall, right beside a major supermarket operated by one of the majors.  Sure, the rent was much higher, but the passing foot traffic was huge.  What could go wrong?

But go wrong it did.  The move was a disaster, a failure the costs of which continue to dog her to this day. 

The problem – my client was in the wrong market.  Just because there are a lot of people around. Doesn’t necessarily mean there’s a market for you.  If they are not interested or seeking the type of product or service you are offering, then the numbers mean little.

So what is a market?  Here’s a somewhat boring definition.  The term market refers to the group of consumers or organisations that is interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product. The market definition begins with the total population and progressively narrows to many different niches.

From your perspective, you need to have the right product at right place at the right time if you are to make the sale.  And there needs to be enough of such buyers for you to make sufficient sales, and earn sufficient profits, to have a sustainable business.

It is frequently said that selling is a numbers game and the more people you get in front of, the more sales you will make.  And that was my client’s plan.  The supermarket would put many more people past her door than she could ever get in her street.

But let’s think about it a bit more deeply.  While my client might have had the “right product” she certainly did not have it at the “right place” or the “right time”.  Those people going to the supermarket were certainly not “qualified prospects”.  They were there to do their grocery shopping.

You’re probably the same.  Grocery shopping is mission intensive.  You are focused on one thing, your shopping list, how to complete it as quickly as possible, and get out.  Grocery shopping is not the time for window shopping, for wandering around looking for ideas for gifts or whatever.  You don’t need ideas, you have a list.

But there may be other ways of looking at a market.  Not all markets are created equal. Some are bigger, better and more lucrative than others. Knowing how to evaluate a market is like knowing where to go fishing for a great catch.

David Cameron Gikand has developed a checklist of 11 market characteristics to help you evaluate your target market so that you can take your business where there are the highest chances of success.  A rising tide floats all boats; a great market lifts everyone up.

Take it away David!

Use these 11 characteristics to evaluate any market with ease

To evaluate your market, get a pen and piece of paper and go out and research the following 11 characteristics. Rate how well that market scores, on a scale of 1 to 10, on each of these characteristics, and then see if the total score makes you happy.

Here we go:

1. Size. The bigger the market size, the better.

2. Urgency. The more urgently people need the products in that market, the better. For example, pet rocks have no urgency, but medication does.

3. Speed to market. The faster you can go from getting the initial idea to beginning to make sales, the better.

4. High pricing potential. The higher you can charge per product, the better.

5. Low cost of acquiring new customers. The easier and cheaper it is to get new customers, the better.

6. Low cost and ease of delivering. The cheaper and easier it is to deliver your product, the better.

7. Uniqueness. The more unique your product is (or how you deliver it, or how you package it), the better.

8. Low upfront investment. The less resources you need to test the market, build the business and get started, the better.

9. Back-end and up-sell potential. The more related products you can sell to your existing clients, the better. You don’t want to go into business whereby you can only sell one product one time to each customer and then that’s it. There is now growth potential there. You need to be able to repeatedly sell the same customer.

10. Evergreen potential. The easier it is to continue selling and selling once in business, the better. For example, a product that can be sold for ever, like toilet paper or cooking oil, is better than one that is sold just once, like pet rocks.

11. Addressability. The easier it is to reach and communicate with your market, the better. For example, does your market congregate in “pools” like mailing lists or radio stations or places you can get access to?

Thanks David – that’ a useful list.

Are you in the right Market?

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and why it is not working.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand where there profits really come from, where they’re leaving money on the table, and where their sales are costing them profits.

If you would like to discuss with me how you might do that, book a Strategy Consult here

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

We are your Solution!

It makes my teeth grate!  You see businesses use the term “solutions” all the time.  They tell you they offer a “solution”.  Some businesses even use the term as part of their name (Side note: I was going to use a fictitious example but thought I’d better check in Google.  Good thing I did; for every example I tried, I found a real business - oops).

They claim to sell ‘solutions’ in the hope they can charge a premium or perform some miracle that will instantly differentiate them from their competitors.

Now there is nothing wrong with providing solutions.  In fact, you wouldn’t be in business if you didn’t have a product or service that someone wanted.

Why do they want your solution?  Because they have a need, a want, a problem they want to go away.  And that is the key – the problem.

Your product or service will have features and benefits.  You must demonstrate that the features and benefits of your product will solve their problem, and that they can believe your claims. 

As I wrote in The Challenge of Customer Awareness you need to approach your target market with a targeted message; the same message will not convert all.  Ineffective sales messages are a waste of money.

Seth Godin says, “No business buys a solution for a problem they don’t have.” 

The benefits that are the core of your “solution” are “converters”. They're not “attractors”.  The problems your prospect has are the attractors.  When you jump straight to trying to sell your solution you end up trying to do the conversion before the attraction--which is logically not the best way to go.

It is your recognition of their problem that first attracts the prospect’s interest.  “That’s me!”

Never start the process (of solving a problem) by proposing a solution. First, decision makers and influencers must agree on the nature and importance of the problem.  The first step in solving a problem is to know what the problem is.  Don't offer a solution before you have taken the time to accurately define the problem. 

How aware is your market about the problem, their need for a solution, and of course, your solution specifically? 

As I suggest to clients when helping them write tenders are proposals, don’t start your response with your offer, or even your value proposition, and you must have a value proposition (or Unique Sales Proposition) for them.  That will just turn them off.

Start with your understanding of their problem, and their requirement.  Alan Dupont said it well, “If we don't understand the problem, we won't find solutions”. 

When issues are complex, analysis is difficult, and solutions are hard to find, it often pays to step back and take a sober, detached look at the problem, and demonstrate your understanding of the depth of that problem.

What makes it a solution is that someone is looking for it.  Putting the solution before the problem doesn’t attract your buyer.

Remember people buy for emotional reasons, but justify their decision with logic.  Once you can identify the emotional pain you can make the connection with your headline.

Your sales message says “I know, I understand, I feel it” before giving the benefits (emotion) and features (logic on which they can rationalise the decision).

Solving problems creates value.  And the more pressing the problem, the more value a solution has.  Also, the more severe the problem, the greater the value the solution has. 

“People are desperate for a solution to their problems.   They want love ... respect ... time ... money ... ... and they'll sell their gold to get it.”  (Drayton Bird)

Beware just making a suggestion.  People pay real money for solutions, not suggestions.  Suggestions are based upon logic, prevention and are usually theoretical and conceptual.  Solutions offer relief, evidence, are being searched for, and deliver a specific tangible result. 

It's only when there are no substitutes, or when the prospect believes there are no substitutes, that a much higher profit margin can be commanded.  The way you do that is by positioning yourself as a unique solution to your prospects' unmet needs.

Simply broadcasting that you have a “solution”, won’t build your business.  Being able to solve a real problem, in a large enough niche, and providing real value, will. 

But you must start with the problem.

Do you use the Problem- Solution approach in your Business?

When clients approach me for coaching, clients with businesses just don’t make the sales they should, I often find their offers are all take, with very little give.  

The problems often lie in their eagerness to talk about their unique offering, and not listen to understand the depth of the client’s problem.  

If you would like to learn more, I’m offering a free consultation, yes, there is no cost – this is my gift to you, book a Strategy Consult here. 

 

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

It’s not the volume of sales that’s important…..

Last week I looked at seven ways your business could leak profits, and how to avoid those mistakes, courtesy of an article by Kelly Clifford.

In this post I’ll look at five more ways to leak profits. My mantra is that it is not the volume of sales that’s important in determining the profitability of your business, but the volume of Gross profits. Each of the five ways below has an impact on your gross profits.

So often I see businesses being told that they have to build their customer base, and sell more.  Now that certainly can be true, but it is not always true. For many small businesses increased profitability can be obtained more easily, and more quickly, by plugging the profit leaks in their business.

Mistake 8 - Unprofitable clients

Do you know which of your clients are profitable, and which are not?  You’ve no doubt heard of the 8020 rule; 80% of your sales and profits will come from 20% of your clients. In my experience this is broadly true.

There are a couple of factors which affect the profitability of clients.

  • What discounts and concessions did you have to give to win that client? If you did, it is likely that you are still giving those discounts or concessions, and they reduce your Gross profit margin.
  • What does it cost to service that client? Some clients are wonderful, and a joy to have, but others can be the client from hell. I had a client some time ago who had a customer who provided 30% of their turnover; obviously an important client. But they were very difficult to deal with and took 80% of managements time. It’s not just the amount of management time going to that one client, but is also the lack of attention to the other clients who may resent the lack of customer service.

Many of these costs are hidden in your overheads when they should be attributed to the cost of sales to that client.

And that leads me to the next leak.

Mistake 9 - Misallocation of costs

When looking at clients’ financial statements so often I find direct costs, i.e. those that are directly attributable to a product or sale, allocated to overheads. They include such things as freight and delivery, packaging and direct labour.

Freight in particular is frequently found in overheads.  Yet it is a Cost of Sale.

I find the same with Wages and Salaries.  It might be convenient for your accountant to include them in Overheads (Administration).  After all, their main concern is determining your tax liabilities.  Your concern should be management of your business.

Sure, the salaries of your admin staff are an overhead, but the salaries or wages, and their on-costs such as Superannuation, of those people who make or repair things are a direct cost attributable to the item manufactured or repaired.  Unless you do so, you don’t really know your Gross Profit margin, and can’t make the right pricing decision.

Poor pricing decisions leaves money on the table.

And then there are the “nuts and bolts”.  In trade-based businesses there are things like nuts and bolts (literally) that may be used in a job, and things like hand cleansers, wipes and a whole lot of other incidental costs. 

It is difficult to record them against a particular job, so again they tend to end up in Overheads, spread across all jobs.  Far better to do as some businesses do, and allocate a small percentage to “Incidentals” on the invoice. 

Mistake 10 - Not charging for all the work you do

You might have had this happen to you; my accountant would sometimes say “That was three hours, but let’s call it two and a half!”   He would “write-off” a proportion of the time spent on my accounts.  Gratefully received, to be sure, but it his decision.  I used to wonder how many people he did this for, and what was the cost to his practice.  No doubt it made him feel good.

More pernicious is ignorance.  One client had a business that serviced small engines. The engines would come in by truck or service or overhaul, the engine would be unloaded, taken into the workshop, worked on, loaded back on a truck for delivery to the client.

While the time spent by mechanic working on the engine was recorded against that job the unloading and loading time was not. The owner told me that it didn’t matter as it only amounted to about fifteen minutes a job. If that happened twice a day, five days a week, the unallocated cost amounts to 2 ½ hours a week. At a charge-out rate of, say $100 an hour, that is $250 a week not covered. Over a year that adds up. It should be recovered against the job. But not doing so is a loss of profits.

Then  consider this, just as a bad debt is not recovered by a sale for the same amount (the sale must give a profit to the same level as the bad debt), to recover that $250 a week requires sales which will provide that as profit.

Mistake 11 - Unprofitable Products

The 80-20 rule also applies to products & services.  The majority of your sales, and your profits, will come from the minority of your products and services.  There is a catch here you should be aware of – the products you sell the most of aren’t necessarily the ones that make the most profit.

Here’s the point; so many businesses I’ve worked with don’t know the profitability of their individual products, or, not infrequently, of their product lines.  They may know their theoretical profits, but not their actual profits. 

That can be due to some of those issues above – misallocation of costs or not charging for all the work done.  But in some cases they just don’t actually calculate their Cost of Sales by product line.

In one case, when we worked with a client to allocate their Cost of Sales to the applicable product lines, we found their Cost of Sales was greater than the price charged.  The more they sold, the more profits they leaked.

Mistake 12 -Poor Customer Service

We all know our reaction to poor customer service “I won’t go back there again!” 

According to a research report by Ruby Newell-Legner, a typical business hears from 4% of its dissatisfied customers. 96% won’t complain and 91% of those will never return.

Good customers are far more profitable than new customers.  They buy more often, they spend more and they provide referrals.  And it costs many times more to acquire new customers (think of your promotional costs) than to retain a customer.  Yes, advertising may be about selling more, but it is mainly about acquiring new customers. 

As marketing guru Dan Kennedy says, the whole point of a “Sale” is not to make a profit; it is to acquire a customer.  But having acquired a new customer, you need to keep her.

If you are leaking customers, you will be leaking profits!

Don’t Make These 5 Mistakes!

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and how to work out just where they are leaking profits, and plug those leaks.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand:

•    The strengths, weaknesses opportunities and threats of their business

•    Determine where they want to be – clear, achievable goals, and

•    How they are going to get there – their strategies to achieve their goals

This is sometimes known as the NOW – WHERE – HOW model.

If you would like to discuss with me how you might do that, book a Strategy Consult here.

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

It's time to plug that profit leak

Now that is a headline to grab the attention of a Profit Leak Detective.

If you are trying to improve the profitability of your business this year, it is important to identify the ways in which your business could leak profit.

Here Kelly Clifford reveals seven ways in which your business could leak profit in 2017 and how to avoid these mistakes.  Kelly is a profit specialist and the author of ‘The Profitable Professional’. He is the founder of Profit in Focus and on a mission to help businesses to profitably THRIVE.

Take it away, Kelly.

Mistake 1 – Not factoring in fixed costs during pricing

When calculating pricing, many are often too focussed on the gross profit margin and tend to neglect setting something aside for fixed costs or overheads. Business owners then wonder why they are making minimal profit, if at all!

Mistake 2 – Thinking that money flowing into a bank account means making a profit

If money is moving into the bank account of a business, this does not necessarily mean that profit is being made on this. Businesses can fail to take into account all of the factors when agreeing to provide a service at a given price. The price tends to be set by market forces but most bosses fail to do an initial analysis to find out if they can deliver the service at a cost less than the revenue received; while bringing in sufficient profits above both fixed and variable costs.

Mistake 3 – The job is not done after a client has been invoiced

Next up on how the list of companies can leak profit is a fairly important factor often overlooked. It is not job well done as soon as an invoice is sent to the client for payment.

Bosses must make sure payment is collected on the payment terms agreed. It is pointless invoicing a client if the payment is not followed through and collected. After all, profit is not earned until the moment that the full amount for that invoice is received in the businesses bank account. Businesses need to be pro-active in collecting invoices.

Mistake 4 – Neglecting attention towards cash flow

Attention towards managing cash flow has to be one of the most important aspects of running and maintaining a business that doesn’t leak profit.

If a business fails to pay its bills due to a lack of cash, then technically the business is insolvent – the main reason companies go bankrupt.

While this prospect should be enough to remind you to take care when managing your cash flow, it shouldn’t be the only reason. Careful cash management means reducing the risks to which businesses can become exposed to. Businesses which suffer from money problems have no safety net for unplanned costs and can also experience difficulties in obtaining funds for expansion.

Mistake 5 – Not reviewing your financial reports regularly

It is truly worrying how many assume the finance side of their business will be okay and in some cases do not know where their financial reports are, let alone regularly review them. This mentality is alarming. Not only are there legal obligations in terms of record keeping, but bosses could be at risk when burying their heads in the sand due to finances. Numbers are not something that should frighten you.

Mistake 6 – If you don’t budget your business will leak profit

A budget is a plan that sets the expenditure and income of a business over a certain time-span, typically annually – it’s a must if you want a business that doesn’t leak profit. Budgeting describes the process of using this budget and can be an invaluable instrument for managing your businesses finances. It helps to determine the best way for a business to control and make money, so it is vital to have one in the first place to stop any potential profit-leaking.

Mistake 7 – Unnecessary waste

Everybody dislikes unnecessary waste, but despite this it is likely that most businesses at some point are wasting money on unnecessary things.

This can be through overpaying for a product or service to just buying things that the businesses simply do not need.

Business utilities are one major example. We have all seen the adverts that tempt us to comparison sites to find the best deal for our home utility bills and ultimately save us money. However, most businesses freely accept the tariffs offered by the utility companies, without fully knowing if it is a right fit, and are then locked into a higher tariff than is necessary. If the utility comparison sites work for your home utility bills, then of course you should be trying this with your business ones – it also works well to shop around for the best deals for other office essentials!

Thanks Kelly – that’s useful. 

Now I know you have hear many of these before from me, but it is good to see them reinforced.  Each of Kelly’s “Mistakes” is a good take-away.

Don’t Make These 7 Mistakes!

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and how to develop that WOW factor that makes them different.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand:
•    The strengths, weaknesses opportunities and threats of their business
•    Determine where they want to be – clear, achievable goals, and
•    How they are going to get there – their strategies to achieve their goals

This is sometimes known as the NOW – WHERE – HOW model.

If you would like to discuss with me how you might do that, book a Strategy Consult here

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

There’s more to it than “the economy”

You will know a business, and probably a few, that have failed.   Sometimes that is due to economic conditions, and there is no doubt our economies have been going through a quiet time over the last few years.

Dun and Bradstreet report, in Australia, that the number of business failures in the third quarter of 2016 rose by 11% compared to the same period last year, and was up 42% on the previous quarter.

Quiet economic times leads to both businesses and consumers being cautious with their spending.  Having said that, I’ve always been amazed at the number of small businesses that don’t keep a beady eye on what is happening in their market place.  They will certainly listen to the gossip of their competitors and other traders around them, but making a regular study of their marketplace, and what the trends are, is done rarely.

According to the Australian Bureau of Statistics, more than 60 percent of small businesses cease operating within the first three years of starting. 

But why is it so?

There’s more to it than the economy.  As Ben Fewtrell from Action Plan ANZ says “So why do so many businesses fail?   Simple… they never learn the basics of how to build and run a business.”  I interviewed Ben last year, and you can see the interview here.  

Despite the gross exaggerations, research reveals just 1.5 per cent of Australian businesses close within their first year.    The problems start in the second or third year, when they start to grow.  There are some common reasons.

One of the most common reasons I have come across repeatedly over the last twenty eight years is the one Ben mentioned; “they never learn the basics of how to build and run a business.”  So many businesses are started by people who have developed a good technical skill; it may be as an IT tech, or through a trade, or as an engineer, a vet, or whatever. 

The problem is that, while they were doing their apprenticeship, degree and working in their industry, no-one training them suggested they might need to also develop business management skills, learn to read and understand financial statements, or how to market - the basics of how to build and run a business.

Five fundamentals required to run a business were suggested by Dr. Greg Chapman, from Empower Business Solutions:

1. A Business Plan to drive your business growth

2. A Marketing Strategy producing predicable & controllable streams of enquiries

3. A Business Management System that turns your business into a profit machine

4. Motivation to get the most from people within your business &

5. Owner Accountability and discipline with a business that’s run by reports.

If you want to have a business, and not just a job, you will need to work “on” your business using these five fundamentals, and not just “in” your business.  Those people who build their business on their technical skills alone, tend to only work in their business, on the tools.  They just have a job, and will never have a business. 

Equally, when the tough times come, they are the ones most likely to fail.

Greg Hayes from Hayes Knight Accountants & Advisers suggests there are varied reasons why most Australian small businesses struggle to survive.

“One of the key reasons is that many small businesses start with a bad idea -- an idea that was never going to work. But the biggest reason for failure is a lack of capital. It’s a common story that many people go into business under-capitalised and they just run out of money,”

When businesses start with a bad idea, it’s usually the owner wants to “do what they do”, without looking at the market for “what they do”. 

As Ryan Deiss puts it, “No amount of work or luck will help if you don’t have a willing and able market.  If there is not a sustainable market for your products and services, all the time you invest in building your business is a complete waste of time.”

And if it’s a market that is so crowded, where every product or service is virtually the same, interchangeable with the competition than it’s “commodity hell”.  The only way to get ahead is to slash prices until the pain of profit loss squeezes either you or those competitors out of the business.  As Greg Hayes says, you just run out of money.

Now these figures are a bit dated, but they confirm what I’m saying.  A 2011-12 report into corporate insolvencies by the Australian Securities and Investments Commission found:

•    44 per cent suffered poor strategic management

•    40 per cent fell victim to inadequate cash flow or high cash use

•    33 per cent went under because of trading losses

You don’t have to fail, or just wing it, trying to learn it as you go along.  People whose businesses fail have no-one who has shown them how to run a business.

You don’t have to fail, or wing it!

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and how to develop that WOW factor that makes them different.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand:

•    The strengths, weaknesses opportunities and threats of their business

•    Determine where they want to be – clear, achievable goals, and

•    How they are going to get there – their strategies to achieve their goals

This is sometimes known as the NOW – WHERE – HOW model.

If you would like to discuss with me how you might do that, book a Strategy Consult here.  There is no charge, it's my gift to you.

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

Stand out like a beacon

We all know we need our business to be different, to stand out from our competitors.  After all, if a business chooses to be no different from competitors, it is nothing but a match in a matchbox

As well-known marketer John Dwyer said when I interviewed him last year (How to attract customers to your business), “in a sea of sameness in your industry, you need to stand out like a beacon”. 

But let’s think this through a bit further.  Is being different enough, or should you be more specific about this.  What makes you stand out like a beacon?  Let me ask, “different from whom” and “a why should your prospect care”?

Have you noticed how many businesses claim to be unique, or having a unique offering.  If they are or do, then they will certainly stand out like a beacon.  But such claims usually only exist in the mind of the owner, and rarely in mind of the prospect.

There’s only one reason why a prospect should care if you are different, and that is if you solve their problem, whatever it is; whether you can take them from being discontented about something to a different state where their condition/situation has actually improved.  That is what they are buying, change, and where the value for them comes from.

Stop selling your product and start selling your outcome

When it comes to a sales message or copy, most businesses talk about themselves and the business. This is a fatal mistake. They should be focusing on the transformation, the change that will occur when the prospect purchases your product or service.

It’s not earth shattering, but it is easy to forget. We get so wrapped up in the wonderful products or services we have to offer, we forget it’s really all about the prospect and what they want.  Uniqueness, if it exists, must be in their minds, not yours.  Don't try to SELL them; instead, describe a picture of a better world … or way of doing things … or thinking, that is so compelling, it draws them in.  If you are good, the prospect is more than sold; they're in … all the way in.  And they’ll buy.

So be very clear about the outcome you’re trying to create for your prospect.   Try rewording your offering in outcome terms, not product or service terms.

Here are some examples:

  • You’re not a web designer; you drive new digital leads.
  • You’re not a productivity expert; you create more time.
  • You’re not an HR consultant; you help employees drive more value for the company.
  • You’re not a business consultant; you help small businesses improve their profitability, cash flow, and have more free time.

You need to get inside the mind of your prospect, and understand their discontent, and to be able to show you understand it.

Now obviously, you can’t do this for each individual out there.  That is why market segments are important; niches with similar problems and desires to change.  And the niche has to be big enough for you to prosper – see my recent blog “Does your marketing tail stretch to the sea?

The other point worth making is that beacon-like point of difference needs to be something that is not easily copied by your competitors.  If it were, you would become a match in a matchbox again.

What you do is important, but how you do it is even more important.  The things that make you stand out like a beacon will come from inside your business, such as speed of service, customer relationships, accessibility.  Don’t focus on the difference from your competitors, let your competitors talk about themselves.  Focus on the transformation you can do for your customers, the change that will occur when the prospect purchases your product or service.  

Then your prospect will care.

Is Your Marketing Performing?

When clients approach me for coaching, so often, they are not getting the clients they need, the right clients.  Eight times out of ten this comes down to not knowing what is working, and what is not working, and how to develop that WOW transformational factor that makes them different.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows by assisting them understand how to use the 80-20 rule to determine their most profitable customers, and to determine the message to bring them on board.

If you would like to discuss with me how you might do that, book a Strategy Consult here

© Copyright 2017 Adam Gordon, The Profits Leak Detective 

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