Who does not need a constant flow of quality leads?

But, there’s always a but, you:

1.    Struggle to get high quality leads at an affordable cost

2.    Don’t have the time to add social media marketing to your daily tasks

3.    Know creating a highly professional presence on-line over time is crucial, yet you also want immediate results

Do you want to reach out to your target market effectively and convert connections into clients or customers, and strengthen your business or personal brand in a powerful way?

If you do, you’ll find this interview very useful.

Today I’m joined by Social Media Expert Adam Houlahan.   

For those of you who don’t know Adam, he is an International Keynote Speaker specialising in Social Media for business, and CEO of the highly successful boutique agency, Web Traffic That Works.  He lives in Australia's famous tourist destination the Gold Coast Queensland, and is considered to be one of Australia's leading experts in harnessing the power of Linkedin for business. Over 5,200 people globally have sought his skill and insights to leverage the power of LinkedIn for their businesses.

Adam is also a featured columnist for MOB Magazine, an Australian National Business publication. He consults on Social Media to private clients in Australia, New Zealand, North America, The Middle East and Singapore. His work as CEO and owner of 6 successful companies has given him the hands-on experience to understand business from the inside.

He is the author of “Social Media – Secret Sauce” and ”The LinkedIn Playbook” which are now amongst the most popular social media books on Amazon.  They give the step by step process to build an online presence for yourself or your business everyone secretly or openly desires.

Adam answered 5 questions on how to make better use of LinkedIn. 

1. Why is LinkedIn such a great platform for generating leads for businesses

2. Can any business use LinkedIn successfully

3. What are the common mistakes most people make on LinkedIn

4. There are so many different types of accounts on LinkedIn, is the free account OK to use

5. Are there some simple changes we could make to our profile that would make a big difference to presence on there

Listen and learn.  

{youtube}8bT-fhvxL4Q{/youtube}

Takeaways

LinkedIn is the second fastest growing Social Media network.  There are over 400 million people on there right now.  The average income of those people exceeds A$100,000.  It’s where people seeking goods and services, and have the means to pay for them, hang out.

Not all industries can use LinkedIn successfully.  Personal service industries such as hairdressers.

LinkedIn is a professional platform, so you have to be professional in your approach.  It can’t be treated like Facebook.  Before you post, ask yourself, are your potential clients going to get value from this content?  Don’t post the wrong type of content. And don’t treat LinkedIn as an extension of your resume’.  You should optimise your profile in a much more powerful way than in a resume’. 

LinkedIn has lots of different types of accounts.  In most cases the free version is OK to use.  Ultimately it depends on the strategy you are going to use.  The most basic of the paid platforms, Business Boss, is suitable for most.  Few people would need to go beyond that.  It gives you all the features you need to create a successful strategy.

Your profile is key.  Make sure you have a really professional profile.  And a thumbnail image that is good, clean and professional headshot. 

Your job description needs to be something people are going to search for, not a quirky title like “Chief Inspiration Office”.  Be very specific about what you are.  The two worst titles you can use are CEO or General Manager.  They are not industry specific.  Think about it as how people will search for you.  Put yourself in the customer’s shoes.

Use the Summary effectively.  Be clear and concise, and resonate around the client, and the problems they face, not you.  And how you solve those problems. 

Where can people go to get more information or resources?

Adam’s website: http://www.adamhoulahan.com  and you can access a free, four week LinkedIn training course, and other resources, a link to Amazon for his book “Social Media – Secret Source”.

You can also get his new book “The LinkedIn Playbook” at https://lnkd.in/geYE2mc

And of course you will find Adam on LinkedIn, and Twitter.

Could your LinkedIn Profile be Improved?

There’s nothing like an outside view, a second opinion.  Very often when we read something we’ve written, we read what we expect to see.  And miss the mistakes, or lack of logic, or lack of persuasiveness.  

If you would like to discuss how you could improve your LinkedIn Profile, contact me.  There’s no cost for a consultation.  It is my gift to you.

Or buy "Small Change, Big Result", my manual on how to increase your success rate with proposals and quotations; make a few small changes, and reap the rewards.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

Targeting Everybody Gets Nobody

The real lesson in this interview came not from the topic, although that is important for all small and medium businesses, but in how and why Geoff Anderson has succeeded.

Let’s start with his business.  Getting customers for your business is critical for every successful venture. There are plenty of ways to attract new customers.  Video is one of the most powerful ways to connect with your target market. 

Corporate videos are an essential component for almost every business to function in the modern world; it enables products to be promoted effectively and attracts your ideal clients to make use of your services. Recent research demonstrates that businesses that use video are seen to be more engaged with their customers.

It’s important to have a video that is creative and captures the attention of your audience quickly.

Sonic Sight is a video production business and Geoff Anderson has been running it since it started in January 1993. Geoff is the author of best seller, “Shoot Me Now - making videos for business”, and loves telling stories through video. 

With his expertise, it is logical to assume that Sonic Sight would appeal to a wide market.  It does, but Geoff has succeeded by taking the alternative approach, and focussing on a very narrow market niche. 

To gain a better understanding of this I asked Geoff some questions on how he has positioning himself as an expert in a very narrow market niche and why that's important for you.

1. Geoff, you've got a business that is 24years old, congratulations. What's been the secret?

2. So how to do go from a broad client base to a niched market?

3. But what about all those customers you lose from the other markets you've turned your back on?

4. How did you decide on this niche?

{youtube}grj2xaiq5Oo{/youtube}

Some takeaways you will find useful

• Patience – you don’t have to rush out and grab the next shiny object that comes along. 
• Enjoy your business – growth can sometimes mean more expenses and more headaches.  Know what you want out of your business.  It can be enjoyable and successful.
• Targetting a niche makes it easier for your marketing.  You can focus your energies much better.  It’s easier to position yourself as an expert.  And you can more readily identify who to next target.  You become better known and get more referrals.  There is usually a tight network in the niche which makes it easier to gain word-of-mouth references. 
• A marketing message targeting ‘everybody’ will catch ‘nobody’.  The clearer and more specific you can be about your market, the easier it is for people to refer you.
• Marketing to a niche doesn’t mean you have to turn your back on other opportunities as they arise. 
• It’s easier to do your marketing when you have a clear strategy as to who you are targeting.
• Once you do make the decision to focus on one thing, everything aligns for you. 

To get more information or resources go to Geoff’s website http://sonicsight.com.au/

And go to Amazon to get his book.

How Well is Your Business Performing?

When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, it is not just marketing that is holding them back.  A lack of focus leads to a lack of control over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business.

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 2016 Adam Gordon, The Profits Leak Detective 

Four More Actions you can Take to Make Your Sales Proposal Effective

Don’t you just hate it – you write your sales proposal, submit it, and wait for a response, and wait, and wait, only to get a NO.

It’s simple really; a Sales Proposal that doesn’t lead to action is ineffective.  And being ineffective is a waste of your time, effort, and money.

It doesn’t have to be that way.  Avoid the simple mistakes that so many make.  My last blog examined the first three of seven common mistakes.  Here are four more actions you can take to make your Sales Proposal more effective.  And there’s an offer at the end.

Remove the Risk

The prospect is uncertain, she has doubts in her mind.  It all sounds very good, but ……   How can she be sure?

There are two things you can do to remove the risk; provide “Social Proof”, and a Guarantee.

Social Proof

As master copywriter John Forde wrote “Used right (morally as well as strategically), it [social proof] is a powerful tool for selling.”

Social proof is more than just word-of-mouth over the backyard fence in today’s on-line world. In fact, there are four types of social proof you can use to strengthen your marketing, and you can use them whether you are writing sales letters, emails content for your website or advertisements.

I’ve written about Social Proof in an earlier blog “How to Use Social Proof to Increase Sales”.

Guarantees

Somewhere, either just before the offer, or just after, when the prospect is hesitating, “Will I or won’t I”, remove the fear that your product or service might not deliver what it promises by offering a guarantee.  This backs up the earlier social proof.

It might be a money back if not satisfied, or if it doesn’t do what it is supposed to do guarantee.  The important thing is that, while your guarantee could possibly be called on, you are much more likely to get increased sales.

Presentation

You know your reaction when you get a badly written document - your thoughts are negative from the start.

What will your proposal look like, visually that is?  Presentation is important.  And how will it read.

A good presentation will make you look so much more professional, and the buyer feel more comfortable about dealing with you.  If the way your industry does things is a simple “price, quality, delivery” quotation here is your chance to make yourself different, and stand out. 

Some guidelines:

• Headlines – it needs to be distinctive.  Size, colour, bolding.  It’s the contrast.  A headline must make the reader want to find out more, and not reveal so much they might not feel they need to read the proposal.  They break up the page and make your proposal easier to read.
• Sub-heads – ditto but smaller.  The same comment as above applies.  Customers often scan a document before they read it.  The sub-heads will guide them and let them know what is coming.  They can be a different font from the headlines or paragraphs which assists the scan.  And they make it easier to find specific information.
• Sentences - make your sentences short.  The easiest sentence to take in is only eight words long.  A sensible average is 14 words.  Any sentence of more than 32 words is hard to follow.
• Paragraphs – keeping them short and punchy makes them easier to read.  No more than 2-3 sentences.  A long paragraph is daunting.  It should be kept to one subject.
• Never use a long word where a short one will do.
• Begin sentences with benefits (when possible):
  
  • Instead of...Moving your money now will help you avoid major losses.
  • Try...You can avoid major losses IF you move your money now!
• Dot points – make it easier to scan and grasp the points you are making, just as I have done here.
• Word graphics – depending on what you are quoting, painting a word picture can help.  (Can you see yourself in that gleaming new, spotlessly clean stainless steel kitchen?) or (imagine if you had all the information you needed for that benches quote). 
• Picture graphics – a diagram or photograph of what you are delivering will help clarify other questions they might have and help reduce the risk and increase the like factor.  “Before and after” photographs emphasise the benefits you are delivering.
  
  • Don’t forget the Captions – tell them what the photo is.  More risk reduction.
• Spelling and grammar errors – they distract, and cause the reader to stop, and consider the correction.  Once they stop they lose the flow.

Just remember - as Dr. Johnson remarked over 200 years ago - "That which is written to please the writer rarely pleases the reader." You're not writing for yourself but for the prospect.  Make it easy for them!

Let it rest for a day and re-read it.  Does it still make sense?

Conclude with a Specific Call to Action

You need to explicitly tell them to do it, and why.   Don’t finish with a general “If you have any questions ….”  I used to do that.  It’s horrible.

You may tell you will contact them; date and time.  Or create urgency by limiting the time of the offer.  Be specific.

Use a P.S.

For some reason, PSs are very powerful.  They can be used to summarise the benefits of your proposal, reinforce the proof, or the urgency or scarcity. 

Here are several reasons you need to add a P.S. in virtually everything you do, print, online, and email:

• The P.S. is meant for those who are attention-challenged, and those who prefer to scan rather than read.
• Many people often read the headline and then jump right to the P.S.  They concentrate on the beginning and the end, but hardly anyone ever jumps to the middle.
• The P.S. can serve as a platform for the most important benefit. It’s just another way to reaffirm and drive home what is the most attractive aspect of your product or service.
• For added urgency, the P.S. can be used to state a specific deadline or expiration date and increase the likelihood of a response.   “Act Now!”

Could your Sales Proposals be Improved?

There’s nothing like an outside view, a second opinion.  Very often when we read something we’ve written, we read what we expect to see.  And miss the mistakes, or lack of logic, or lack of persuasiveness.  

If you would like to discuss how you could improve your sales letters of proposals, contact me.  There’s no cost for a consultation.  It is my gift to you.
http://www.profitsleakdetective.com/fast-track-to-cash-consult

Or buy my "Small Change, Big Result", my manual on how to increase your success rate with proposals and quotations; make a few small changes, and reap the rewards.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

The First Three of Seven Steps

Do you know what is not effective in a Sales Proposal or Sales Letter?  You should, because these mistakes are far from rare.   They occur time and time again.  And they are so off-putting.

The first mistake occurs right at the beginning of the proposal.  Its where the business starts talking about themselves, how good they are, how they are unique, unmatchable in every respect, the “ant’s pants” in fact.

I call these ME-ME proposals.

So let’s look at what you can do to change all that, and write a sales proposal that works.

Start with the Headline

If your headline doesn’t grab them, then they are not going to read on.  So it has to be meaningful to them.

You need to grab your prospect’s attention.  Headlines are the advertisement for your promotion, so you need to create an impact.  The headline has to have a hook in to that leads the reader on.  You only get one chance to grab their attention before they file your proposal in the round file.

The key to understanding headlines is that what grabs attention is personal benefit, known as WIIFM – What’s In It For Me.  So you need to highlight a key benefit, preferably backed by a promise. 

An example:  Low Maintenance School Uniforms – That Last

So in this example the benefit is Low Maintenance School Uniforms and the promise is That Last. 

There are some classic headlines leads that are used over and over again ….. because they work.  Some have benefits and promise, others just benefit.  Swipe and deploy!

The First 50 Words

What comes next is also very important; the opening paragraph.  This is where the ME-ME shouldn’t come in, but so often does.

Your opening paragraph must be about your prospect, and their problem.  Show that you understand them, their problem, and the difficulties it causes them.  Empathise with them.  Remember, it’s about them, not you.   You can’t be persuasive if there is no empathy.

A typical way to do that is to highlight the gap between where your prospect is right now and the benefit and promise of the headline.  After all, if there wasn’t a gap they wouldn’t be interested.

Staying with school uniforms:  “Are you sick and tired of always having to buy expensive school uniforms only to find they are high maintenance; they pick-up dirt marks so easily, those dirt marks are hard to remove, they always requiring ironing.  And they don’t last.  It doesn’t have to be that way.” 

Where the prospect is now, is being troubled by the problems they are facing.

Now you are need to develop Interest 

Remember the task of the opening paragraph is to build on your headline to lead the prospect to read on. 

I like using the acronym PIPES:

P – Problem; we started with that.

I – Implications; what are the implications for them if they don’t solve their problem.  Use emotional concepts.  Remember, people buy on emotions, and rationalise their decision with the facts.

P – Potential; what can they achieve/do/enjoy when their problem is solved.  Again, emotions help.  Ask them to visualise their situation once the problem has gone – Imagine this …..

E- Explanation;  This is where the facts come in.  Why there is a solution, and how it will work.  This is not yet your solution, but why the type of service/product you provide will solve their problem

S – Solution;  Now you are going to lead the reader into all the benefits of your product or service, why your solution is the only logical choice.  You are telling them you have the solution to their problem, that your product will close the gap referred to above – guaranteed.

Introduce all the benefits of your product or service and why they offer the desired solution.  It is about the end results.

To have the greatest impact use bullet points to illustrate each benefit.  Bullet points are built for flyers and a lot of other promotional messages.  So often people skim through your copy.  Bullet points make skimming easy. 

You don’t have to use a lot of writing tricks like connectors and other means of transition; just load the bullets, one after another.

Don’t just list the features (what your product is or has) of your product or service.  Tell them what the feature will do for them.  That’s the benefit.  It tells them WIIFM.  “Our uniforms are all made from XYZ Wonder Fabric.  This means:”

But there is more to your persuasive sales proposal.  We haven’t finished yet. 

Next week I’ll look at four more steps.

Could your Sales Proposals be Improved?

There’s nothing like an outside view, a second opinion.  Very often when we read something we’ve written, we read what we expect to see.  And miss the mistakes, or lack of logic, or lack of persuasiveness.  

If you would like to discuss how you could improve your sales letters of proposals, contact me.  There’s no cost for a consultation.  It is my gift to you.

Or buy my "Small Change, Big Result", my manual on how to increase your success rate with proposals and quotations; make a few small changes, and reap the rewards.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

If your business is not making enough profit, then you don't have a business... you have a charity!

That’s a quote, and I’m going to quote a bit more. It’s from Dr. Greg Chapman of Empower Business Solutions.  I interviewed Greg a year ago on a different topic, but you might find something he said elsewhere useful.   I know I did, because it supports a fundamental at the heart of being a “Profits Leak Detective”.

“Whenever you read an article about business growth, it almost always comes down to a push to increase sales, but there are times when this may have totally the opposite effect that was intended.

The big mistake businesses make is using Sales as a proxy for growth. When economists speak about growth, they look at profit, which is not the same Sales. In certain circumstances, increases in Sales can reduce profitability, but people continue to use Sales as an indicator of growth because it’s easy to measure.

So when does using Sales as a proxy for growth break down? Firstly, it needs to be recognised that all sales are not equal. Some will be more profitable than others. More resources are used in making some sales, and in service delivery than others. This requires deeper analysis than most business owners typically undertake.

If businesses don’t fully allocate their cost of sales and cost of services, it’s likely that there is a cross subsidy between their products and services with the less profitable ones being subsidised by the more profitable ones and increased sales of the former actually decreasing the profitability of the business.

It’s likely that such businesses are under pricing some of their products and services, and are not as competitive as they could be in others. Pricing is an essential part of a business’ marketing strategy and poor pricing can damage a business’ chances of success.”

There are two key elements here.  My mantra has always been that it is not the volume of sales that is the key to profitability, but rather is the volume of Gross Profits.   And Gross Profit is the difference between the Price and Cost of Sales.

Let’s discuss some of Dr. Chapman’s points:

“All sales are not equal”.  Very true; as you know, 80% of your sales will come from 20% of your customers.  It costs money to acquire a customer.  Returning customers buy more and are easier to sell to, and to service.

“It’s likely there is a cross subsidy between their products and service”.  The 80-20 rule also applies to the profitability of your sales.  However, I would go beyond Dr. Chapman’s suggestion that this is down to businesses not fully allocating their cost of sales and cost of services.  He is certainly right – they don’t, but sometimes they incorrectly allocate them, and sometimes they don’t allocate them at all, merely applying a broad margin that is supposed to cover everything.  A frequent error I have found is some variable costs, i.e. Costs of Sales buried in their Fixed Costs, in which case they certainly won’t be correctly allocated.

When we fully allocated Cost of Sales for one client, we found that that a whole division of the company had a negative Gross Profit; their Cost of Sales was greater than the sales of that division.  Definitively a case of cross-subsidisation, with the very-profitable other division being dragged down.

“It’s likely that such businesses are under-pricing their products and services, and are not as competitive as they could be in others.”  Very true.  Businesses that don’t know their costs are most likely to apply blanket mark-up margins across the board and not have a pricing strategy at all.

Pricing will be based on costs alone, and not on value.  Don’t get me wrong, you must know your costs.  Trying to price without knowing your costs is like playing that childhood game of “pin the tail on the donkey” while blind-folded. 

As I wrote elsewhere “The road to success is paved with good information.” 

But you also must know your market, and your ideal customer and the nature of the problem your potential customer is experiencing, the problem your product or service will solve. 

If you are under-pricing, then you are leaving money on the table.  If you are over-pricing, you will be losing sales, because you offering doesn’t represent value in the eyes of your prospective customers.

“Pricing is an essential part of a business’ marketing strategy”.  I couldn’t agree more.  Most small businesses don’t have one, yet it is fundamental to how you are perceived in the market place.  For example, where do you want to be positioned in the market place, el cheapo, value for money, quality?  Price has its role to play in all of these.

Pricing is something I have written about quite extensively:  Business is what, if you don’t have   Are you making these pricing mistakes?, The Paradox of Pricing, Do you set your prices to maximise Sales?

So when shouldn’t you increase sales?  You shouldn’t when those sales are costing you money, leaking profits.  And the key is – do you really know?

What is your pricing strategy?

Do you face that dilemma, trying to reconcile the need to improve profitability with the threat of losing customers if you do raise your prices?  If you would like to discuss how you could generate a continuous stream of profitable customers, keep those customers and minimise customer churn through an improved pricing strategy, contact me.  There’s no cost for a consultation.  It is my gift to you.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

Do you struggle to engage your potential customers?

In today’s world of constant distractions, most business owners struggle to get their marketing messages heard. Part of the problem is that there is so much competition out there, all blasting away through off-line and on-line media.

It doesn’t matter whether you’re the owner of a retail shop, financial advisor, swimming pool manufacturer or inventor with an ingenious product.  Why should they listen to you?

We struggle to engage our audience.  A key word is “content”, the information we put out about our product or service.  But why should our prospects believe us? 

I searched for who could help you with this question and found David Jenyns from Authority Content, and Melbourne SEO Services

David’s entrepreneurial journey begins back in his early 20’s when he sold Australia’s most love sporting ground, the Melbourne Cricket Ground. Seriously, he was doing the Brooklyn Bridge exercise, and was well publicised in so doing.  Since then, his business experience spans from developing and branching retail stores, to found one of Australia’s most trusted digital agencies, Melbourne SEO & Video. He’s an Amazon bestseller, a lover of processes and procedures and the founder of systemHUB.

Recognised as a high achieving entrepreneur, you will find many of David’s keynote presentations on YouTube including: TEDx, WordCamp and Problogger.

He has developed what he calls “The Simple System For Building Your Brand, Sales & Credibility”, which he explains in his book “Authority Content”.

Authority Content details a simple process that any company can use to break through the communication noise.

Built on the “3Ps” framework (Present, Product, Promote) this book teaches you a step-by-step system for building authority within your industry which will lead to sky-rocketing website traffic and sales.

I asked David four questions to explore why Authority Content is so powerful.

1.    Why do business owner struggle to get their marketing messages heard?

2.    Why is content so important?

3.    What is authority content?

4.    Where do most go wrong creating it?

{youtube}-Smyl1PA8uo {/youtube}

Some takeaways you will find useful

You must use the right bait to catch the right fish. Your message must be aligned to the right target audience – who are you trying to attract into your business?

The content you put out becomes the first point of contact to a prospect when they start to engage with your business.  It needs to be high quality and pre-sell what you are doing.  Content becomes the fuel in your marketing machine.

Your content should help your prospect “know, like and trust” you before the sale.  You need to put out consistently helpful information to first capture their attention, and then hold it so they start to trust you.

The best way to create quality content is through video.

Many business owners become too busy doing what they do, to consistently create quality content.   They look for excuses.

To get more information or resources go to David’s website http://www.authoritycontent.com.  You will also find him on Facebook, Twitter and YouTube.  Get his book through http://amzn.to/2b4BU5W

How Well is Your Business Performing?

When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, it is not just marketing that is holding them back.  It is the lack of control they have over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business.

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.  http://www.profitsleakdetective.com/fast-track-to-cash-consult

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

What in your business should be killed off?

Did you stop and think whether you had any “darlings” in your business that should be murdered?  You will recall from last week’s blog I used the writing advice “murder your darlings”, which is advice given to writers to remove any passage of writing that didn’t fit the story or style.  It can be perfectly good writing, and treasured by the writer, but if it spoils the story it needs to go.

The metaphor for business was that there can come a time when products, services of even processes that may be treasured by the business, need to be killed off.  The two classic case studies I quoted were Ford’s Model T, close to Henry’s heart, but kept in production for far too long, enabling the competition to catch and pass Ford; and Kodak, inventor of the digital camera, who clung to traditional film, leading to filing for bankruptcy.

Search the literature and there are many such stories, for example Nokia and Digital Equipment. 

Even more prevalent today is the disruption caused by technology.  Think Uber and AirBnB as I have written about a number of time; Disruption and the Gig Economy, More Disruption, But More Helpful, I don’t have the Answer , Three Sources of Business Disruption to Avoid

So how to avoid this situation

How do you identify, those “darlings” which need to be murdered, and make the decision to do so?

Here are eight things you can and should do.

Decisions - Making good decisions requires good information, then analysing and using that information.  Making decisions on gut feeling and instincts is all very well, but you are far less likely to make the right decisions.  Facts require a good information system providing accurate and timely information.
People are likely to make poor decisions without accurate and timely information that has been analysed and reported.  And too many poor decisions will lead to business failure.  

Mindset - Vince Barabba in “The Decision Loom” suggests businesses must have an enterprise mindset that is open to change.  Unless those at the top are sufficiently open and willing to consider all options, the decision-making process soon gets distorted. 

Whenever I’m consulting to or coaching a business and am told “We’ve always done it that way” alarm bells go off in my mind.  I explained why last week.

Have a variety of tools you can call on when tackling complex business problems; tools such as brainstorming, scenario planning, being willing to ask and keep asking “What if?”, risk management, and regularly using the “80-20” tool.  If Kodak had used some of these in the ten-year period they had to prepare for the arrival of digital photography, they might have made some different decisions.

Being flexible – both Ford and Kodak were inflexible.  “We’re on the right path, and we’re not budging” appears to have been the approach.  That doesn’t mean constantly changing direction like a hare, but it does mean having the ability to change when necessary.  Nokia made a significant change when it moved into mobile phones, and it was innovative enough to become a market leader, but like Kodak, became fixated on the phones it was producing, and was overtaken and passed by ‘smart phones’.

Heraclitus, an ancient Greek philosopher, is quoted as saying "change is the only constant in life", so the idea that we have to keep changing has been around a long time.  The marketplace we all operate in is changing even more rapidly, think disruption.  Killing promising new businesses to maintain old ones doesn’t make a lot of sense. When will businesses learn that if you don't cannibalise your own business, competitors will do it for you? 

Look at the trends.  Much like “we’ve always done it this way”; resting on your laurels, ignoring viral trends and failing to innovate turns market leaders into history in the blink of a business cycle.

Not understanding the business you are in!  Think of the Mission Statement in most business plans.  They should provide a clear definition of the business you are in.  Defining what business you are really in is a composite of three factors:
•    Customer Groups - who is being satisfied
•    Customer Needs - what is being satisfied
•    Technologies and processes performed - how needs are being satisfied.

Kodak thought they were in the film business, when they were really in the business of satisfying the need for “images”.  It is the end that is important, not the means.  So many business failures come about through not clearly understanding this.

The status quo needs to be challenged on a regular basis.  Many famous leaders have said it a lot of different ways, but it always comes down to the same message: when you stop challenging the status quo, you're dead.  Few companies are great at constantly reinventing themselves and most get by one way or another.  But the ones that resist change and try to hold onto what they were don’t find those fatal darlings.

Do you have some “darlings” in your business?

When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, they usually have a profit leak, and often that profit leak, costing them cash and profits, is a “darling”.  It may be a product, it may be a market, it may be a process.  But its time has passed, and it needs to be killed off.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows.
If you would like to discuss with me how you might do that, book a Strategy Consult here.  http://www.profitsleakdetective.com/fast-track-to-cash-consult

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

And the lesson for business

You may know this phrase – if you’re a writer, but probably not if you are in business.  But it has a business lesson.

The source of the phrase is the English writer Sir Arthur Quiller-Couch, who said ‘murder your darlings’ in a lecture he gave at Cambridge University in 1916, a century ago.

The American author William Faulkner followed up many years later, advising “kill your darlings”.

Stephen King continued the theme, saying, “kill your darlings, kill your darlings, even when it breaks your egocentric little scribbler’s heart, kill your darlings” in his book On Writing. 

But what exactly does this mean?

Basically, this phrase is referring to those parts of our manuscript that we have simply fallen in love with but are no longer needed for the story and can perhaps even be distracting to the reader.

They're all referring to what you might call your “best bits.” The “bits” you should edit out of your work.  The theory is that writing you’re particularly proud of is probably self-indulgent and will stand out.  It might be excellent writing, but is not needed there.

So what is the business lesson? 

What is “no longer needed”, and should be killed off?

Let me give you two very real case studies.

The Ford Model T was an automobile that was produced by Ford Motor Company from October 1, 1908, to May 26, 1927.  It is generally regarded as the first affordable automobile, the car that opened travel to the common middle-class American; some of this was because of Ford's efficient fabrication, including assembly line production instead of individual hand crafting.

Although automobiles had already existed for decades, they were still mostly scarce and expensive at the Model T's introduction in 1908. Positioned as reliable, easily maintained mass market transportation, it was a runaway success. In a matter of days after the release, 15,000 orders were placed. 

The first production Model T was produced on August 12, 1908 and left the factory on September 27, 1908, at the Ford Piquette Avenue Plant in Detroit, Michigan. On May 26, 1927, Henry Ford watched the 15 millionth Model T Ford roll off the assembly line. (Source: Wikipedia)

The problem was, while the Model T was the foundation of Ford’s success, it had stayed in production far too long.  The competition had caught up with it, and passed it. 

The lead in the car industry it established vanished.

As the old saying goes, “you can be on the right track, and still get run over.”

And then there is Kodak.  

On 19th January 2012 Kodak filed for bankruptcy protection.  There are few corporate blunders as staggering as Kodak’s missed opportunities in digital photography, a technology that it invented. This strategic failure was the direct cause of Kodak’s decades-long decline as digital photography destroyed its film-based business model.

Steve Sasson, the Kodak engineer, invented the first digital camera in 1975.  But it was filmless photography, so management’s reaction was, ‘that’s cute—but don’t tell anyone about it.’

Kodak management’s inability to see digital photography as a disruptive technology, even as its researchers extended the boundaries of the technology, would continue for decades. As late as 2007, a Kodak marketing video felt the need to trumpet that “Kodak is back“, and that Kodak “wasn’t going to play grab ass anymore” with digital.

They commissioned a study.  The results of the study produced both “bad” and “good” news. The “bad” news was that digital photography had the potential capability to replace Kodak’s established film based business. The “good” news was that it would take some time for that to occur and that Kodak had roughly ten years to prepare for the transition.

The problem is that, during its 10-year window of opportunity, Kodak did little to prepare for the later disruption. In fact, Kodak made exactly the mistake that George Eastman, its founder, avoided twice before, when he gave up a profitable dry-plate business to move to film, and when he invested in colour film even though it was demonstrably inferior to black and white film (which Kodak dominated).

Kodak choose to use digital to improve the quality of film.  It bought out a new camera, the Advantix Preview.  It was a digital camera. Yet it still used film and emphasized print because Kodak was in the photo film, chemical and paper business.  It failed.

You see the problem

Unless you “murder your darlings” you’ll get left behind, run over, a memory.  As I write this, Ford Australia has just closed its local operation, after approximately 90 years of manufacturing in Australia.  There were many issues, but the principal one was that it stopped making the type of car people wanted. 

They failed to move with the market, and kept on making their traditional type of car, a large six-cylinder rear wheel drive sedan.  People were no longer buying that.

On a personal note, I recall having just gone on the board of the family retailing company, which my great grandfather had started in 1862, and questioning something.  The crusty old Chairman, who had been with the company all his working life, said, “We’ve always done it this way!”  End of discussion. 

I had the melancholy duty, some years later, of taking on that role to try and save the business for the family, only to have to call in the Receivers.  The business had a number of “darlings” which it had failed to kill off.

So how to avoid this situation; how do you identify, and make the necessary decision to “murder your darlings?”

That will have to wait for next week.  This blog has gone on long enough.

Do you have some “darlings” in your business?

When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, they usually have a profit leak, and often that profit leak, costing them cash and profits, is a “darling”.  It may be a product, it may be a market, it may be a process.  But its time has passed, and it needs to be killed off.

For more than 28 years I’ve been helping small business owners plug the profit leaks in their business and restoring their cash flows.

If you would like to discuss with me how you might do that, book a Strategy Consult here.  http://www.profitsleakdetective.com/fast-track-to-cash-consult

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

Much activity, but no progress

My client hesitated; "I don’t know about that.  What if a better opportunity comes along?"   I was suggesting to him that he commit to a specific objective; time based, measurable, with steps to follow once the initial objective had been achieved.  It was designed to get his start-up moving, to get some momentum, and bring in some cash.

But he was like a dog with too many bones to choose from.  He’d identified so many opportunities and markets for his product.  But virtually all had impediments, most of which required money to overcome, money he didn’t have.

Have you ever watched a hare running in a paddock?  They can run quite quickly, but don’t make much forward progress.  Off they dash, then stop, squat for a moment, off they go again, in a different direction, only to stop, squat, and off again – in another different direction.  There’s no such thing as a straight line from A to B.

A poorly led business is like a hare in a paddock, constantly changing direction.  It is very hard to make progress when you are changing direction all the time.  Different goals, different strategies, not giving time for one to succeed before the next is embarked on confuse both staff and customers.  Chasing another bone, the silver bullet that is going to solve the business’s problems for once and for all. 

Successful businesses have a very clear focus on where they are going and what must be done to achieve their goals.  They also have motivated staff.
That doesn’t mean something should not be abandoned if it is not working.  Not everything will work.  You have to keep testing and trying, but do so with your eyes clearly fixed on the end-goal.

There are two problems with hare-like behaviour in a business; lack pf progress, and stress.

Successful businesses keep trying new things.  And importantly they keep measuring, so they know what is working, and what is not working.  When they find something that works, that takes them towards their overall objective, they do more of it.  But when they find something that doesn’t appear to work, they may try to fix it, and if it doesn’t, they discontinue that project or process.

The important thing is to keep moving forward to achieving their overall objective. 

Two key measurements of that progress will be cash flow and profitability.  If you are dashing about from one thing to the next, not committing to anything because you want to be free to chase the next meaty bone, then you will be spending precious cash in the endeavour to make this one work, but not staying long enough to make it work, and generate cash flow. 

Believe me, this happens, particularly in the start-up phase.  And the problem is, such businesses never get beyond start-up.  They dart from one possible windfall, to the next, off in another direction.

Which brings me to the other problem – stress. 

If your business is not making progress, if it is burning cash faster than it can create it, then you will be stressed, and that stress will spread throughout your business.  Your staff will know things aren’t going well, and they will be worried about their jobs, and their future.

Stressed people aren’t always pleasant to be around.

And I know what your solution will be, having been working with people like you for twenty-eight years.

The solution most adopt is to work harder and longer.  Gradually you find yourself working long days, and night, seven days a week.  No time for your family, and your hobbies for relaxation. 

It does happen.  I’ve seen it time and again.

What’s the real solution? 

I know it sounds boring but, put the blinkers on, decide which of the options has the least impediments to success, plan the steps, and take them, one at a time. 

Achieve that, and move on to the next.

Develop some momentum, and bring in some cash to fund those next steps.  Slow and steady progress will be the result.

My client is still hesitating.  Setting targets and dates is a bit to airy-fairy.  But not that new opportunity he has just identified – it’s huge.   And he can’t wait to attack it, if he could only fund that attack.

Do you have direction in your business?

When clients approach me for coaching, clients with businesses that are underperforming despite the crippling hours and effort the owner is putting into them, it is not just marketing that is holding them back.  It is the lack of control they have over their business, and eight times out of ten that lack of control comes down to a lack of knowledge of what is happening in the business, and lack of direction.

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 2016 Adam Gordon, The Profits Leak Detective 

Who wins from a reciprocal exchange?

Let me tell you about the largest negotiation I was ever responsible for, and the lesson I learnt from it. 

I was responsible for bidding and negotiating major new contracts for a medium sized Australian manufacturing company. We had bid on some new work, and were asked to come and negotiate with a major client.

It was all rather hurried and last-minute. I had a briefing with our board and confirmed our minimum acceptable position which we used to call “MinAcc”. Naturally the client was determined to get our price down as much is possible, Minacc was the point at which, if reached, I had to walk away from the negotiations and fly home. On the other hand, it was up to me to negotiate the best possible price, and margin, for the job.

I should also add that our price had two components, the non-recurring or setup costs, and the recurring cost of production units. Each had their own Minacc point.

But of course it wasn’t just the price that was important, and terms and conditions of the contract were also very important and subject to negotiation.

The “strawman” was a technique I had been schooled in by our more experienced directors.  This is a technique where you negotiate very strongly about something that is not so important to you, so that when, if you concede, they will also concede another sticking point.

By picking on a weak part of the position and making a big deal of it, attention is distracted from the more important factors that would weaken your position.  The idea is to make concessions in areas that are really important to them, in return for which you give up your straw men.  This tactic will only work if their demands are for something that is either difficult or impossible for you to agree to.

In my situation we were able to reach agreement on both the terms and conditions and price eventually. The contract was renewed a number of times after I left the company, and became a very long-running contract for the business.

As an aside I also used technique I have not used since, a very simplified version of the Monte Carlo simulation to look at a range of possible outcomes.  Sitting alone in my motel that night I could see only one that would allow me to reach a successful conclusion, which guided my approach the next day.

Back to the lesson; the “strawman” underlies one of the key principles of influence in Robert Cialdini's book, "Influence – The Psychology of Persuasion."  They include Reciprocity, Commitment, Social Proof, Liking, Authority, and Scarcity.

It is reciprocity.  People tend to return a favour, thus the pervasiveness of free samples in marketing.   In effect, I conceded on some key points that were important to them, and they conceded on some key points important to us.  I’d never heard of Cialdini or his book then.  That is not surprising, as he didn’t publish it until 1984. 

In day-to-day transactions some call it “reciprocal concessions”. You have probably done this from the other side, starting with a small price that you’re prepared to pay, but willing to concede a higher price, but not as high as a seller is asking.

When you’re selling the logic goes, you mention a big number... any big number... and then mention your price, which is lower.  By comparison, the price will look small.

“Reciprocal Concession” just adds more deliberate meaning to that context. “If that’s too much,” it says, “how about this?” Knowing, of course, that “this” was what you were negotiating for all along.

How might that work in your next sales pitch?

You have properly seen online sales pitches like this:  "To get the same kind of service from a top-level pro, you might pay $1,1275 for a three-hour consultation. That’s what I’ve charged my private clients for years...”

“And frankly, it’s well worth it.”

“But I know this is new. And I know, from where you stand, it takes guts to be a pioneer. So I’ve set the launch price at just $725. That’s a great deal.

“However, let me do you one deal better. For the next 24 hours, you can grab an early-bird discount of just $450. You HAVE to let me hear from you by midnight.

Make that deadline, and the steep discount is yours.”

You get the idea.  If you start with the low price, it might feel low. It might not. By starting with a nearly preposterous offer and then backing off, you highlight the bargain. You also get a customer who feels more satisfied, getting such a great deal too.

If you have negotiated on the beach in Bali, the same principle applies. It’s like a ritual dance going back and forwards until a midpoint of mutual satisfaction is reached.

Where else can you use this principle? 

Reciprocation recognises that people feel indebted to those who do something for them or give them a gift.  For marketers, Cialdini says:  “The implication is you have to go first.  Give something: give information, give free samples, give a positive experience to people and they will want to give you something in return.”

How about one of the most powerful promotional tools, word-of-mouth through referrals.  If people feel they owe you something, they are more likely to give you something in return. One of the things they will give is referrals. 

So how might you generate that?  What about a thank you note, either by email or more preferably, a handwritten note. It only takes a few moments, but is really appreciated. It helps build a relationship, shows that you care. The recipient now feels that they owe you something and a request for a testimonial is the logical next step.

And personal testimonials are social proof of the value that you supply.

People like to refer business. It makes them feel good. People are making a contribution when they refer business. They are doing a "good deed" and that makes them feel good about themselves. Given the opportunity, people would refer business to others all day long.

Or demonstrations; the seller offers to demonstrate the product or service.  At some stage a tea, coffee or even a beer is offered, no charge of course, “accept a little hospitality”.  This is where a sense of obligation is created so that you will start to feel at some point to you need to reciprocate by buying something, just something small of course.  There’s always a touch of reciprocity from the demonstration’

Give to get back.

Where do you use the Principle of Reciprocity 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 lie in their approach, concentrating on the sale, and not on the sale process.  It is all very well to start with the end in mind, but sometimes you have to give to get.

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 2016 Adam Gordon, The Profits Leak Detective