But would be more profitable if they didn't

It was the travails of a new client who definitely has a hole in their bucket that lead me to revisit a blog and, more importantly, the research behind it, that I wrote some time ago.  The blog was “There’s an 88% chance there’s a hole in your bucket”.  In it I discussed a survey that found there 88% of the businesses surveyed knew they had a profit leak.

The informative details were in a survey in the UK by The Access Group. The survey found that 88% of the businesses surveyed knew they had a profit leak.  Of these nearly one-third had no idea where the leak was and so were not doing anything about it.  Estimates of the amount being lost ranged from less than 10% to up to 20%

I find that figure quite remarkable. Turn it around. What would a new product or service which added up to 20% to your bottom line, rather than took it away, do for you?

In looking at the findings, I’ll also highlight what the survey found to be the secret to avoiding this situation.

The question is, of course, whether the findings apply to you? I’ll comment on them and discuss their applicability to small business based on my experience with small and medium businesses in Australia.

Survey Methodology

In the first half of 2010, The Access Group surveyed 169 businesses in the UK. The organisations surveyed were across a range of industries from manufacturing through to professional services. Turnovers ranged from less than $1 million to more the $20 million, with the majority turning over more than $10 million.

They defined “profit leaks” as ‘any inefficiencies that increase costs or impact on sales or margins, and can occur anywhere within an organisation. These losses can manifest themselves as anything from overspending and poor procurement procedures to missed sales opportunities.’

Access believe it is no secret that every organisation has profit leaks, but identifying where these leaks are happening is a huge challenge.

The most common problem for companies is the lack of timely data on which to analyse operational effectiveness due to disjointed systems and mismatched KPI’s across the business.

The findings

The level of loss

Overall, 88% of respondents surveyed acknowledged that they have profit leaks within their organisation. One respondent suggested that because of the prevalence of this problem it’s no longer acceptable to try to trade out of trouble.

Profit losses need to be dealt with head-on if businesses want to survive and prosper during this period of continued economic instability.

Of the organisations experiencing profit leaks:

•    The majority, 36%, believe that between 0-10% of profits are lost;

•    27% of respondents believe that 11- 20% of profits are lost; and

•    25% said they didn’t know the percentage of profits lost or that it was not applicable to them

As an example of the impact, a business turning over $1 million that is leaking 10% of an estimated $75,000 in profits would be losing $7,500 a year in profits.

That might not sound much, but if your net profit margin were 7.5%, you would have to generate an additional $100,000 a year in sales to recover those profits.

The benefits of plugging those leaks are too great to be ignored.

The source of loss

•    68% of respondents knew where their organisations were leaking profits whilst 32% didn’t know where profits were

•    72% of respondents believed that operations leaked the most profits, 56% felt sales and marketing were the main culprits whereas 31% felt finance was the biggest source of loss.

Looking at the results more specifically, lost sales opportunities, poor project profitability, and low staff utilisation were all among the top areas of profit lost.

Measures to remedy or prevent profit leaks

The survey results highlighted that respondents clearly felt that having the right information to hand would have the greatest impact on reducing profit leaks, with 51% pinpointing reporting as the main focus of review and improvement.

Indeed, when compared to what measures the respondents ‘could’ put in place to prevent profit leaks, 63% of all respondents said that better reporting tools, alongside greater visibility across the organisation (56%) were the top two measures.

This would indicate that even those that didn’t know where the profit leaks were in the organisation were mindful of the fact that reporting and accessibility of information are essential to stemming losses.

“This shows just how critical reporting and visibility of data is to an organisation. Having access to accurate and timely information provides a better understanding of where opportunities are being lost. And if you have transparent reporting on staff utilisation, sales procedures, billing/cashflow, project profitability or stock availability, then you have a benchmark to make improvements. After all, you can’t manage what you can’t measure.”

Next week I’ll look at whether this applies to you.

Fast Track to Cash

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


© Copyright 2016 Adam Gordon, The Profits Leak Detective 


Business is something you can do the right way or the wrong way 

And have you thought about the difference between owning a job, and owning a business?

How do you make that shift from being an employee in the business, that is, doing what the business does, to being a business owner? 

Do you get up each morning, and hope for the best, or do you have a plan and a structure to which you are working.

One test is the tropical island scenario; if you went and holidayed on a tropical island for three months, or perhaps six months, would you have a business to come back to?

If you want the latter, one that will not just survive, but grow, can you identify the key ingredients to do so?

Why is it so, and what can you do about it?  As always, I go to an expert who can give you, and me, some guidance and advice.

I recently interviewed Ben Fewtrell from Action Coach ANZ to discuss this very question; “How to build a business that works without you?”   And here is why I sought out Ben!

Ben started his first business at the age of 18, by the age of 28 he had built and sold his transport company to pursue his love, the business of business. He now co-owns the largest and most successful business coaching firm in Australia and New Zealand and has personally coached and worked with thousands of businesses in dozens of industries. With his specialty in Sales and Marketing Ben's clients experienced solid increases in their sales almost instantly.

A passionate business builder, Ben is a regular contributor to several business publications, magazines and newspapers and was featured in Dale Beaumont's best seller 'Secrets of Top Business Builders Exposed', has appeared as a guest on SKY Business and 2GB, is a regular co-host on Alive FM's business clinic and you can tune into his weekly Business Podcast Show 'Business Brain Food' available in iTunes, where Ben talks to the world’s leading experts on how you can build a better business.

As a keynote speaker, Ben has travelled the globe and has been described as passionate and funny, described as an 'Edutainer', delivering a fun yet extremely educational and helpful presentation leaving your audience motivated and energised.

He is also a Director of the SME Association of Australia.

I asked Ben five questions on “How to build a business that works without you?”  

1.    What are the three keys to a business that operates without its owner?

2.    Why do you think 80% of new businesses fail in the first 5 years?

3.    How does someone need to think to be able to run a business that doesn’t need them anymore?

4.    Are there set structures or business building formulas people should learn?

5.    Why should someone have a business coach?

There are some very valuable tips for those of you who want a business, and not just a job.  As Ben said “The people that are self-employed earn money.  The people that own a business make money.”

So build a team you can trust, equip them with good systems, develop the mindset to think as a business owner, not as an employee, and have a plan and a structure to which you are working.

And find someone, experienced, knowledgeable, who could prevent you making the mistakes most novices in business make? 

If you would to get more information or resources, you can:

•    Get goodies from his website at http://actioncoachanz.com/

•    Follow Ben on Facebook, LinkedIn, Twitter, Google+, or view his videos on ActionCoach YouTube

Fast Track to Cash

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

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

Without measurement there can be no improvement

client loyalty smlKnowing what your customers want, and what keeps them happy leads to increased sales, and increased profits.  As I discussed last week, getting customer feedback can be incredibly important for your business.  And I gave four good reasons for doing so.

So, how do you get it?  Ask them of course, and here are three types of surveys you can use, plus some useful tips on writing a customer survey, and a comment on which survey media to use.

Of course much will depend on the nature of your business, the offering you make and whether you have many customers or a few clients.

But either way, the old saying that without measurement there can be no improvement applies.

Let’s look at some of the options:

The special purpose survey

This is the type of thing I do before starting a business plan.  I survey my client’s customers to uncover information about a range of factors which ultimately impact on the business’s direction and strategies.  It is often best undertaken by an outsider to get ‘free and frank’ responses.  People are sometimes hesitant to tell a business directly what they think.

I use a mixture of open-ended and multiple choice questions.  Usually I leave price until after I have explored and identified the key elements of service delivery for that particular product or services.  Price is rarely the key factor.  And I always use a ‘fun’ question to draw out any issues the other questions haven’t established.

Special purpose surveys are also used for a variety of purposes such as testing whether there is a market for a product, developing a marketing campaign, determining opportunities for improvement – the list is endless.

Regular surveys

You may choose to do regular surveys such as an annual, 6 monthly or quarterly surveys.  One of the key benefits of regular surveys is that they also allow you to pick up trends that you can act on before a particular issue becomes critical.

Random surveys

Some service providers do random surveys after service delivery.  The response rate may be low but where there are a large number of customers even a low response rate can give a statistically significant response providing you useful information.

AdvancedSurvey.com provide some useful tips on writing a Customer Survey

“ Writing a satisfaction survey can be tricky, but it's of paramount importance to your business or organisation to understand how satisfied customers are with your service. Here are a few tips for writing a customer satisfaction survey.

  • Start with the end in mind. Make sure you understand why you're writing and creating a customer survey and what you're going to do with the results. How are you going to change your processes as a result of these customer satisfaction survey results?
  • Do not be biased in your question writing. Don't assume that customers love your products or hate your products. Try to gather satisfaction information without leading the customers either way.
  • Gather demographic information within your customer survey to help segment your data during the analysis. You can easily gather zip code or state information, for example, so you can see if only Californians are happy with your service.
  • Open ended questions (text boxes) are crucial for understanding the satisfaction of customers. For instance, if customers are unhappy with a particular aspect of your service or product, you can ask them to expand on why they are unhappy. Be aware that too many open ended questions can wear down a participant and lead to skipped answers (or worse, incomplete surveys) - it's a delicate balance.
  • Make sure you are using vocabulary that your customers understand. Don't get caught up using company-only vernacular or acronyms. Be clear so everyone can understand your customer satisfaction questions. In fact, it often makes sense to "test-drive" a survey with some customers before you launch it to the entire survey participant population.”

Survey Media

Again much will depend on the nature and frequency of the survey. 

Detailed surveys are usually undertaken by telephone or face-to-face.  Because of the time involved such methods can be expensive.

Written surveys can reach a much wider base.  They may be posted or emailed.  Because of the low response rate businesses sometimes offer a reward or inducement to complete the survey. 

Increasingly online survey tools such as provided by Survey Monkey and Dolphin Software allow you to quickly create and publish online surveys in minutes, and view results graphically and in real time. 

You can’t assume you know what your customers are thinking.  Getting feedback from your customers helps you build a more profitable and  sustainable business.

Throw some light on the dark areas of your business

Just as lack of information on where the profits in your business are made, lack of knowledge of what your customers are thinking about your business, your products and services holds you back from making the right decisions.

If you would like to discuss how you could obtain that feedback, and use it to generate a continuous stream of profitable customers, keep those customers and minimise customer churn, contact me.  There’s no cost for a consultation.  It is my gift to you.

AG2Signature4 2

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

And how to get it

Marketing is really pretty simple.  Just find out what people want, and give it to them.  Or so said marketer Daniel Levis. 

Sounds simple, doesn’t it, yet people rarely do it.  Most small businesses I see do what is known as “Monkey Marketing” - simply aping their competitors without care or thought for the real wants and needs of their prospects

You will sell more if you offer what people are after. 

And customers will keep coming back if they are happy with your products and services, and how they are provided.  Ken Blanchard called it “creating Raving fans”. 

"Your customers are only satisfied because their expectations are so low and because no one else is doing better. Just having satisfied customers isn't good enough anymore. If you really want a booming business, you have to create Raving Fans."

But how do you know what your customers want, and what keeps them happy? How do you even know what your customers like or dislike about your offering?

The answer might seem pretty obvious - ask them.

Asking your customers for feedback can provide extremely valuable insight for your business and offerings, a different view of your business than you see from the inside.  

A key input into the planning process whenever I do a business plan for a business is a customer survey.  We seek responses on key service issues, the benefits sought, the things the business does well, and doesn’t do well, its strengths and weaknesses.  The survey always adds value to the planning process, and frequently uncovers a key factor on which to build the plan.

Similarly, after every small business workshop I run I ask participants to fill out an Evaluation Form before they leave, looking for feedback on the workshop, its presentation and content.

Here are four reasons you should ask for customer feedback.

1) Learn what your customers like and don’t like.  It may be your offering itself and how well it meets their needs, or how you provide it, or your after sales service.  Solid information, unlike opinions and guesses is extremely useful.   Knowing what benefits they seek enables you to make changes to your offering and how you present and deliver it. 

Early in my consulting career a Director of a client company suggested they didn’t need to do a customer survey.  He ‘knew’ what their clients thought and wanted.  Needless to say, when we did the survey, he didn’t.  And that caused things to change.

Another learnt the critical importance of on-time delivery.  They knew it was important, but not that it was critical.  The business plan was then built around determining what on-time delivery was to the customer, and how to ensure it was met.  They became a very profitable business.

2) Make customers feel important and involved.   By asking for your customers to for their views, you’re telling them that you value their opinion.  Your customers feel important because you’re treating them as such and when they see changes as a result of that consultation they feel involved in improving your business. 

You are building a relationship, and businesses thrive on relationships.

3) Continuous improvement.  I’m a big fan on continuous, incremental improvement.  The 80/20 rule applies as much to continuous improvement as it does to sales; 80% of the problems will come from 20% of the causes.

Customer input is a key ingredient in identifying where improvements need to be targeted.  If you’re consistently listening and seeking feedback, you always have a finger on the pulse of what’s working for your customers and what is not, so you can continually improve your products or services. 

4) Testimonials – the responses customers provide can be valuable testimonials to be used on your website and in your marketing materials.
Knowing who your customer is, what they want and providing it is the key to consistent income.  There’s a lot to be gained from getting customer feedback and absolutely nothing to lose. All you have to do is ask!

Remember that people rarely praise, but often complain.  Asking customers for feedback provides the opportunity to improve your business and its offering, and eliminate the weak spots that lead to complaints.

A happy customer will help you generate the publicity for your product!

Next week I’ll look at how you ask them, and some of the options you may have.

Throw some light on the dark areas of your business

Just as lack of information on where the profits in your business are made, lack of knowledge of what your customers are thinking about your business, your products and services holds you back from making the right decisions.

If you would like to discuss how you could obtain that feedback, and use it to generate a continuous stream of profitable customers, keep those customers and minimise customer churn, contact me.  There’s no cost for a consultation.  It is my gift to you.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

If so, how do you keep it?

Business begins with the sale, and without continuing sales you don’t have a business.  Without sales you won’t have the cash flow to pay for everything else, including all that you do well.

That’s all very well, and it’s easy to say.  But as a small business owner, you know there’s more to it than that.  There are a couple of issues to consider, let’s make that three.

•    How do you get those sales?
•    How do you keep that customer?
•    What about customer churn?

How do you get those sales?

Why should a potential customer choose you?  We all make claims about our business.  You see the same words endlessly rolling out in advertisements, letters and proposals.  People talk about the uniqueness of their products or services, their quality, the level of customer service and on and on.

Now here is a little test you can apply to your promotion.  Take your major competitor’s name and substitute it for yours in your promotion.  Is it just as believable?  Could your claim be said about them?  After all, if they are your major competitor they must be doing something right.

You need to be seen as more than interchangeable with your competitors.  You need to be seen as both different and better.

Word of Mouth (WOM) can help get sales.  Many, if not most, small businesses place an inordinate faith in word-of-mouth to keep customers coming through the door.

Word of mouth advertising is by far the most powerful tool in terms of generating new leads and sales. Personal endorsements hold great value.  The main issue, in my opinion, with word of mouth advertising is the lack of consistency.  Friends, family members, and business associates connect with others when, where, with whom and how they want to, not necessarily when you want them to.

While WOM is always important small business owners don't understand how they can enhance their customer flow through a well thought out and timed marketing strategy. 

Getting small business owners to think about marketing I have found to be even more difficult than getting them to think about understanding their finances.  It takes time.  Let’s tie those two skills together. 

Who are your key customers?  Where do you make your money and from which customers?

Key customers are those customers in market niches which provide the majority of your profits.  Remember the 80/20 rule.  You will win 80% of your profits (and sales) from 20% of your customers.  They will be buying from you more frequently and in larger amounts than other customers.  They do so because you meet their needs; solve whatever business, personal, emotional problems they have.   They trust you, and believe they have developed a relationship with you.

I usually start with asking my clients to modify their accounts to show their Sales and Gross Profits by product/service group (it is amazing how many don't have this basic information) AND by customer segment.

Once they have that information I find it easier to get people to focus on how to increase sales and profits from the product/service groups and customer segments that make them the most money.

Then they can think about the message (the value) they need to give those customers about their products and services, and how they can best reach them (media).

If people don’t know what you offer or can’t find you they can’t do business with you.  It is a little like winking at a girl in the dark – you know what you are doing but nobody else does.

How do you keep that customer?

Many small businesses do what they do, well, a good job.  Otherwise they wouldn’t still be in business.  Now I know, and you know, there are others who don’t but neither you nor I are concerned about them.

Doing what you do well is obviously important, and that includes not just the product if you make or sell something, it includes the service that goes with it. 

To keep those key customers, you need to look after them, and build an enduring relationship. 

Being a great provider or whatever it is you offer, is incredibly important.  But it only becomes more important after you make the sale.  The only element that's going to determine how many you get to provide to is your marketing skill.  That's why marketing plays such a primary role in pretty much everything that we do.

Even then, you will always lose some.

What about customer churn?

You know that you make more money from your current customers than from new customers, but customer churn is a reality.  You will always lose customers for one reason or another.  They move on, go out of business, get bought out, change management.  It happens.

That’s why you need more than your key customers; you need a continuous stream of new customers coming through the door.

The typical small business owner started their business because they are good at what they do, that is, their technical skills.  So they see operations (doing) as the most important thing, rather than creating a continuous stream of customers.  In fact, they think running a business is about ‘doing’ rather than gaining customers for what they do.

Even when quoting they rush through the quote to get back to the job, when spending a little more time on the quote would considerably increase the likelihood of being successful.  (See my book “Small Change, Big Result”)

This comes back to the first point. 

To have a business, you have to make a sale, and keep making them.  Those helping you gain those technical skills would have concentrated on the technicalities, not on how to gain customers for them.  How do you keep those customers coming though the door?

Is your business travelling as well as it could, and should?

There's an old saying that a person who chooses to represent themselves in court, has afool for  client.  If you would like to discuss how you could generate a continuous stream of profitable customers, keep those customers and minimise customer churn, contact me.  There’s no cost for a consultation.  It is my gift to you.


© Copyright 2016 Adam Gordon, The Profits Leak Detective 

And how to make best use of it

I’m sure you are well aware of the 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

The key issue in a recent discussion of three different markets for the same product was that, despite the fact the same product on offer, a different message is needed for each market.

These three markets are defined by the prospect’s awareness of a problem/need they may have had, and their readiness to make a decision to buy.

There is another side to the “customer awareness” coin; a concept which takes this idea step further and gives you greater guidance on how you might best “pitch your pitch”.  The underlying premise takes “awareness” to another level. 

In developing your sales message, which could be an advertisement, a letter, an email, a pitch or presentation, you need to ask what your target market is likely to know about your business, your products, his own problems and other possible solutions available.

You might ask, why does this matter?  It matters because the level of awareness of the prospective customer about these questions completely changes the nature your message and your approach, as I alluded to above.

Even when you are selling the same product to everybody, the people you approach will only respond to one kind of pitch, depending on how aware they are of

•    who you are,

•    what you’re selling, and

•    why you are selling it

The concept of “customer awareness was developed by Gene Schwartz in his book “Breakthrough Advertising”.  Schwartz is one of those blokes who are quoted as developing the fundamentals of advertising and promotion.

He described five levels of awareness running from most aware to unaware.

So let’s see if this makes sense in developing a sales message?

1. Most Aware

The customer has probably dealt with you before and is quite comfortable with you and your products.  So he or she really only needs to know the details of your offer.

You have probably heard of the importance of building customer relationships.  Good relationships lead to repeat buying.  These customers become advocates for your business and your products.

Think of the Apple customer base.  They will even queue overnight to be the first to get the new iPhone, iPad or whatever.

Selling to the ‘most aware’ is pretty straight forward.  You don’t have to educate them.  Nor do you have to deal with possible objections, or remove the risks. 

There is a relationship and they trust you.  You just have to let them know you have a new product, or a new offer.

2. Product Aware

Your prospect knows what you sell, but isn’t sure that it is the right product for him.

These are the prospects who are not as familiar with your business and its products, but are also aware of the competing products in the marketplace.  They won’t have the same relationship with you and because of that may have doubts and objections. 

So removing objections and perceptions of risk and establishing trust is important.  You have to demonstrate that the features and benefits of your product will solve their problem, and that they can believe your claims.

Your sales message needs to start the process, promising the benefit they are looking for in the headline, and then giving the reason why it will give that benefit to build confidence.

You still have the advantage here of not having to educate the customer about what your business does.

3. Solution Aware

From here on in the Five Stages scale your work becomes harder. 

Your prospect knows the results he wants, but not that your product provides it.  So your sales message is not initially about you; it’s about educating the prospect. 

The prospect is not yet in a position to compare options.  He is only concerned about getting the result he wants.  He knows or guesses that somebody out there can help him, but he doesn’t know who, or where, or perhaps even where to look.

If you are going to make the sale, he will need to be convinced that your product can give him that results.  But before you can do that you need to demonstrate that you are on the same wavelength, that you understand his pain and predicament.

So why bother?   After all, your chances of getting a sale are much higher in the previous two levels of awareness. 

It’s simple; there are more people in these situations.  If you want your business to grow you are also going to have to tap into those prospects in the three unaware categories.

Notice I said “also”!  You need more than one message.  In an earlier blog I wrote that ‘one’ was the most dangerous number in business.  It applies to marketing as well.  If you are using one message only to target all your market, well, you are targeting no-one - ineffective messages.

4. Problem Aware

Your prospect SENSES that he has a problem, but doesn’t know there is a solution.

This is where most of my ‘profit leak’ clients are.  They know things are not right with their business, but they don’t know there is a way to fix it.  They don’t know what to look for, where to look, or even when to look.

You may well be in the same situation.  You have the answer, but your potential customers don’t know they need to be looking for it.

I’ll quote “Great Leads” again; “The key with this customer is to show you ‘feel their pain’.  Not just that you know the frustration, desperation, or even fear and anger it causes.” 

Remember people buy for emotional reason, 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).

5. Completely Unaware

This is the hardest, yet the biggest opportunity from Schwartz’s Five Levels of Customer Awareness.  It’s the largest market out there for you. They have no knowledge of anything.

These people don’t know they have a problem that can be solved, let alone that there are products out there, including yours, which could improve their situation. 

Crack this one and you will find completely new markets on which to grow your business. 

But it is also the most difficult.  How do you win the attention of ‘unaware’ customers?   Why should they pay attention, let alone listen to you? 

On the other hand, if you can attract their attention, you may well find that you have moved them past the point initial resistance, and of considering the competition.  You ARE the solution.  You need to make the offer to seal the deal.

So how to make best use of Customer Awareness

Customer awareness is a difficult challenge.  Yet can you see if you can get it right what a tremendous difference you will make to your sales message, whether it be an advertisement, a brochure, web page, sales letter or presentation.

You will be talking to that prospect in a way that will reach them. 

But you need different messages for different prospects if you are to do so.

Most small businesses don’t vary their message – same old, same old message throughout all their promotions.  They think they need to appeal to as many prospects as they can with the one message.  But it doesn’t work that way.

Think of it like this; the more aware your prospects are, the more direct can be your approach.  The more unaware, the more you will have to take an indirect, educative approach.

Is your business travelling as well as it could, and should?

If you would like to discuss how you could differentiate your approach, and make better use of customer awareness, contact me.  There’s no cost for a consultation.  It is my gift to you.

 

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

One pitch does not fit all!

Some years ago now an Australian Rugby player, he played both Rugby Union and Rugby League for Australia, was reading a medical article in a magazine while flying to Ireland.  He turned to the player next to him and said “I’ve got that.”  The article described a medical condition that he had.

He had it, but he wasn’t aware it was a problem, until he read the article.

How many of your prospective customers are like that; you have the perfect solution for their problem, if only they were aware that they had a problem.

No awareness, no sale.

Awareness drives your promotion

When I first started working with small businesses I learnt that you could divide prospective customers into three groups:

•    Those aware they a had a problem, a need to be met, and they were ready to make a decision about a solution;

•    Those aware they a had a problem, a need to be met, but were not yet ready to make a decision about a solution; and

•    Those not yet aware they had a problem.  They didn’t recognise the clues suggesting they might be leaking profits, for example.

There are not many customers in the first, more in the second, and many more again in the third. 

Why is this important? 

Just think about the message you need to give each of these groups:

  • Ready to buy – you want her to choose you.  Your advertising, promotional message or sales pitch will seek to persuade that prospective customer that your product/service is a better/cheaper/faster/more reliable solution for them.  It must remove any possible objections she might have in her mind about your offering.
  • Not ready to buy – Your promotion has three tasks; to persuade the prospect to bring forward their decision, to keep you in front of mind if they can’t be persuaded to make that decision now, and to have them choose you when they do make it.
  • Not yet aware – your promotion will be educational, like that Rugby player’s magazine article.  They need to understand there is a problem before they can start thinking about how to solve it.

The key point is that, to be effective, three different messages are required.  The right message for one group will bomb for another, and vice versa.  And if your messages are not effective, they are a waste of money.  Ineffective advertising is a profit leak.

Five Levels of Awareness

Recently I came across a concept which takes this idea step further and gives you greater guidance on how you might best “pitch your pitch”.  Funnily enough, the concept goes back a long way, to a legendary copywriter Gene Schwartz.  Schwartz is one of those blokes who are quoted as developing the fundamentals of advertising and promotion.

In his book “Breakthrough Advertising” he developed the concept of “customer awareness”.  I came across it in “Great Leads – The Six Easiest Ways to Start Any Sales Message” by Michael Masterson & John Forde.

The underlying premise is that, in developing your sales message, which could be an advertisement, a letter, an email, a pitch or presentation, you need to ask what your target market is likely to know about your business, your products, his own problems and other possible solutions available.

You might ask, why does this matter?  It matters because the level of awareness of the prospective customer about these questions completely changes the nature your message and your approach, as I alluded to above.

As “Great Leads” puts it “even when you are selling the same product to everybody, the people you approach will only respond to one kind of pitch, depending on how aware they are of who you are, what you’re selling, and why you are selling it.” 

Schwartz described five levels of awareness running from Most Aware to Unaware.
 
Next week I’ll look at how to use this to finesse your sales message.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

So you have a business, and not a job!

The dilemma some people find themselves in when they find they have a job I explored in the previous blog.  If you don’t recognise this, it can lead to despair.  And if you do recognise it, but don’t do something about it, you will be trapped, and in all likelihood, fail, with all its consequences.

One of the dangers of starting a business because you are good at doing something, is that you spend most of your time “doing”, as opposed to “managing”, as I discussed.

Some years ago I had a client who ran an IT company.  He was the best tech in the business, and that was the problem; he felt he was the one who had to handle all the problems other techs were having difficulty with, instead of working “on the business”.  He even wore tech clothing to work, to handle the jobs when he was called out.

It took two years to convince him to come dressed as a manager, not a tech.  The success of the business was dramatic, and it was due to the change of attitude, nothing else.  As a manager, he worked on the business.

So how do you get your business working for You?

First step

The first imperative – know what business are you in.  Get this question and you will head off in the wrong direction.   You won’t be able to define your ideal customer, the one who is going to provide 80% of your sale, and your profits.  And you won’t be able to craft the right message for them.  You’ll continue to chase “everybody”, who’ll never make you happy.

Second step

You won’t have a business, and you won’t have a business working for you, if you don’t have a clear idea of where you’re going, if you don’t know what you want the business to achieve for you. 

It’s no surprise that lack of direction has been recognised as a problem for a long time, two thousand years in fact.  The following quote has been attributed to Seneca, a 1st Century Spanish-born Roman Statesman and philosopher 'If a man does not know what port he is steering for, no wind is favourable to him.'

Even Alice in Wonderland had something to say:

Lost in Wonderland, Alice asked the Cheshire Cat: “Would you tell me, please, which way I ought to go from here?"
"That depends a good deal on where you want to get to,” said the Cat.
"I don’t much care where,” said Alice.
Said the Cat: “Then it doesn’t matter which way you go."

Or as marketing guru Dan Kennedy says “You can eventually get south by going due north, but life is a lot easier and less stressful, and business more profitable,it you actually get headed in the direction that leads to your destination of choice”.

So, start with the end in mind.  In an ideal world what do you want from your business now, and what do you want from your business in say 5 years’ time?  Until you can clearly state that you’ll just have a job, working for your business.

Third Step

What has your business got to be like to give you that result?  Can you describe it?  Picture all the elements, not just the bits you enjoy doing, but all the others.

Now, what has to change in your business to achieve that state?  A lot no doubt!

If you are just in a job, you’re not in business.  You are working for the business and the business is not working for you.

Think of your business as a series of connected processes:

You have to find customers.  Without customers you haven’t got a business.  Who is better placed than you for that role.  As business owner or manager more than anyone else in the business you have to know and understand your customers.  You must have a repeatable process to win a continuous stream of customers.

Then the usiness has to do what it does to meet their needs, whether you are in retail, in services, repairs and maintenance, manufacturing or whatever.  If you are working for the business this is what you do, as a provider or doer.  Is what the business does solely dependent on you?  If so, you are really working for the business. 

You have to deliver the customer’s requirement to them.  In retail this is just over the counter, but for others it may require on-site installation or delivery over a long distance.  And on-going support may be required.

These are all what we call “business processes” – finding customers => doing/providing => delivering.

That may have kept the customer happy, but there are a number of other support processes that have to go on that enable you to deliver those ‘business processes’ efficiently and effectively.

Processes or functions such as:
•    Finance and accounting
•    Purchasing
•    Hiring, firing, HR, work safety
•    General administration

If you are in business, and the business is working for you, then you will have systems and procedures that ensure both your business and support process work well.

If you are working for the business, you won’t have an end in mind, and the chances are you will have few systems and procedures in your business - I mean documented systems and procedures that minimise mistakes and errors.  If not, life will seem like a never ending treadmill, off which you cannot get.

You will be in a job, not in business.  And only one person can change that. 

But we can help.

Is your business travelling as well as it could, and should?

If you have some of those dark recesses in your business, if you are floundering in a lack of light and seek illumination the end of the year has come and gone and 2016 is upon us.  I have only three spaces left for a business assessment this month.  If you would like to avail yourself of one, and there is no cost – this is my gift to you, book a Strategy Consult here. 

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

Or just in a job

Late last year I had the opportunity to speak to some people who needed help in their small businesses.  Some needed help desperately, others were not yet desperate but were certainly heading in an adverse direction, and one, just one, really only needed guidance and an outside voice to check with on a regular basis.

They were in a diverse range of industries, but there was one common factor; they were all ‘operators’, not business people.  They had a job, not a business.  And that is something that, if not recognised, can lead to failure and despair.

Are you in that situation?

I suppose it goes back to why you started your business in the first place.  So many small business owners start their business because they were good at what they do, whether they were a tradesman, a technician or a professional.

And in running the business, they did what they did. They provided the trade, technical whatever's or professional services their business offered. 

Is that where you are at the moment, being the “operator” in your business, the person at the centre who actually does the work of your business?   How much time do you spend “doing” in your business as opposed to:?

•    Finding a continuous stream of customers for the business;

•    Developing systems and procedures so your business has a sound foundation and others can do what you do;

•    Improving and growing the profitability of the business.

The first of these points refers to the fact that business starts with a sale.  In any business, whether starting one or expanding one, the customers, prospects and marketing strategy come first.

As the infinitely wise Peter Drucker said, “The purpose of a business is to create and keep a customer”.  If you do this, then profits will follow.  Who is best placed to educate and inform potential customers of the benefits of your products and services but you, as the expert.  Can creating a stream of customers really be left to others?

The second and third points underlie what Michael Gerber (“The E-Myth”) referred to as “working on the business, not in the business”.

If your principal role in your business is as an operator rather than a marketer and business builder, then you have a job and not a business.  Do you describe yourself as, for example, a builder, or as being in the building business? 

There is another way of looking at this. 

Are you working for your business or is your business working for you? 

When asked, I’ve always said to people looking to go into business “Do you enjoy what you do?”   It’s an important question. 

It’s important, because you’re swapping one boss for many.  Running your own business takes considerable time and effort.  It can also be stressful.  If you don’t enjoy it, then you won’t be able to see it through.

If you don’t enjoy it, you it will probably because you end up working for the business rather than the business working for you.  Working for the business becomes just an endless grind.  Nothing changes, day in, day out - week in, week out - month in, month out – year in, year out.

So how do you get your business working for you? 

What business are you in? That’s the first question you need to answer. Get this wrong and you will head off in the wrong direction.

Probably the most famous example of a business getting this wrong is Kodak. They saw themselves in the business of providing photographs, which in their mind was film, chemicals and equipment to go with it. They failed to recognise that they were really in the image business and that, with changes in technology, there were many ways of providing images.

It was not just digital photography, although that provided the deathblow. The inventor of photocopying offered his patents to them, which they turned down because they weren’t in that business. They later tried to get into the photocopying business and compete with Xerox and the others, but were too late.

And then of course along came digital photography – goodbye Kodak.

A client’s dilemma bought this to mind; they were passionate about their business but had to turn to other subset skills to survive. Partly because they only operated in the business and not on the business they failed to recognise how this was leading them astray and causing many of the problems.

Next week I’ll look at the other steps you need to take to get your business working for you.

Is your business travelling as well as it could, and should?

If you have some of those dark recesses in your business, if you are floundering in a lack of light and seek illumination, the end of the year has come and gone and 2016 is upon us.  I have only three spaces left for a business assessment this month

If you would like to avail yourself of one, and there is no cost – this is my gift to you, book a Strategy Consult here.

© Copyright 2016 Adam Gordon, The Profits Leak Detective 

But it will if you are in business

“If I was having second doubts about needing you – which I wasn’t – they would have been dispelled when I opened that document and was confronted with how much I DON’T KNOW about our own business!”  That was the response I received recently from a new client.

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.

Profit leaks occur because people don’t know what is happening in their business.  Useful, if not vital, information is hidden in those dark recesses, information which can guide decision making.

Ill-informed decisions are poor decisions, and poor decisions just lead to more problems.

All they know is that they don’t have enough cash and, despite being stressed, react by working harder, usually to try and win more sales.  But if they are leaking cash and profits, working harder will not solve the problem.  They will end up with even more stress, and spend even more time at work, away from family and friends.

There is not much point in working hard to generate extra sales if you have a profit leak!

Think about this: all action is determined by decisions and the quality of decision making is a direct function of the knowledge you apply to it.  Without the right knowledge it is pretty hard to take appropriate and timely action.

Good management requires informed decision making.  And that requires good information, analysing it, and using it.  Making decisions on gut feeling and instincts is all very well, but you are far less likely to make the right decisions.  Facts are better than opinions.  Facts require a good information system providing accurate and timely information. 

So what is the Number One Problem that prevents you generating the cash you deserve?  Like my client above I have found when businesses are struggling, they don’t know what to look for, where to look, or perhaps even when to look.

What they DO know is that they don’t have any cash and are working way too hard.

Generating more sales won’t help your cash shortage if those sales are leaking profits.

Understanding not just where your sales come from, but more importantly, your profits, is critical.

Once you know that, you can make better decisions about where to concentrate your efforts in this cash-recovery situation.

And you can then look at improving your profitability through better margins rather than pushing to sell more.  This means:

•    Increasing margins through better pricing strategies

•    Improving margins through more accurate Cost of Sales – knowing where your costs are incurred, and who incurs them

That is not to decry selling more.  Informed decision making also applies to marketing.  So many struggling businesses don’t know who is their ideal customer.  Rather, I’m told, it is “everyone”.  How do you craft a persuasive message that will move “everyone”?  

If you don’t know your ideal customer is, you can’t develop the right message, or know the right way to deliver that message. 

You need to know their specific problem or need, and at the same time, you need to know what makes it difficult for them to buy.  Unless you know their possible objections, how can you counter them?

And without that information, how do you develop a powerful value proposition, one that will resonate with the customer?

Another example - Just take cash flow, that essential element that keeps your business alive and ticking.  Managing your cash flow means knowing, and controlling exactly how much money is going in, and out, of your business.  It means knowing what you owe, to whom and when. And what is likely to come in, from whom, and when.  It guides your decision making.

Ignorance in business is not bliss.  It will hurt you.

Is your business travelling as well as it could, and should?

If you have some of those dark recesses in your business, if you are floundering in a lack of light and seek illumination, the end of the year is approaching rather rapidly. And I have only two spaces left for a business assessment this month

If you would like to avail yourself of one, and there is no cost – this is my gift to you, book a Strategy Consult here.

© Copyright 2015 Adam Gordon, The Profits Leak Detective 

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