Brad Sugars, the founder and chairman of ActionCOACH has owned and operated more than two dozen companies including his main company, ActionCOACH. It has more than 1,000 offices in 34 countries. He provided ten tips for new companies, which we think every business owner should come back to every now and then – as a reality check! We added two more and also included our own explanations for each. Here goes:
- OFFER WHAT PEOPLE WANT TO BUY, NOT WHAT YOU WANT TO SELL
The way many innovators think is something like this:
- Get an idea for what you want to make
- Create it
- Find someone who wants it
- Try to sell it
Ask any entrepreneur and they’ll tell you it’s a terrible strategy for starting a business. Making something before you see any opportunity could waste a lot of time and money. And you may well end up with something stunning but no one to buy it.
Contrast this perspective to a market focus. A successful entrepreneur will look at the problem in a different way and find something missing or needed in the world, develop a solution for it, create it and it virtually sells itself. If you start with the problem, you avoid putting effort into something nobody wants or needs.
It actually goes beyond this. You might find people that want your product but aren’t in a position to buy it or even have people with the means to buy it but not the desire. In essence, what you have to offer is something that people really need, are prepared to buy it and are willing (and able) to at (virtually) any cost.
Test the market before you launch anything new or before you make additions to your range of products or services
Finally, listen to your market. If they keep asking for something you don’t have, maybe you should be providing it! Quite often your business evolves through building on what you have already and can even take the most unexpected turns – if you’re tuned into your customers.
- GET CASH FLOWING ASAP
There are a number of ways to secure cash upfront and these include:
- Asking for a deposit on work up-front, with the balance due on delivery (especially in a professional services business but the same can apply in retail – especially on high-ticket or specialty items)
- Pre-selling your products or services (before you even produce them). If you’re offering training, for example, sell the courses and then make sure you’re one or two modules ahead of the class!
- Offering earlybird ‘specials’, and
- Negotiating payment terms with your supplier/s to ensure that you’ve been paid before the supplier payment is due
Maintaining constant communication between your business, your customers and your supplier to keep payments aligned and cash flowing, is critical.
- ALWAYS FIND NEW WAYS TO KEEP COSTS LOW
There are a number of options you can consider such as:
- Purchasing used items instead of new when you set up your business
- Sharing business space, if you can
- Negotiating terms with your suppliers (woth anoth mention)
- Evaluating lease versus buy options and choosing the best for you as you start out – you can always make changes later
- Buying office supplies – from paper clips to files to printer cartridges – in bulk if you can (to enjoy economies of scale)
- Hiring staff carefully and intelligently.
- Firstly only ‘as and when’ you need them and possibly on a pert-time or contract basis initially – until you can afford to have them on your books full time
- Secondly, when you do take them onboard, don’t learn the hard way that staff turnover can wreak havoc on your profit. Work hard to manage staff performance, reward good performance make them want to work hard and stay the distance.
- WHEN PLANNING, ALWAYS OVERESTIMATE EXPENSES AND UNDERESTIMATE REVENUES
Expenses are almost always more than initially planned or and revenues generally less – as much as 30 percent on average either way. Try not to be caught off guard so:
- Always prepare for the worst-case scenario
- Be flexible and
- Stash any extra income.
- FOCUS ON SALES AND MARKETING MANICALLY
In business, nothing happens until a sale is made.
Sales are critical for the following reasons:
- They show value and prove that you’re doing the right stuff. It’s no good having a perfect infrastructure and no one buying your product or service
- They pay for things – when you have clash flow you can cover your expenses and keep your business running
- They pay for growth – as your sales increase, you have the capacity to grow your business, and
- They attract investors (if you want them) or keep them at bay (if you don’t).
It probably sounds counter-intuitive but when you start up, you have to rely on tactics that you wouldn’t necessarily classify as ‘marketing’. You have to “sell, sell, sell like hell”.
Generating leads and turning them into sales is way more important than getting your brand perfect. Once you have cash flowing into the business, formalise structures – such as your brand – as quickly as possible.
- FIND WAYS TO EXPONENTIALLY INCREASE PROFITS
Legendary American marketing guru Jay Abraham states that there are only three ways to grow a business:
- Increase the number of customers
- Increase the average transaction value per customer, and
- Increase the number of transactions per customer.
That’s as simple as it gets.
You need to find the most effective way to generate leads. Then you need to work out what percentage of your leads turn into sales. Once you know that, you can work out how many leads to need to gather monthly.
Next you need to work out how to convert your leads to sales. This is one of the most important things you can do. Track the conversion from leads to sales and work hard to improve your conversion rate – which will increase sales and ultimately your profit.
Make sure you have more than one offering – an ‘entry level’ to start with and then grow your customer into the more advanced – and expensive – options. If you can’t cross-sell and upsell you have a ‘one hit wonder’ and you’ll be permantly looking for new customers – which we all know costs more than ongoing engagement with existing customers (that already know and trust you).
- TEST AND MEASURE EVERYTHING.
If you can’t measure it, you can’t manage it – W Edward Deming
That said, he was also aware that there are many things that cannot be measured and still must be managed. You can’t tell if a program or strategy is working if you are not faithfully testing, measuring and tracking your results
Make sure you measure all the things that matter. Ask yourself the following questions to to determine what they are:
- Does it align with my objectives?
- Do I have the capactity to measure it?
- Does it help me make decisions?
- ACCEPT THAT LEARNING MORE EQUALS EARNING MORE
The more knowledge you have about your business, the further you will be able to take it. It is crucial that your business has an edge over its competitors and it’s worth accepting that learning always comes before “earning”.
Identify areas of weakness and either learn about them yourself or hire an expert and learn as much as you can from that person.
If you feel there really isn’t much to learn, consider finding a mentor. You’ll be surprised how much you miss when you get so close to your business.
- DON’T DISCOUNT, ADD VALUE
When you discount, you are taking money directly out of your pocket and directly from your profit. You also devalue the preceived value of your product or service. You don’t want to be seen as “cheap and nasty”. So don’t do it.
Instead of discounting, create added value propositions all the way up and down your product or service line. You can do this by:
- Throwing in freebies – additional products and services with your offering, at the same price
- Adding free consulting
- Offering follow-up and support services
- Giving guarantees and warranties of satisfaction, and
- Offering payment terms – especially for high ticket items.
Remember the bottom line – a 10% discount is more than meets the eye.
If you absolutely HAVE to discount, price it into the final number. It creates perceived value, you don’t lose out and it’s a win-win.
- GET A COACH
A business coach is someone that is is objective and outside of your business that you can rely on for:
- Nitty gritty business advice
- Brainstorming
- Bouncing ideas around
- Being accountable and
- Giving guidance
Even if you don’t get a business coach at first to help you and guide you in your planning, you definitely should consider this option when:
- You see no clear path forward
- You’re overwhelmed
- You need more personal accountability
- You want to develop new skills, or
- You’re in a rut
- DON’T PUT ALL YOUR EGGS IN ONE BASKET
If you’re totally reliant on a single company for the bulk of your business, you’re one decision away from disaster.
And reliance on a single client isn’t the only risk out there. Many businesses are just as reliant on a single market, a specific community, one distributor, or a single industry.
The one answer is “Diversify, Diversify, Diversify.” And the other is, no matter how big the contract or sale, don’t stop the persuit of new customers. Ever.
- KEEP AN EYE ON THE COMPETITION
Knowing what your competitors are doing is an important part of running a successful business.
Start out with some desk research. The obvious departure point is their website. See how and where they are positioned, what they have to offer and where possible, their pricing. Google them and see if there are any customer complaints or compliments. Follow them on their social media platforms and join their Facebook groups
Make enquiries of your customers. Find out what or who else they considered. Ask them how they made the decision to go with your product or service.
This type of analysis can throw up some interesting findings. You may discover that your competitors are not who you thought they were. When consumers are making difficult choices about how to tighten their belts, you may be competing with totally different products or services for their spare cash.
Staying ahead of the competition is not easy but there’s no point in burying your head in the sand. There’s every chance that they’re keeping tabs in you.
When it comes to your rivals, knowledge is power.
Taking stock of your business is something you should plan quite regularly – maybe monthly in the early days and about quarterly as your business becomes more established. No matter the frequency, make sure it happens. Your business can only benefit.
Please feel free to comment on our blog and if you’d like it in a pdf or in the form of a checklist, please provide your email details in the comment section and we’ll send it to you.
For Brad Sugar’s original 10 tips, go to Entrepreneur.com
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