One way to set yourself up to create an extraordinary experience is to begin with the end in mind.  Plan on delivering something extra, something that the client was not expecting.  Don’t quote it.  Don’t talk about it. Just deliver it at the end.

Work in a certain industry for a few years to find under-served niches / opportunities. Be married to a spouse that has a secure, well-paying job, preferably with health insurance.  Wait to have children. Cut your personal spending to the nub.

This scenario allows for unbridled pursuit of your venture with the minimum of financial stress.

To your success,

Scott

“Dear Subscriber,

Due to economic hardships in our industry we find it necessary to increase your subscription price”

While I have no doubt that the newspaper industry is encountering significant economic hardships, is this good justification for raising prices?

As service professionals, we seek to find the appropriate price to charge for our services.  The price we ultimately offer our clients should not be derived from our “situation”.  Our personal or business situation should never be considered when deriving prices.  The temptation is great to stray from this rule.  Most of our costs of doing business will increase over time (health insurance, salaries, rent, mileage).  We must remind ourselves of one crucial fact:  our clients don’t care.

Our clients only care about one thing…..the value we deliver.  Our pricing should always be “value based”.  What do we offer that our competition does not.  Offering additional value, relative to our competitors, is the only justification for raising prices.

I would gladly pay more for my newspaper subscription if the value increased relative to my alternatives.  Sadly, for the local newspaper, their value is eroding not increasing.

To your success.

Scott

Over coffee this week, I met with (another) would be entrepreneur who is considering starting a new venture. Most of the questions she had revolved around, “Do you think my idea is a good one?”.  Like most of us, we seek reinforcement and validation of our ideas by others.  It gives us comfort.  Comfort, before committing risk capital and time.

However, the question is not really relevant.  Everyone has an opinion.  But no one can predict the future success or failure of a new business venture.  Venture capitalists do well to predict the success of new ventures 20% of the time.

So what to do?  Start the venture.  Start as small as possible.  Use microscopic amounts of capital.  Go with your best interpretation of your idea.  Get a prototype in front of customers.  Try to make a sale.  Ask the customers what they like, how would they improve it.  Refine it.  Sell some more.  Morph it.

The business that lives on will rarely look like the business in the original business plan. Customers will take the business in new and profitable directions.  Stop suffering.  Stop planning.  Get started!

To your success,

Scott

Do you need a P&L (Profit and Loss statement) to effectively manage you B2B service business?  Probably not.  This advice probably sounds contrary to what your accountant has been telling you.  However, the truth is, most small service businesses cannot justify the time and expense that generating a P&L requires.

Preparing a P&L involves using accounting software.  Using accounting software (Quickbooks, Peachtree, etc) involves a fair amount of care and feeding and for most non-accountants, assistance from their CPA (read $$).

A typical, 1-5 person service business should be able to determine the financial health of their business by  reviewing the following key indicators:

* Cash in the bank.  Is my bank account balance growing or contracting.

* Accounts Receivable.  Breakdown your AR into aging buckets 30-60-over 90 days. Take aggressive action to collect anything over 60 days.

* Billing History.  Look at your total billings for the last four months.  Are they trending upward or down?

* Expenses.  These should always be kept at the bare minimum.  Low overhead is the key to survival.  If you need accounting software to track and manage non-billable expenses, you have way too many expenses / overhead.

Keep the focus on clients and generating revenue…….and stop pretending you are a part-time accountant!

To your success,

Scott

Sure, it sounds impressive when you can say to a client, “we spoke about this three months ago and determined that you had interest in updating your website.”  But really, where is the value?

These times call for a new interpretation of CRM. Call it CRM 2.0.  Call it CRM for social media.  Doesn’t matter.  The way we communicate has fundamentally changed over the last twenty-four months.  Yes, that quickly.  In the last two years, nascent technologies like blogs, LinkedIn, Facebook, Twitter, and RSS have moved into the mainstream.  These new conduits for conversation are being rapidly adopted by business professionals. 

Your customers are speaking via these new mediums.  Are you listening?  Here is what they are saying:

* “I am working on project X”

* “I need to learn more about Y”

* “I am concerned about Z”

Your customers are posting, venting, and expressing their needs and wants on social media outlets.  Rich data is being presented.  Data, that if listened to properly, can point you in the direction of crafting valuable offers for your clients.

The “New CRM” needs to capture and organize these streams of valuable information.  Captured in a way that a complete profile of your customer’s social media interactions can be viewed simply and effortlessly. Organized in a way, that a dashboard of all new customer “feeds” can alert you instantly to what your customers are saying.  

Oh, and one more thing.  The New CRM will gather information on the profiles of your clients, then troll social networks and blogs for potential clients with similar concerns. Now we’re talking!

Couple these feeds from the new social conduits with traditional email communications, add in a pinch of voice mail to text transcription, and we have a recipe for CRM success.  A tool that requires very little input from us, but delivers exceptional value by dramatically increasing our ability to act.

Stay tuned.  Its coming.

To your success!

Scott

” She was in the right place at the right time.”

” It’s all timing.”

” He was fortunate enough to have BLANK.”

” She is lucky to have great people working for her.”

I don’t want to dwell on the motivations of the observers for ascribing “luck” or “chance” to the entrepreneur’s success.  Nor do I want to delve into the psyche of the entrepreneurs that allow themselves false modesty when they claim the same phenomena.  I simply want to share some examples from my past and others who have had some success.  In all of these cases, luck had very little, if anything to do with it.  If this sounds like bravado to some, fine.  That is not my intention.  My purpose is to move as many of us as possible into action. To get us on the road of “creating our own luck” if you will.

In all of the following examples, there is a recurring theme.  Watch for it.

* Inspired by his boss, my roommate from college went on to found and operate the largest privately held payroll services firm in the U.S.

* My best friend growing up, took over and successfully grew a high-end home remodeling business that was previously owned by a friend of his father’s.

* After attending a software developer’s user group meeting, I have some great prospects to hire for my new business.

* A good friend joined the most powerful entrepreneur network in the world and tripled his business in three years.

* I had a successful exit with my software business, do in large part, by the negotiation efforts of a local CPA referred to me, by my long standing business mentor.

The common theme in these successes is people.  The people you surround yourself with.  Your Network of Help.  In every case, there is a human relationship involved.  Someone that has committed themselves to helping another be successful.  Look for and cultivate these relationships.  Success rarely comes from how smart we are or how hard we work.  If we think we were “just in the right place at the right time”, look closer.  A far more likely possibility is that you or someone else put you there.

Luck has little to do with it.

To your success!

Scott

The hiring of salespeople for our service business offers opportunity, but also entails substantial financial risk.  The financial risk coming in the form of base compensation and benefits.  Additional risk comes from making the wrong choice in salespeople.  It has been my experience that one in three hires for sales positions end up working out.

Let’s think about a new way to expand our Sales capacity:  The New Salesforce.  The New Salesforce is an army of people that are potentially available to introduce your service to your target customers.  

Who are these people?

These are people that have built an identity of trust within your target market.  People listen to what they have to say and take their recommendations and advice seriously.  They are not generalists.  They specialize in specific industry knowledge. 

Where do I find these people?

The New Salesforce are leading bloggers, admins of LinkedIn and Facebook groups, and thought leaders (o.k. maybe tweet leaders) on Twitter.  People (your customers) “follow” them.

How do they become my New Salesforce?

You reach out to them with a compelling offer, just as you would any salesperson.  Here’s an example.  Let’s say you are a designer, specializing in producing high quality websites for medical practices.  [BTW, if you are not specializing in certain niches, red flag, full stop.]   Your goal is to find the social media, social network influencers in this space.  Once found, make them an offer!

About the Offer

Your offer should be a compelling way for them to benefit financially for referring potential clients to you.  Craft an attractive commission plan that rewards them based upon prospects referred and new clients obtained.  You cannot expect them to close the deal for you.  This, you must do yourself in most cases.  However, a steady stream of new prospects is critical to the long term growth of your business.

Why is this attractive to the New Salesforce

These people are already engaged in “conversations” with your target market.  Bringing up your service as part of these conversations on LinkeIn, Facebook, and Twitter requires very little additional effort on their part.  Additionally, the “selling” is something that can be accomplished in their down time, or off hours.

Action:  seek out the New Salesforce in your target market and start making offers!

To your success.

Scott

What are some of the qualities of a good client?  Clients who pay on time.  Clients who value our services, speak well of us in the marketplace, and refer others to us.  Clients who treat us as humans.

What are the costs of doing business with bad clients?  In addition to exposure to bad Accounts Receivable, and the emotional drain of dealing with a troublesome person, the biggest cost is one of lost opportunity.  Every minute we spend servicing a problem client, is time we are not spending with a quality client or pursuing another quality relationship.  Unfortunately, this cost does not show up on our financial statements or bank account.

As service professionals, we need to raise the bar for satisfying client relationships.  We need to have the courage to tell problem clients to take their business elsewhere.  This “quitting” of a client runs counter to our service culture.  Phrases like “the customer is always right” have dominating our thinking for years.  The fact is, the customer is not always right.  

Our goal should be to gradually replace problem clients with quality clients over time.  Before expanding capacity to take on new business, we should examine the quality of the business we hold today.

At Treadstone Group, we quit several clients over the years.  The staff appreciated my stand.  The clients we quit were always surprised and angry.  Some actually told us we couldn’t quit them,  ”Vendors don’t quit customers!”.  However, our company and our employees were better for it.

Action:  examine which clients you should quit.  Have a plan for replacing the lost revenue BEFORE you quit them.

Your thoughts?

To your success!

Scott

Most of the case histories that have been written on OBM have been fantastic success stories.  When employees understand how the company makes money, employees suddenly change their behaviors and invent solutions to problems that had mystified management.  Here are the untold stories:

* Once employees found out how much money the owner was making they demanded to participate in the profits. Rarely, was there ever an offer by the employees to take on risk in the business via a variable compensation plan or loaning the company money (like most owners do).

* Employees saw how profitable certain lines of the business were and decided to start their own company, competing with their former employer.  They were also armed with all of the company’s financial data.

* Employees began making value judgements on departmental expenses.  Most prevalent of which was the disdain for the highly compensated salespeople that generated all of the revenue for the company.

As B2B entrepreneurs, there may come a time when we entertain the idea of opening up our books to our employees.  When the time comes, lie down until the feeling goes away.  If you feel your employees don’t understand how your business makes money, then you have two choices.  More education (without sharing your P&L!) or find new employees.  I have done both.

Financial information is not a right or a privilege for your employees.  You take the risks.  You reap the rewards.

Your thoughts?

To your success!

Scott