Did you see the current economic storm coming? Were you listening to what the reputable commentators were saying and reviewing the likely impact on your business?

If not, its time to raise your eyes from working in your business and look at what is happening around you.

Upheavals in world financial markets caused by the US sub-prime mortgage problems has made many business owners very nervous.  Every day the news seems more gloomy as world stock markets tumble and yet another banking icon declares losses that are incomprehensible to mere mortals who occupy the small business world.

When economic sentiment turns from optimism to caution cutomers tend to close their wallets and wait for the air to clear. As a result, business owners are forced to review sales forecasts, marketing strategies, production plans and cash flow projections to ascertain the best course to survive the storm and identify new opportunities.

What should you do when the world seems to be closing down?

• Review your customer and product profiles - Is you business concentrated on a range of customers who are able to survive economic storms and do you provide the products and services to help them survive?
• Review your marketing strategies - Do your customers, and others like them understand understand the total solutions your business provides? How are you making this information available to them and what mesages are you delivering? Are your current marketing strategies still appropriate? What new opprtunities present themselves in difficult times?
• Review your production plans and processes - What is the balance between production and inventories? How does production align with current market conditions? Are your production processes producing the best output for the least appropriate cost and minimum waste? Are you producing what your customers actually want and at a price they are willing to pay?
• Review your cash flow projections - When times are tough, cash is king. Are your credit and cash collection policies current, appropriate and complied with? Are your inventory holdings in line with current customer requirements (inventories can be one of the hidden stores of cash in your business)? Do you have other assets which are surplus to requirements and could be sold for cash? Will projected cash flows allow you to ride out the storm?

Any good sea captain uses all the resources available to him when storms arrive. He not only relies on his own knowledge and information provided by his instruments, but also on his navigator, engineer, and the rest of the crew , as well as advice from outside his vessel to help steer a safe passage through the storm.

By all means use the institutional knowledge within your business to plan your way through the current economic turmoil. Remember though, there is advice available from outside of your business also, and often the perspective from outside is clearer than from within. Your banker, lawyer, accountant, trade association and business coach can help you steer a course to new opprtunities and/or safe havens.

The summer holiday season has finally come to an end for Australian and New Zealand businesses. The "silly season" from mid December till the end of January brings everyone back to work with suntans and refreshed minds.

Holidays provide an opportunity to get away from the business to spend time pursuing other activities.  The business however, is never far away.  Unless you are totally out of range of telephones and the internet, the business goes on holiday with you.  You do get time to reflect though, away from the bustle of working every day in the business:

• How have we done in the last year?
• What mistakes did we make that we can avoid in the future?
• Where is the business headed?
• When do I plan to retire?
• What new opportunities are out there that we need to look into?
• Is there a better way of doing what we do?
• and so on...

Why not start the new year by writing down your goals for yourself and your business for the next year, and the three or four years beyond that? What is the strategic intent for your business, and what is the gap between the current reality and this strategic intent?

Writing your thoughts down gives you something tangible to think about and gives you the opportunity to develop strategies for change and prioritise them.  This means that the actions that you take in the new year are taken intentionally, and therefore have a greater chance of success.

And, don't forget to ask for help if you need it - you probably don't have all of the answers yourself.

We have all heard "rules of thumb" about how to improve the way we do business. In some circumstances these seem to work quite well, but not always.  A rule of thumb is really a formula someone has worked out for their business that seems to deliver results for them, most of the time.  We hear them from acquaintances, from golfing partners, and sometimes from business consultants who offer them as a panacea or cure for business ills.

When we say "formula" we include rules, templates, best practices, and other "cookie cutter" methods, which are simply attempts to transplant methods that worked in one business into other businesses. 

Formulas make sense, don't they? Only if your business is exactly the same as the one where the formula was developed. The problem with formulas is not that they don't work. The problem arises because your business isn't the same as any other business, not even other businesses offering the same products and services to the same markets. 

You're not like other leaders. You have your own strengths and weaknesses, and they're not like anyone else's strengths and weaknesses. And your specific situation isn't exactly like the situation for any other business. 

A business principle is an underlying business reality. Principles are fundamental laws.  You cannot change them.  However by knowing and understanding them you can build these principles into the design of your business.  You get to have them powerfully working for you rather than against you. 

A business principle is deeper, more fundamental than a formula. A formula is a generalized attempt to solve a general business problem. But your problems - and opportunities - aren't general. They're specific. What you need are specific solutions to your specific problems and opportunities. 

You don't want "approximately" or "good enough." You want "exactly right" for your business, and "outstanding" for your customers, investors, employees, and others.

The previous four posts to this blog highlight a number of key principles that you can use in your business. In case you missed them they are:

1. The customer must be paramount

2. Systems are the solution to business frustrations

3. Deliver Full Spectrum value

4. The 80/20 Rule

The next few posts will bring some additional principles for you to consider. Using them as a basis for you business development thinking, you will begin to develop some ideas about how your business might become different.  Now that's a thought!

Value is one of those words that means what you think it means, depending on your point of view. In business, value is anything you provide that someone wants. If you provide it and they don't want it, it's valueless. If they want it and don't get it, it's valueless. If they want it and get all of it, that's full spectrum value.

What might this mean to the people your business touches?

To the owner, value is wealth, profits, satisfaction, making a contribution, status ... and much more.

To customers, value is a good price for the products and services they buy, a good experience of the product and the provider they get it from, status, emotional satisfaction ... and much more.

To an employee, value is a paycheque, job satisfaction, a good working environment, respectful treatment... and much more.

To the community, value is a business that pays its taxes, provides jobs for its citizens, contributes to the positive energy and the economics of the community ... and much more.

The bottom line is this: 

Value is whatever satisfies the needs of anyone having anything to do with the business.

Unless your business can deliver full spectrum value that can be recognised by everyone that it touches then there is nothing that will differentiate it from all the other businesses in the community that are its competitors.  The less it is undifferentiated, the less reason there will be for prospective customers to visit and existing customers to stay, employees to remain loyal, suppliers to offer special deals, lenders to lend, and investors to continue their investment.  The choice is yours.

Your customers are by far the most important people interested in your business. They are more important than yourself, your investors and your employees.

Unless you serve your customers and fully satisfy their needs, your investors, employees, and even yourself, will not be served, because your business will be nothing without its customers.

Customers vote with their feet and their wallets. The primary goal of your business is to deliver an experience every time your customers visit so that they have no reason to move their affections elsewhere. The experience must be relevant, timely, suitably personal, of value to the customer, and meet or exceed expectations.

And that must be the number one goal of your business, or it wont survive and no-one will be satisfied.

One of the blogs that I follow with interest is Becky Carroll's Customers Rock! As a thank you to regular readers she has published an e-book with the title "Customers Rock!™ - How Businesses Can Make Sure Their Customer Experiences Rock".

The eBook is a compilation of five of Becky's favorite blog posts from the last 12 months.  she has also included the comments along with each post so readers can continue to follow the conversation; many of these were quite enlightening!

Topics include:

• Taking care of existing customers
• Customer or client?
• Tips for listening to customers
• Stories and the personal touch
• Measuring customer relationships

On the topic of "How to Take Care of Existing Customers", for example, she writes "We have to focus on two main areas when it comes to our customers: bringing new customers in and taking care of existing customers. The old idiom, “A bird in the hand is worth two in the bush,” comes to mind here.

"I like this definition from the New Dictionary of Cultural Literacy (Third Edition, 2002).

The things we already have are more valuable than the things we only hope to get."

This handy little book has some gems that are useful to any small business and is worth a read.  As the book is freely available for distribution you can download your own copy by clicking here.

Life can be very painful at times, especially when legal rights and defences are concerned.  For want of documentary evidence a right or a defence can fail, often with painful monetary consequences.

In the last year I have had to assist several businesses to defend themselves against claims where they had kept insufficient or inadequate documentation to support their argument or position.  It becomes very difficult to construct a defense when the evidence is largely anecdotal and verbal. 

Often the person or organisation prosecuting a case can support their argument with written contracts, meeting notes, correspondence, diary entries etc, and even though the moral ground may strongly be in favour of the defense, their argument can fail through lack of documentary proof.  Procecution lawyers and revenue authorities thrive on these situations.

The fundemental tenet here, and one that business people need to adhere to at all times is "if its not written, its not real". 

Its the same with business systems.  If you want want the people in your organisation to perform key tasks in the same way every time to achieve the same results every time, your systems need to be written down.  Some benefits of written systems are:

1. There can be now doubt about what is required to be done
2. Routine tasks can be dealt with quickly and easily
3. Performance measures can be easily understood by all
4. Performance can be measured against written standards
5. Documented systems form part of position agreements
6. There is transparency about what is required.

There is a moral here.  Next time you don't get the results you expect or have to defend your position in a complaint or action against you, look for the written documentation to support your point of view.  Whereever you find a gap, remedy it, especially if a material consequence could arise from its omission. Without written evidence your life will inevitably become more difficult.

So you want to grow sales in your business?

You have two main choices, sell more to the customers you already have, or find new customers to whom you can sell, or both.

Let's have a look at the second option. For the sake of this discussion we will assume for the moment that you have exhausted the possibilities for selling more to existing customers.

If you want more customers, where do you start? Let's start by looking at the customers you already have and ask the question, "how can I find more customers who are like my best customers?"

If your sales or accounting systems are able to provide you with the information, sort your list of "sales by customer" for the last year (say) in decending order from greatest to least sales.  You need to be careful here that the results are not skewed by a few large sales which are outside the norm of how you do business. 

Now look at the list and segment it into five equal groups by number of customers. This divides the number of customers into 20% segments. Total the value of sales for each 20% segment and analyse the results.  You may be surprised to learn that a sizeable proportion of you sales, maybe 70%-80% are delivered to your business by customers in the top 20% segment.

What about the next 20% segment? How are these customers different from the top 20%?  And the segment after that?

If you are able to segment your customers by trade or business type and sort sales by this type of segment, what can you discover here?  What about by type of product or service purchased? For people who are smart with spreadsheet software, sorting customer data with pivot tables can reveal some very interesting results, especially in a customer type/product type matrix. But let's not get too complicated.

Now it's time to ask some probing questions. Who are your best customers? What do you know about them? Where can they be found?  What similarities do they have? What do you know about their buying preferences?  How do I treat them that is different from how other customers are treated? What is it that makes them "best" customers for my business? Who else sells to customers like these?

There are many questions you can ask, and you need to ask them if you wish to discover the best approach to attracting them to your business. Some of those questions relate to demographic characteristics and other to psychographic charcteristics. Demographic characteristics are those that you can generally count, measure or observe such as genda, age, income, lifestyle choices etc. Psychographic characteristics are generally about behavoural observations such as emotions, likes and dislikes, choices and preferences, comfort and discomfort, and so on.

Using your new found knowledge about who your best customers are, you can now develop strategies to target other similar prospective customers in your trading area knowing more about what and how they buy, and what is important to them and the business relationship they want with you.

Its time to do some analysis and thinking now!

If you don't have the knowledge or resources to do this yourself, seek help from someone who does. "Cloning your Best Customers" is a foundational marketing topic in Full Spectrum Business Development coaching.

This posting by Carmine Coyote of the Slow Leadership Blog caught my attention. It neatly sums up attitudes to risk, which is very topical in light of the current credit squeeze resulting from the US sub-prime mortgage problems.

In her opening paragraphs Carmine says:

"Risk is one of the most misunderstood ideas in the world today—especially the business world. Despite all the time and effort devoted to risk evaluation and risk management, corporations constantly find themselves subject to far greater risks than they imagined.

The reason for this is rather simple: they confuse risk with probability and try to deal with it primarily by statistical or mathematical means.

Probability is, indeed, numerical. It’s the study of the likelihood that some event or outcome will happen—an attempt to understand the inner workings of chance.

Risk is something quite different. The easiest way to describe it is to say that risk is simply a substitute for knowledge."

Carmine argues that while risk can be assessed mathematically, the best way to minimise risk is to make business decisions based on knowledge - the more knowledge, the better the decision.

Risk can be assessed and amelierated as follows:

• knowledge - the more the better - that gives you as full a picture of facts, events, personalities, economics, politics, etc relating to the business decisions you make; supported by;
• mathematical risk probability calculations that attempt to rationalise the facts (knowlege) into numbers.

Relying on the numbers alone is not a safe option.

You can read the full article at http://slowleadership.org/blog/?p=186.

Quantification is a key process in Full Spectrum Business Development. Quantification includes both observation and calculation of key strategic and operational indicators.

Each year I try to take a skiing holiday with my wife. We have tried to make it an annual event for the past twenty five years.  In latter times, instead of buying new skis every couple of years we have rented so that we can keep up to date with the technology without the investment.  Not every ski rental company is the same however.

Fitting ski boots is a specialist task.  Many ski rental companies carry a limited range of boots for hire and try to sqeeze their customers into "nearest fit" or "one size fits all" boots. The consequence of this is sore feet and shins at the end of the day, and a miserable skiing experience by the end of the week.

Imagine the pleasure therefore, when after a break of four years from visiting out favourite ski resort, we visited our usual ski rental company to be greeted by friendly knowlegeable staff who were able to find our old records on their computer system with the exact fit and setting details for boots and skis for my wife and myself.  Nothing was too much trouble. Comfort was the key. Updates on new ski technology was offered and enquiries about whether skiing style or proficiency had changed. There was also an offer of ski or boot exhange if we were unhappy or wanted to try something different. Oh, and you could also pass your skis back in for any day you didn't want to ski and this would be deducted from your account.

You will realise of course that in ski resorts there are many companies trying to rent you equipment. We found this company ten years ago and keep going back to them. Why, because nothing is too much trouble. And they see hundreds of customers every day.

So the moral here is this:

Even though you may sell the same goods or services as your competitors, the thing that will differentiate your business above all others in your line of business is the experience you deliver to your customers. This experience doesn't just happen, it's designed to happen.  It happens through how your place of business is presented, how your staff are trained to deal with customers and their knowlege about what they sell, and much, much more. If you haven't done so for a while, take a step back from your business and look at it from the outside, from the customer's perspective, and ask yourself, "would I like to shop here?"

And by the way, the $20 voucher they gave me for renting went towards a very nice pair of ski gloves from their retail store that cost more than I intended to spend!