MONEY MAKERS: How to make a profit in business (Part B)
Published on 20 August 2020
In the first session, Steve detailed the knowledge, information, and action around the eight hats of business, being strategy, marketing, sales, service, finance, human resources, information technology, and administration.
He explained as business owners, we are responsible for those eight functions and if we lack knowledge or have a weakness in any one of those areas, upskilling or outsourcing that aspect of the business is advisable.
Missed the first session with Steve Grant? Catch up here:
Changes and diversity
Steve says this involves looking at market changes across a one-year period, using the example of winter causing the amount of business to go down and rebound once it warms up again.
He says in this period of dormant staff and possible dormant resources, businesses should ask themselves what can they do now to increase revenue?
“You can set up a new business. You can increase your product range to take care of the reduction in the sale of your existing stock.
“You just need to be aware of that lull, if you have a seasonal brand,” Steve says.
Bundle with a business
Steve suggests partnering with a complementary or even an opposition business that sells different products and bundle offers to value-add.
SWOT stands for strength, weaknesses, opportunities and threats and Steve explains there are three aspects to the SWOT analysis businesses can do.
“One is self, two is doing one on your competitors and the other one is doing one on your own business.
“If you can come up with 10 ideas, what you can then do is a continuous improvement analysis or field force analysis.
Put those in order of priority with 10 for each of those four areas. Then pick the top three and just ask yourself how could I take advantage of these strengths in my business?
“Similarly, if you have a weakness in your business, how can I reduce, or I eliminate that weakness in my business?
“If I have an opportunity, how do I take advantage of that opportunity? Or if I have got a threat, how do I reduce or again, eliminate that threat?
“What you now tend to find is that in terms of doing a SWOT analysis on your business is that the strengths and weaknesses are typically internal, and the opportunities and threats are usually external,” Steve explains.
Steve proposes business may be looking at two markets; potentially looking want to expand your market to include those people that have cashflow issues, but still want to buy your product.
Offering a finance solution will allow them access to your product and help them with their cashflow.
“The other aspect of that might be that you have a high-end client and selling a luxury item, so it just makes sense for them to take out a loan or a lease.
“That's where you need to talk to your accountant and know whether that's low risk,” he advises.
Loyalty incentive program
You want to make your customers, lifetime customers. A loyalty program or incentive program will attract more people to your business and retain your existing customers.
The balloon promotion strategy
Steve says if you have a presence online you need to have all of your external marketing platforms working for you to direct the clients to where the sale is, and that's normally your website. These leads could come through social media, traditional media, or podcasts etc.
“Most businesses have got at least a website these days, so make that website work for you,” he advocates.
“Sales is about looking at every possible touchpoint. You need to do a check of your business to know when a customer touches your business, what is the conversion rate.
“Once you know what the conversion rate is you can say to yourself, "I need to improve sales by 22% to 25%,” he explains.
Paint a picture
Steve recommends turning what you are providing to potential customers into a picture.
“If I said to you the red fox jumped over the brown dog, what do you have pictured in your mind? It is a picture of a red fox jumping over a brown dog, so that is what you need to do.
“You've got to think with visuals, so if you give them a picture of what your particular product or service can do for them, that's what a lot of sales is about.
“Put them in a position where they want to be in the future. This needs to either satisfy a need or a want. It must solve their problem, or fulfills the desire. Through visual representations and pictures of customers using the goods and services, they get can see the result that they want.
“Keep this consistent on signage, Facebook posts, Instagram posts, LinkedIn posts, everything … make it very obvious in a visual way through pictures of your kind of people and your target market,” he says.
Customer lifetime value is a measurement of how valuable a customer is to your company with an unlimited time span, as opposed to just the first purchase.
Using the example of a retail outlet, Steve suggests a customer walks in and is greeted by an unfriendly, unhelpful sales assistant and leaves the store.
“That person then is gone forever. Say that person would have spent $200 a month if they may have bought your product that particular day. You have now lost that potential revenue.
“The alternative is you provide exceptional service and then that customer keeps on coming back.
“If that person is spending $200 a month, obviously over 12 months that is $2,400 and over 10 years it is $24,000. If you do not provide great service, there's also reputational damage to your business because of that. So not only does that person leave your business, but they will go and tell other people.
“There’s a general rule that if you provide bad service, that person will tell 35 people. With the internet and social media these days, it is even more, he cautions.
Decision makers and decision process
Before you approach a client, you need to do some research. You need to understand your customers. Who is the decision maker and what is the decision-making process?
Steve recounts a group sales training event in which participants said they feared cold calling.
“I told them you never have to make a cold call ever again. Make yourself known, even if it's via email or Facebook, and provide that customer with some pre-contact value.
“When you contact that client the rapport process has already started, because you've already started adding value to the relationship, even though you haven't met them,” Steve advises.
Instead of trying to sell directly to somebody over the phone, Steve suggests aiming for a face-to-face opportunity to meet, such as catching up for a cup of coffee.
“My strategy is I talk about myself for five minutes and about you for 55 minutes. I want to find out a lot about what you do and that finds the results, because then I know who they are.
“The discovery process is never ever about you. The meeting is always about the other person,” he says.
Educate, educate, educate
Steve reveals if you can get them to talk about themselves in the discovery process, you will find more about them, their needs, their wants, their problems, and their desires.
Once you know what they are, he proposes you might be able to put in place your product or service.
“You're in a position to be able to help them overcome those issues or fill those issues. So, educate, educate, educate. Educate them on the feature, educate them on the benefits and educate them on the value.
Upsell and cross sell
Cross selling and upselling are all about asking questions and listening to what the person is saying. It is also about remembering that whatever they buy, is probably creating other problems for them, Steve explains.
“Asking questions and becoming really comfortable with asking questions and listening to the answer is absolutely key to sales, and that is opposed to telling your customer how amazing your products and services are.
“It's a completely different strategy to ask questions and then link what we have to their needs and wants,” he explains.
Always keep your sales promises
If you break a sales or service promise that builds on the poor reputation of your business.
“If you say you're going to do something, write it down and do it,” he urges.
If you look after your people, they will look after you. Steve maintains your goal should be for your people to wake up every morning and look forward to coming to work.
He says to do the job analysis first. The most important aspect of recruitment is to get the right people onboard.
“When you have found the right people, look at the induction process such as the employee handbook, getting the contract and the superannuation information, the necessary policies and procedures, the codes of conduct, what your safety message is.
“Make sure you have a plan to serve the regular customers, run through product knowledge, get an understanding of the communication process in your business, and what your expectations are on the job description.
“The most important document in my mind is the job description. You get that right and everything else is fine,” Steve reassures.
Ask staff for ideas
Consider an incentive program, recognition plan or reward for ideas, Steve suggests.
“It might be during a team meeting where you invite ideas from staff.
“Recognition of an idea put forward and implemented builds so much rapport with your staff, and all of a sudden they do want to come to work,” he says.
Training and development
Staff appraisals are key; you need to have an appraisal with an action analysis.
“If you have identified there is a skill gap, address it through a training programs or online training.
“Let them go to the training program to get the benefit. They can improve, the business improves, you make more,” he illustrates.
Use technology to increase your productivity
Steve maintains there is so much technology available that can streamline your business to make you more efficient and effective, and make sure that you're only spending a minimum amount of time with the maximum bang for your buck.
“If you've got two people who've been working over two months and you put one additional person on, and the team finishes that work within the two months, then you've got an extra month to add to your new worth and increase your profits.
“You can also improve your recruitment processes by adding newly skilled people. You can do training and develop, implement better systems through administration and better systems via your policies and procedures,” Steve proposes.
Philosophy of your business
This could be things like continuous improvement, client focused, outcome focused, efficiencies and effectiveness.
“If you actually walk the talk and you talk to your staff about what you're trying to achieve and what you're all about, then put that in the agenda for the team meetings,” Steve says.
Come up with three words that describes your desired future culture within your business and what is it that you want the culture to be?
Do you want it to be a product? Do you want it to be cost? What is it that you want your culture to be?
Do not expect business to come knocking
Steve cautions that in the hard times, you cannot just wait for business to come to you.
“You have to go out and chase it. Being proactive as a business owner and setting yourself up to succeed is incredibly important. Having a sales system increases the possibility of the earning of that sale,” he argues.
Knowledge, information, and action. Nothing will ever happen without action.
“An idea in your mind without action is an idea in your mind that will stay there. So action is required to make changes within your business,” he advises.
Steve Grant is a Business Coach at iHelp Business Coaching who resides and works in Rockhampton, Central Queensland.
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