Make Million from Your Business by Dr. Tom McKaskill - HTML preview

As others come into the market to copy you, the added features of your new releases keep you in the leadership position. You need to take a very hard position with R&D to ensure there is a cutoff for any version release.

Basically, you draw a line which says ‘that is enough’, don’t add anything more, leave it alone, get it out. This is very hard for the perfectionists to accept as they can always see how a product can be improved. You have to hold the line if you are to survive and prosper.

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49. Focus, Focus, Focus

In the early days of a new firm, survival has to be the primary objective. Unfortunately, because funds are always tight it generally means that you take on anything which will pay expenses, usually compromising the long term objectives of the firm. But once you are past that point and you have enough business to choose what you do, the primary objective must be to tighten the focus of the firm so that you do one thing really well.

What that means is, don’t solve lots of different problems for different types of customers. Instead, choose what you can do really well for one set of customers and dig deep.

Competitive advantage lies in being better at one thing than your competitors. The more you specialize, the more likely you are to develop the expertise, products and services which will give you that advantage.

Focus builds on the advantages which come from learning curve effects and economies of scale. Focus improves your probability of repeat sales and referrals, both essential ingredients for high growth execution.

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50. Shotgun Marketing Is A Waste

We need to start our marketing strategy with what problem we solve and who has the problem. We need to know who our ideal customer is and how we can get our message in front of them. So rather than blast our message out to all and sundry, which is effectively the shotgun approach to marketing, we should be using a rifle to zero in on our target customer.

Instead of advertising we might be better off with telesales. Instead of putting up an exhibition stand, we might be better running seminars for invited audiences.

What we have to work out is the cost of customer acquisition.

Anything we do which puts our marketing resources in front of the wrong prospect is money wasted. We need to design our marketing programs so they focus on where our targets customers can be found. Do they read a specific magazine, attend certain trade conferences, buy from specific retail outlets, belong to certain clubs or use specific credit cards? We need to go where they are and where we get the biggest bang for our buck.

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51. Lowest Price Is Fragile Positioning

In every marketplace there are going to be a range of products which vary in quality, price and functionality. One position which seems to attract more than its far share of attention is the lowest price. This is often seen to be the largest part of the market and therefore the most attractive for the company which wants to grow. However, lowest price is a hard position to build a sustainable business on.

When you take on the lowest price, you are appealing to a customer group who are primarily interested in price. That is, the features and functions which you believe are the things which excite you about your product and which you believe should attract business are actually not important to the customer. They just want the basic features and functions for the lowest price they can find. In fact, less features and functions would probably appeal to them if they could have a lower price. What this means is a dive to the bottom and the company which can achieve the lowest price wins. However, as soon as a competitor finds a way of pushing their price lower than yours, they will take away your market share leaving you nothing to compete with.

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52. Always Pay Market Price

No matter what long term incentives you offer employees, any compromise you make in terms of the remuneration they receive now will be resented. Even if you show them what the rewards for long term success will be if they go the distance and the firm successfully executes on a planned high value exit, this will not be sufficient. While smaller firms generally don’t offer the same levels of remuneration and benefits as large firms, it is critical that you offer the going market rate.

What is interesting is that employees will often sacrifice long term gains for short term benefits. Part of the logic behind this is that employees live in a world where they compare what they receive currently with what other people with similar skills and experience receive. If they feel that they are under compensated, they tend to resent it. This gradually eats away at them and they will often push to have their remuneration lifted or will leave the firm for another employer who will pay market rates.

Also never pay more than market rates. What happens is that you end up with people who you are stuck with who won’t move on because they cannot find anything else which pays as well. You can also be left with a situation where they are out of step with other employees and then you have resentment from the rest of the employees.

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53. Join A Peer Group

I have had the opportunity over the last decade of teaching hundreds of mature age practicing entrepreneurs. During the same period, I have also been invited by various entrepreneurs associations to conduct seminars and workshops for their members. What I have found is that entrepreneurs who keep to themselves or don’t have the opportunity of developing an entrepreneur’s network feel very isolated. Alternatively, those entrepreneurs who are members of a peer organization or have their own personal network of peers are much more resilient coping with business and personal problems.

We accept as entrepreneurs that we are different from the general population. Our focus 24/7 is our business and we take it with us into our personal lives. What this means is that we never get away from our business problems and they dominate our thoughts and often, our conversations.

When we have no one who can understand the issues we are dealing with, we end up stressing and internalizing the problems. Those entrepreneurs who can talk to others who have similar problems or have experienced them in the past allow us to voice our concerns in an environment where we will receive sympathy and support and often wise advice. Those entrepreneurs who belong to peer networks have often told me that it was the best thing they ever did.

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54. Try Before They Buy

The biggest obstacle we have in closing a sale is the buyer’s perceived risk. If they have used the product or service before, they know what they getting for their money and the perceived risk is very low. But what if they have no prior experience and there is no one they can turn to for advice. Confronted with a complex and expensive product or service, you can imagine their reluctance to hand over their money. The way out of this is to find various ways in which the prospect can try before they buy.

There are lots of techniques which vendors use to allow a trial of a product or service. Products can be made available for trial periods or taken to the home or work location so they can see them in situ. Alternatively, a demonstration might be arranged for an individual or a group. Services are more difficult to trial but sometimes a short or limited experience can demonstrate the quality of the potential outcome. Another method often used is a live simulation undertaken by a member of the firm’s staff or a video of the product or service in use. What we have to achieve is to lift the prospect’s level of confidence in the outcome they seek. Some form of limited exposure to the actual product or service in use will often overcome their hesitation.

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55. Quality Pays

We are often told that ‘quality pays’ but usually without the explanation of why that is so. A quality product should work as per the specification and it should do so every time it is used. A very simple explanation but it is highly related to customer expectation. What we know is that customer satisfaction relates directly to customer expectation. Customers expect product to work properly. Satisfied customers buy again and tell others how good the product or service is.

On the other hand, poor quality results in products not working correctly. This results in recalls, higher levels of complaints, higher warranty expenses and lower levels of repeat sales and referrals. The benefits of better quality are very obvious if you think of profit margins.

When we look at administrative or manufacturing operations, the case is very strong. It is much harder to fix a mistake or problem which has been allowed to stay in a value added process for some time. Rework is both disruptive and expensive. The lowest cost of production and the highest levels of productivity will come from catching errors at the point they occur. A culture which has a zero tolerance for allowing errors and mistakes is one which has a much higher chance of becoming a market leader.

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56. Keep Staff Informed

Some firms treat employees like mushrooms - keep them in the dark.

Their culture is one where the senior management believes it is dangerous to let lower level employees know what is going on in case the risks in the business are exposed and staff leave. However, this style of management fails to appreciate the higher risk of allowing rumors and misinformation to infect the workplace. Employees are not stupid and they can put isolated bits of information together to create a picture of the health of the business, however, their interpretation of what is happening and how management is dealing with the various issues facing the firm might be wildly wrong.

A more proactive culture informs employees so that everyone has a comprehensive picture of what is happening and an understanding of how the firm is dealing with the pressures it faces. The advantage of this approach is that there are no surprises and individuals who have good ideas can come forward to assist in the strategy. Often people in operational and sales activities will have information which is not readily available to senior management. This information can sometimes throw up insights and ideas to enable the firm to cope with pressures or execute on opportunities.

While there are risks, keeping people informed and involved is the better strategy.

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57. Leave Your Ego At The Door

Entrepreneurial firms are often very finely tuned. They are usually under pressure due to under resourcing and lack of funding. They exist on a knife edge between success and failure. That being the case, you need everyone in the firm to contribute ideas to its success. A culture which encourages pragmatic solutions, honesty and a willingness to step forward and contribute are essential ingredients of success. The last thing you can afford is for anyone to have a big ego and think they are better than everyone else. You need to avoid situations where any one person feels they have the only solution to a problem and are not open to advice or keep everything to themselves in case others see a weakness or fault with their decision.

My advice has always been to employ people who can go beyond their personal issues and focus on what is the right thing to do for the firm. The last thing you need in business is for someone to make decisions purely on what is good for them at the possible expense of finding the right solution for the firm as a whole. We can only have meaningful conversations if individuals can fully contribute without feeling that others are judging them. Problems need to surface quickly so they don’t get to be bigger problems. We need to ensure that, while there may be performance implications for contributing to the creation of the problem, there are serous sanctions for hiding problems.

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58. Never Oversell Or Over Promise

One of the worst things which can happen to you in business is to commit to a deal which you know you either can’t fulfill or will struggle to fulfill. It may seem great at the time you make the sale, but inevitably it comes back to bite you. If you fail to deliver, you may have to give the money back, write off any work you have completed, manage the reputation damage which stems from the activity and argue with the salesperson to have any sales commission refunded. All very nasty things to deal with.

However, it is the longer term effects which are much more damaging. Apart from a lack of trust by prospective customers and the own goal you scored against your competitors, the internal effects are very damaging. Once your operational staff lose confidence in your rogue salesperson, they will try to avoid working with them, inflate the estimates to give themselves a buffer or quietly let prospects know that they can’t trust the salesperson and encourage others to doubt what the salesperson says. You end up with a ‘them’ and ‘us’ culture where lack of support and cooperation is the norm. In such a situation, it becomes impossible to operate an effective business.

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59. What Will Go Wrong Probably Will

It is probably overly pessimistic to think that what can go wrong will, but even so, it is a great way to manage risk exposure. Basically, if you don’t have an approach to planning which considers risks, the chances are that you will be caught short and your business will suffer as a result, perhaps even fail. Our planning process needs to consider the most likely risks and plan for those, that is only prudent. Planning for unusual risks is probably taking it too far but what we do need to do is at least think the worst situations through and see if there are strategies which we could employ which take little effort but keep us on the main course.

We all willingly pay our burglary and fire insurance premiums and yet know the risks of such events are very small, but the loss we incur if they happen is very high. The same logic applies in business, we need to assess the impact of possible delays, threats, accidents and so on, and consider which ones we need to cover for and which we take a risk on. At least by going through the process we go into the future with an understanding of the risks rather than simply ignoring them. In practice, there are many risks which can be covered relatively easily but should be considered in case we miss something which needs attention.

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60. Create Value Beyond Functionality

One of the things which I constantly tell entrepreneurs is to think beyond functionality when they are creating customer value. Far too often I hear entrepreneurs talk about products and features and functions as if that is the only thing which the customer is interested in. Yet, when you look around, you find numerous successful companies which have built their reputation around intangible attributes of their customer experience.

What differentiates one airline from another when they all use the same planes, use a common ticketing and check in system and serve the same meals?

Customers are interested in every aspect of the sale activity from where they find information, how they evaluate the product, what they feel like when they use it or talk about it and how they interact with your employees during and after the sale. They are also often engaged with you long after the initial sale. Value to the customer can have many dimensions beyond just solving the immediate problem. It is the overall experience which they remember. Your task as a vendor is to create an experience which taps into multiple forms of value not just functionality. By creating a wider set of experiences you can differentiate your business and develop a unique competitive advantage.

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61. Find A Business Partner

Being in business is not easy. Many entrepreneurs liken it to a roller coaster ride. That being the case, when you are doing it alone, it is even harder. Many sole entrepreneurs tell me how lonely they feel and how they have to carry the full weight of the business. Few are willing or able to share the worries of the business with their spouses or life partners. They say that the normal ebb and flow of business can seem like a continuous flow of problems and that can look scary to the person who worries about their security, their children’s education and where the mortgage payments will come from if the business fails.

What I found works really well for many entrepreneurs is to have one or more partners who work together in the business. This means that there are other people who you can take into your confidence, share the stress and worries about normal business issues but also work together to find solutions for problems. It is so much easier to cope with a problem if there are others who can share the load. Even having the ability to discuss a problem with someone who understands what you are dealing with is a great asset in business. The only thing you have to be very careful about is choosing the right partner.

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62. No One Is Indispensable

If you are lucky, you will have some employees who are unbelievably good. They are super productive, get on with everyone and never ask for more than they deserve. Then one day they announce they are leaving; going back to school, moving interstate with their new spouse or off to do charitable work overseas. You are devastated because you know how rare they are.

Then there are the great salespeople who close more than their fair share of deals. However, you discover that they have been putting in false expense claims, over promising on sales or making unacceptable sexual advances to a staff member. You have no choice but to fire them.

In both cases you have lost someone who will be missed because of their outstanding contribution to the business. But the reality is that this will happen over and over again. What is amazing is that the business survives, new people turn up or step up and life returns to normal. What we have to ensure is that we never lock ourselves into one person so much that the business cannot continue without them.

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63. Have Your Business Audited

Can you really be sure that you have done everything you need to do to meet all your compliance requirements. Can you be sure there are no errors in your systems which are misleading you or that proper authority has been applied to all the expenses. It would be a rare entrepreneur who claimed he knew enough about his business and about the legal obligations to state that he wouldn’t benefit from a proper independent inspection by experts.

Apart from making sure the systems are working correctly, the compliance obligations met and any serious errors detected, there is a great deal of comfort to the entrepreneur in having an independent audit.

In a way, it is a method of being accountable to yourself. You want to know that you have done the job correctly, you have not overlooked something important and your systems are operating correctly. You also want the advice which comes with the audit on how you could improve your systems. It is important to know that you have your accounting and other governance information up to date if you need a loan or wish to entice an investor into the business. This is something you cannot leave to the last minute.

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64. You May Have To Fire Your Friends

You may have started the business as friends and colleagues but the reality of business is that the business cannot have any passengers.

Everyone has to contribute and at a level which the market demands of them. If they can’t do the job, put in the hours or carry their fair share of the load, they undermine the entire operation.

One of the most difficult decisions an entrepreneur will make is to recognize that their relative or friend is holding back the business and they have to go. Tough as it is, it will be the right decision to enable the business to move forward and prosper. It is a decision between friendship and the business but if you have other employees, there is an obligation to them as well. You cannot really do the right thing by those you have recruited into the business if you compromise the health of the business by continuing to employ people who don’t make the grade. If you don’t take appropriate action, you are sending a message to all the employees that you are willing to compromise your position and your standards. In the end that will undermine your authority and their faith in you as the leader.

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65. Have Customers Sign Off

We all know that cash is king but if you don’t have systems to plan and manage it, you haven’t really learned the lesson. One of the most difficult things to do is to collect the cash from customers where you have a combination of product and service delivery. Customers will find every possible excuse not to pay or to delay payment. In many ways it is like going into battle. It takes a lot of preparation and very good tactics to ensure you get your money when it is due.

You need to start by setting very clear expectations of what you are providing and the terms of payment. It is critical that you are able to clearly specify the intended outcome of any delivery so that you can verify and document that you have met your obligations. As soon as you can, have the customer sign off on the outcome. This is usually easiest if you do it as soon as you have the evidence you have met your obligations. Do this with staged deliveries as well. Once the customer signs off, send out the invoice and start the process of collection. The customer sign off gives you considerable leverage and takes away the ability of the customer to argue you have not met your obligations as an excuse not to pay.

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66. Barter Where You Can

Finding a way of trading resources which you have with resources you need is a really good way of overcoming a shortage of funds. What we should recognize is that many companies have things which they can provide at marginal or not cost to them. On the other hand, you may have services or resources which you can provide for which you will not incur significant outlay. Bartering what you have for what you need makes a lot of sense.

There may be many things which you would like to have but which you cannot afford, or at least afford at that point in time. What if you could obtain additional office space by trading some services or obtain the shared use of a conference room by trading some advice. You need to think about what you have which can contribute to another business which has marginal cost to you but in return, what they could offer you which would be valuable to you but negligible cost to them. You can also trade equity for specialised services. Your lawyer or accountant may be prepared to take a small stake in the firm in return for professional services. Think laterally and you might come up with some interesting arrangements.

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67. Don’t Forget Your Family

You would be hard put to find any entrepreneur who said that being in business was easy and that it didn’t take a toll on their family. The fact is that being in your own business is 24/7. There are no weekends or holidays. The phone can ring at any time, even in the middle of the night and the buck stops with you. This can get very stressful on the rest of the family who feel that they must always take second place. When you don’t turn up at school events, miss birthdays and take phone calls during family dinners, you are in serious danger of losing the support of your family.

What we often forget is that family is forever and the business is transient. Few businesses last more than a dozen years. They either go under or we sell the business. That being the case, we need to put the business into perspective and recognize that it is only one part of our life and even then, only a temporary part. We need to set aside time for family and structure the business in a way where we can take weekends and vacations occasionally and spend quality time with the family and let them know they are important. Entrepreneurs have very high divorce rates because they forget to look after this part of their life.

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68. Don’t Assume – Get The Evidence

All too often we make decisions on our gut feel or instinct and then regret it later. Usually it is because we didn’t take a little time to do some checking. Whether it is hiring a new employee, developing a new product, setting a price or opening up a new territory, you should never neglect the facts. There are always relevant facts available if we only bother to take the time to look. We should never accept anything on face value without asking what research went into the decision.

Before you embark on a new project, approve the business plan or commit to new equity, you might ask a few hard questions. What alternatives do we have and what are the outcomes we could achieve under each? Do we need to make the decision now or can we wait while we examine the issue in more depth? What questions should we ask to gain more insights or clarity as to the impact of our decisions? What additional information would allow us to be better informed? What is the evidence we have to enable us to judge the validity of the assumptions underlying our decision? Sometimes the best decision you can make is not to make a decision.

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69. Check Your Brand Image

Some firms are clearly in the brand business while others don’t think they are, yet we all have brands whether we acknowledge it or not. If you are in business then you are conveying messages in the public domain about your business and your products. Those messages are not just about your product or service features and functions, they are about the intangible characteristics of who you are, what you do and how you do it. They are aspects of quality, integrity, reliability, positioning, availability and so on.

Over time they converge around your company name, product labels and even individuals.

Giv