Getting Your Business to Work

Face Reality

I sent this email to the President of a company I am consulting with. See if it can help your thinking during the slow economy.

1. Whether or not the note comes due doesn't change anything for the next few months. The money is still due and deserves a return. More investment money will only enable you to limp along longer without accountability.

2. The economy is not an excuse for 4 years of no growth and no profits. The purpose of every successful company is to grow and make a profit. The more sales and profit, the more valuable the company.

3. The sole purpose of a real company is not to sell it, but to grow it. Entrepreneurs grow companies. Small business owners own a company that barely makes them a living.

4. CEO's of companies who don't steadily increase the value of their stock and/or grow their revenue get replaced fast. No excuses. They make it happen or find another job.

5. The meeting we had was the same meeting we have had at least 4 times over two years:  

• No grouth and not profit.
• No positive sales results.
• Not enough sales activity or impact to attract new customers.
• For whatever reason, you have not hired more sales people to close enough leads

As you know, I study entrepreneurs and small business owners. 95% of them get stuck and can't grow beyond a certain level that leaves them short of successful. Good intentions, hard workers, work 80 hours / week, care about their product, and very convinced their way is the best and only way. But these 95% of all small businesses don't move beyond the owner's ability to control all the work. This keeps them stuck at a level they can't get beyond. They don't know what to do next except try to work harder themselves. They get frustrated when questioned because they value working hard over getting results. They never can find any good help they can afford. They are slow to hire new people who will help them grow the company. They don't put strong people around themselves because they think they cost too much. They can't let go, can't delegate, and micro-mange everything that happens every day.

The only way to break the cycle is for the owner to change their habits or be replaced by another manager who knows how to manage instead of doing the work. For example, my friend has started 6 companies and eventually gets replaced or fired by the investors when the company gets stuck. With new direction and leadership, the company gets back on track.

Now what is your solution?
I DON'T want to Survive for another year. You have a great product that saves companies money. The economy is not the reason for the lack of sales. It is a lack of enough excellent and qualified people selling. You can't do it alone with a weak players surrounding yourself. You must reshuffle your staff to make way for at least 1 more fully qualified sales closer to get the revenue back on track. Time is too short to hope for a big deal or another loan to bail you out for another 6 months. I will close this rant with one of my quotes:

"The results you get are a direct indicator
of the leader of an organization."

It is time to face reality. What BIG change do YOU need to make (and your company) to get different results.

George Hedley CSP
Certified Speaking Professional

Surviving The Economic Slowdown: Part Three

For more, see Part One, and Part Two, of this series. Look at your fixed costs! Another part of the equation is your fixed cost of doing business. What things do you need and what things can be postponed or eliminated from your ongoing cost of doing business? If you think your business volume will go down by 20% in the future, start cutting your overhead by 25% now. Cut more than you think you’ll need as profit margins will also go down in a tight economy. Start with your largest expenses first – your equipment, backhoes, forklifts, cranes and trucks. If you aren’t using them on the jobsites at least 24 to 32 hours every week, they’re costing you more money to own than they are making on the jobs. Sell what you don’t need and lease the equipment you need when you need it. Getting rid of that old unused equipment littering up your yard will free you to focus on getting more profitable business instead of keeping your equipment busy. Take a hard look at your management, supervision, administration, foreman, and field personnel. Now is the time to eliminate every “C” player, keep the “A’s” and warn the “B’s” they need to improve. As work slows, you will be able to replace poor workers with quality employees who will be readily available. Don’t accept less than the best now. It is an employer’s market so take advantage of it. Get your team together and let them help you reduce fixed expenses. State your goal to cut your fixed cost of doing business by 10%, 20% or more. Let them come up with ideas how to make it happen. By making cost reduction a team activity, everyone will help and feel a part of keeping your business running as costs go down. Be sure to look at every major cost items including job costs, production, benefits, training, receivables, payables, banking, insurance, and technology. George Hedley

Surviving The Economic Slowdown: Part Two

What moves are you willing to take to get ready for your future? Consider two parts of your business as you decide what to do. Look at both your target market and cost of doing business. (Part One, yesterday. ). Look at your target market! What types of customers have you built your business with? Do you have a short list of customers you have targeted to obtain new or repeat business from over the past several years? What other customers have you ignored as your backlog has stayed full? Which customers need what you offer even as the economy might slow in the future? What other services can you do for your existing customers? Which potential customers will gladly consider your company to be on their bid list? I have noticed I am getting a lot more phone calls from new subcontractors seeking projects to bid. They cold call and ask if they can get on our bid list. There is kind of a desperate tone in their voices. They have to get work or they’ll go out of business. They aren’t looking to build a long term customer base. They’re looking for work to survive until their regular customers call them again. Before you start blindly calling every new customer target you can think of, have a strategic plan of attack. When I get those cold calls, the salesperson doesn’t have a clue about our company or what we specialize in. Research your targets. Find out what kind of work they do, how they do business, and how your company can help them meet their goals. Pick only potential customers you want to create long time relationships with. Building and growing a loyal customer base takes time and commitment. Not a short term fix. To enter a new target market, you’ll have to convince potential customers your company is qualified and experienced in the type of work you’re proposing on. You’ll also have to demonstrate how your company can help new customers build faster, better, or cheaper than the subcontractors or contractors they are using now. Be ready to show how you can solve their problems and become a team player. Show them you are in it for the long haul. You are not there to just get on their bid list. You are there to build a relationship and you know relationships take time. Also consider what other types of project types, locations, sizes, or services you can go after. If you are in the heating and air conditioning business, why not offer monthly service as well? If you specialize in building new commercial projects, consider offering development and construction management services. If you are a drywall subcontractor, consider adding metal stud framing, acoustical ceilings, insulation, painting, and door installation so you can become a full service tenant improvement contractor. For more, Part One. Part Three, Tomorrow!

Surviving the Economic Slowdown: Part One

Do you think business will go up or down in the years ahead? What will you do to survive if your business shrinks by 40% or more? Shouldn’t you start doing something about your future right now? What are you waiting for? It’s the last quarter in your last game of the season. If you win, you’ll get into the championship playoffs. Lose and you are eliminated. You are twenty points behind and only a few minutes remain in the game. What will you do different to win? Is it finally time to change your game plan and try a new set of plays? Think about your business. Most business owners know a slower business market will become a reality in the future. But most don’t want to make a move and change the way they do business. They are sitting and waiting wait for something to happen. In the slowdown of the early 1990’s, my business went from $50,000,000 to $5,000,000 in annual sales in only one year. It was hard to believe the construction business nearly stopped as quickly as it did. There just weren’t any jobs to bid or build. I had to reduce the number of employees from 150 to 10. I had to cut my overhead budget from $2,000,000 per year to $500,000. As your business slows down, it is almost impossible to reduce your expenses as fast as your revenue diminishes. You have to keep people on staff to finish the projects and do the paperwork long after the work is finished. In other words, you lose money in a slowing market. Consider your choices! The choice is yours. You can continue to charge ahead doing business the same way you always have and hope the economy continues to boom ahead. Or you can make some strategic moves to get ready for a business slowdown. In the late 1980’s we anticipated our core industrial building construction business market to slow down in the upcoming future. To weather the storm and diversify, we made a decision to invest in the future and hired an experience retail construction division manager to seek major retail construction work. We also tried bidding public works construction at the state universities. The retail decision worked out well and we soon become a major contractor for many of the national retail chains including: Mervyns, Costco, and Wal-Mart. What moves are you willing to take to get ready for your future? Consider two parts of your business as you decide what to do. Look at both your target market and cost of doing business. (Part Two, Tomorrow) George Hedley

Stop Whining! It is what it is!

Remember 5 or 10 years ago when your business was only half of what is was in 2008? Or your investments, or your house value or your salary? Well it is time to stop looking back and start looking forward. Looking back will get you depressed and all upset about what you had. Guess what? You don’t have what you had anymore. It’s time to start building again from where you are. Building is fun. Whining is over rated and depressing. Calculate the gross and net revenue you really can expect for 2009 and 2010 and then figure out how to make a profit with what you’ve got. If it means you will have to cut back your expenses 60%, then do it now. If it means you will have to go back to working hard, making sales calls, getting out of your comfy office, or getting your hands dirty, do it. I know you thought you could retire in a few years or reduce your involvement in the business. But you can’t. Besides, you don’t want to be one of those old folks who do nothing positive with their time except complain about the price of healthcare. My current message is to START BUILDING & START MAKING A PROFIT with what you’ve got. That means you now have a chance to redesign your future. Exciting! Now you can design your business to be the best in your market. It is back to basics! As a result, I have re-designed my Profit-Builder Circles Academy to help every business owner Re-Build using the basic 7 characteristics every “Best In Class” business has in common. Excellent market leading companies all have: 1. Passionate Vision, Clear Written Targets & Goals 2. Structured Organization & Accountable Responsible Team 3. Operational Systems To Run The Business 4. Above Average Profits and Focus On Numbers 5. Unique & Different Delivery System, Product Or Service 6. Pro-Active Sales & Marketing System and Fast Growth 7. Equity Growth & Wealth Building Ready to start over and build your business better than ever before? Let’s keep talking! Stay tuned for more ideas to help you get your business to work! ~George

Strive for more than mediocrity.

I spent the last week presenting 4 programs on ‘Effective Leadership, Building Customer Relationships, Pricing Strategies, and Nine Numbers You Need To Know’ to the Sage Software Summit in Denver, Colorado. There were over 2,500 people in attendance leaning how to improve their companies. Each of the attendees decided to move forward and make their companies the best they can regardless of the economy. Then I went to Phoenix to attend a western workshop of the National Speakers Association. I listened to several of the top experts in the United States present seminars on selling, branding, and internet marketing. I left with the realization that top companies in their marketplace make the most money and sell at higher prices. While the majority of companies struggle to squeak out a small profit fighting for the same piece of the pie. I came home with a list of 20 things to do to improve my business. I also realized that companies that don’t improve stay mediocre. What are your doing about improving your business? Is your company mediocre? Are you really willing to do what it takes to get your business to work the way you want it to? Or are you stuck, afraid to make a move, unsure what to do, unwilling to try new things, not able to trust your people, and comfortable with mediocrity. Mediocrity is owning a company that makes little or no net profit, competes on price, doesn’t have a unique differentiating factor from their competition, and doesn’t deliver what the business owner wants. Are you satisfied with being mediocre, average, achieving less than your potential, and continuing to struggle to keep it afloat? OR, do you want to: - Be the industry leader in your marketplace? - Sell more than low price to win customers? - Make lots more money than your competition? - Have the best people run and manage your business? - Be the owner instead of the overworked boss? - Generate lots of passive income from your investments? - Have plenty of free time to enjoy your family, friends, and fun? The choice is yours! Happy Thanksgiving & remember to thank at least 5 people for what they have done or mean to you. George Hedley CSP Certified Speaking Professional HARDHAT Presentations

Do You Compete On Price?

Well I finally got our August 31st fiscal year end corporate taxes done. Unfortunately Uncle Sam got shorted this year as the economy and real estate market reduced my income. Think about the billions of dollars the banks hurt the economy by not qualifying borrowers the prudent way they should have. This caused the country to head into a recession and millions of people have less money than they need to get by. And as a result Uncle Sam will not get enough tax money to cover expenses. So I'm sure they will cut spending like you and I have to do to cover our rising costs and shrinking revenues. Or will they? I recently spoke to a very diverse group of audiences including modular building manufacturers, steel fabricators, spray foam contractors, art dealers, and the sales force at Solo Cup. Everyone is facing the same pressure: too much competition and rising costs. Steel prices were significantly raised by the mills last week even though the market is heading down. Who can figure? But the key to success in any business is to offer more than low prices. When you compete on price, you'll never make enough money to meet your goals. The Fortune magazine most admired companies list came out a few months ago. Guess what? The companies who top the list INNOVATE and stay ahead of their competition by offering new and different products, services, and ways to deliver more value to their customers. And they are making record profits. How about your company? What do you have to do to be better than your competition? Go visit your competitor’s place of business. Are you really any different than they are? If you had a choice, would you buy from them or your company? If all else is equal between what you offer and your competition, the only differentiating factor is low price. And you can’t make any money selling low price in a shrinking market. Need ideas, visit my website @ hardhatpresentations.com and look for one of my 100 articles to help your business grow. George Hedley CEO Hedley Construction & Development Inc.