A Recovery - Statistics Aren't Everything

The government is releasing statistics and starting to talk of the recession ending. It won’t be feeling like a recovery for many people. These sentiments were echoed in an editorial in the Washington Post. 2010 will still be difficult but there are opportunities too!

As business leaders this is a critical time for you. Regardless of whether you are making a profit now or if you are bleeding red ink you need to do some planning. This is the time to put plans in place for operating your business in an “unstable” environment.

Sit down and put together scenarios that show what happens if your revenues drop significantly. Look at revenue decreases that range from 35%-75%. Based on these scenarios you can then put plans/options in place to help you and your team manage through these uncertain times. You need cash to operate your business. Know how much you need. Getting any kind of financing now is extraordinarily difficult. Money just isn’t flowing from banks, etc. You have to find private funding but that comes with its own set of pitfalls. So do what you can with what you have. Look where else you can cut – people, products, benefits, etc. What else can you do to bring in additional revenues? Ask yourself all of the hard questions!

If you aren’t in the black now, do everything you possibly can to get back to positive. It’s ironic; companies that have seen decreases in revenues are now operating where they were a few years back. One clients business has dropped from over $4M to $2M. Of course, when they were at $2M they were thrilled. Now they have to go back to being able to operate successfully back at the $2M level.

I had one of my clients go through the process of identifying the various options available to them should sales drop significantly. They put “triggers” in place that set in motion certain activities should sales drop below pre-defined levels. The questions you have to answer include - what does it take to run your business, how much do you have to make in order to operate your business, and at what point do you shut the doors?

The environment will remain challenging for some time. Figure out what you need to do to operate successfully in unstable conditions.

Sometimes We Just Need an Escape

Today, I spent the day at a baseball game – the Colorado Rockies and the San Francisco Giants. I am a big baseball fan. There is just something very calming yet exciting and energizing about it. But I digress.

We all know that the world we live in is challenging right now, there is a lot of negative energy out there. Every day there is bad news that the press magnifies. The economy is struggling and will continue to do so for some time. As business owners (and individuals) there is pending legislation that threatens to have major impacts on our business and in our lives. Conflicts overseas have the potential to impact our national security and how we do business.

With all that said, as a business leader it is important to take care of yourself! As I was taking in the ballgame, and the environment as a whole, I realized that for a few hours people from all walks of life (regardless of who they were rooting for at the game) were letting go of their stress, participating in the various game activities and of course standing, cheering and chanting for their ball club. There was not talk of politics, the economy, health care, etc. Okay, there were those who could be seen tweeting, texting, sending pictures and probably posting to their MySpace and Facebook accounts. But it was all in good fun!

If you think about it, for thousands of years, people have gathered to watch sporting events. There is something about the gathering of a fun and friendly crowd that has a certain energizing effect on us, especially when “our team” wins. It is the simple things in life that can give us the biggest boost.

During these stressful times, take time for you (and your family). Clearing your head and just having some good clean fun even for a few hours can give you new insights into some of your greatest challenges. Take your new found energy back into the office the next day – you will be a better leader for it. Worse case is that you get some fresh air and cheer on your favorite team!

Giving to Get From Your Network

As a general rule I make every effort to stay in front of my network on a regular basis. I do this by attending networking events, scheduling breakfast, coffee, lunch, cocktails, a phone call whatever works to catch up with the people who I want (and like) to help. You just never know what people are up to and the only way to find out is to ask. This is also a great way to keep your finger on the barometer of the community as you can ask your network what they are seeing in the economy or your industry.

Of course, you never know when you will need your network. I will often contact my network looking for people with specific skills that I may need or more importantly that I can refer to my TAB Members of other clients. Asking for business leads is always a good thing too. But it is also important to be able to give back to your network by providing them with referrals or help. In the long run, this always pays off in some way shape or form!

Yesterday, I was catching up with someone and as it turned out both of us had a lot to share with one another - personally and professionally. One of the outcomes of the conversation is that I was asked to do a webinar for an event coming up this fall. Why is this a big deal - well first of all I am helping to make an event, the Angel Capital Summit, successful! I am giving back to my network. Second, it is great exposure for me and The Alternative Board - Denver West as I get to talk about something that I have expertise in (building advisory boards). It promotes my brand and builds credibility.

Most people go to networking events to get leads. If this is your goal, most likely you will not have success initially. Networks take time to be developed. You need to get involved, nurture the relationships and give back to the people who are part of your network. This will allow people to get to know you, your leadership and management style, and your company. Mostly people want to get to know "you". Building the relationships builds the networks so that when you need help you can go and ask your network for the appropriate introductions.

Commit to attending at least two networking events per month (or whatever makes sense for you). Go regularly so people have a chance to get to know you. Find an organization that you believe in and volunteer (this does not need to be business related). You will feel good about what you are doing and start building a great network.

Remember, your network won't be able to help much with referrals or other opportunities unless you stay in front of them and give them reason to help you!

Delegate for Greater Success

Even "Super-You" needs help and support. There is no shame in asking for assistance. Push aside the pride and show respect for the talent others can bring to the table.

And, remember that there is no such thing as a single-handed success: When you include and acknowledge all those in your corner, you propel yourself, your teammates and your supporters to greater heights. - Author Unknown.

Do you feel stressed and overloaded? We all feel it at some time. I’ve been feeling a bit overloaded these past couple of days (there are many wonderful things happening in my business) so I did some reorganizing and found some additional tasks that I wanted/needed to delegate. Most of us can use some improvement in our delegation skills so I figured I would share my thoughts on delegation. Those who know me, know that I am a huge proponent of delegation – as long as you are delegating the rights tasks. See Applying the 80/20 Rule to Daily Tasks to learn more about what you should and shouldn’t delegate.

If you don’t involve others in your success then you will have limited success. Working as an individual, you can only work so many hours a day. There are only so many tasks that you can complete in these hours (let alone completing them with high quality). If you are good at your job, you will want more success.

But you can’t do everything and even if you try you will end up stressed, unhappy, and feeling like you are letting people down, including yourself. One of the most common ways of overcoming this limitation is to learn how to delegate your work to other people. If you do this well, you can quickly build a strong and successful team of people, well able to meet the demands that others place. This is why delegation is such an important skill, and is one that you absolutely have to learn and start executing!

To figure out how to delegate properly, it’s important to understand why people avoid it. Quite simply, people don’t delegate because it takes a lot of up-front effort.

Which is easier: doing something that you already know how to do, know the content, etc. or spending the time teaching and potentially documenting the process for someone else to do? The million dollar question you need to ask yourself is “is this a good use of my time? Is it part of the 20% of tasks that will generate 80% of the company’s revenue?”

It may initially appear that it is just easier to do it yourself then spend time teaching, documenting and checking on someone else; in the long-run you may be hurting yourself, the company and your employees.

• Invest time in your employees, especially if the tasks are repeating (or even if you expect that there will be similar tasks in the future). Not only will this offload some work from your shoulders but you will be giving your employees challenging work and helping to build their skills, confidence and makes them more loyal to you and the company.

• You don’t have to delegate to employees. There are outside parties who specialize in certain areas that are not part of your core competency (or can perform the tasks faster, easier and cheaper). I often encourage business owners to delegate or “outsource” entire functions of their organization. For example, Information Technology, Human Resources, and even Marketing can be outsourced. It may cost you some additional dollars but isn’t your time worth it?

• And finally, you want to be focused on your strengths, your core competencies. By focusing on what you do best and what is most strategic to the company will help you move your company forward faster!

Delegation allows you to make the best use of your time and skills, and it helps other people in the team grow and develop to reach their full potential in the organization. At first sight, delegation can feel like more of a hassle than it’s worth. However by delegating effectively, you can greatly expand the amount of work that you can deliver. When you arrange the workload so that you are working on the tasks that have the highest priority for you, and other people are working on meaningful and challenging assignments, you have a recipe for success. To delegate effectively, choose the right tasks to delegate, identify the right people to delegate to, and delegate in the right way. There’s a lot to this, but you’ll achieve so much more once you’re delegating effectively!

The Philosophy of New Products

New products are the lifeblood of your company and one of the primary drivers of new growth. The decisions you make have profound impacts on the profitability of the company as well as potential impacts to your career. Given the current economy, many companies have stopped developing new products and/or services. Be aware, if you fit this profile. You want to make sure that when the recession starts to end you are prepared to catch the wave and grab the new business. If you don't have any new products and/or services you may miss out on a golden opportunity. The risk of failure of new products is quite high:

• Six out of seven ideas for new products never become commercial successes

• Three out of four prototyped new products never become commercial successes

• Two out of three launched new products never become a commercial success

However, new products that survive generally become very successful in generating high returns for your company. Companies that proactively embrace the philosophy of new products are often rewarded in turn: 15% of sales and 22-30% of profits come from new products. Definition of New Products Successful companies spend a considerable amount of resources defining, developing and launching new products. Generally speaking, the definition of a new product is:

• The product is part of a new product line versus an existing product line

• The product’s technology is new to the company versus using existing company technology

• The product is targeted at a new market versus an existing market

Targeting Markets for New Products 70% of new products are targeted at existing markets, as opposed to new markets. Existing markets have plenty of product choices, numerous competitors and knowledgeable customers. Many companies believe there is a lower risk entering an established market. This is not the case, as existing markets are extremely competitive. Most of the failures of new products can be directly attributed to a poor understanding of the marketplace. So what do you need to know in order to plan profitable products? Market Analysis

• What is the market opportunity?

• How is the market segmented?

• What are your target markets?

Product Strategy

• Does the product fit with the company objectives?

• What is the product roadmap?

• What are the customer requirements?

• What impact will the new product have on existing products?

Competitive Landscape

• Who are your real competitors and what are their products?

• What are the key differentiators?

Three Key Factors for New Products If you focus on market analysis, product strategy and competitive landscape you are well on your way to successfully introducing new products into the market and increasing your revenues and profits. Don't forget, your markets may well change as the business and economic climate continue to change.

Going International: What You Need to Know

Many small business owners are considering entering international markets to expand their business. Regardless of the economic climate, there are several things you need to know first.

Entering international markets is a logical growth step for many companies. Selling products beyond your borders, however, is not a trivial matter. Here are a few questions to make sure you ask before entering an international market.

1. Have you researched your new target markets to make sure that the product is really needed? Does your business plan show revenue growth and is the ROI higher than taking your product into additional vertical markets domestically?
   
   
2. What is the competition like in your new target markets? Competition outside of domestic markets can be vastly different.
   
   
3. How will you distribute your product?
   
   
4. Are there any laws and regulations that determine how the product is built, sold, or used?
   
   
5. Will an American English version of the product work or do you need to have a localized version of the product?
   

The quickest way to learn about your new target market(s) is to partner with a local distributor. A good distributor will be able to help you answer the questions above and will help you determine if there is a solid business opportunity. If there is a significant market the distributor can be your local operation for sales, marketing, installation, support and services.

The advantage to using a local distributor is that they will help you learn about business, cultural and language issues that you may not be aware of and may not be equipped to handle on your own. It is not uncommon for companies to start their international operations using distributors and then add their own direct operations over time.

Once you’ve decided that going global is right for your company be aware that the internal changes will be significant for your company. Here are a few challenging opportunities that will present themselves:

• Time differences – 5, 8, 10 … hour differences make scheduling meetings difficult.

• Communications: face-to-face communications will be rare given the cost of international travel, so most of your communications will be done via e-mail and conference calls. This can be a challenge especially when you are dealing with controversial issues.

• Marketing, sales and support will need to be visited to determine what services are needed and how they can be provided.

• Multiple product versions – For hardware products, in order to comply with laws and regulations it may be necessary to have international versions of certain components of your product. If you have a software product, it is recommended that you internationalize your product so that it can support multiple languages.

• Cultural differences: language differences and business styles may take some getting used to when dealing with other countries.

Going international is a great way to grow your company! Just make sure that you do the appropriate due diligence before entering new markets.

Human Resources in a Recession

One of the many topics that business owners are continuously asking me about is Human Resources and how to manage their people through these unchartered waters.

My response: Now is the time to do what we should always be doing and that is to use and develop our Human Resources to their fullest potential. Our employees are our most valuable resource and, therefore, we need to address this critical asset head-on.

• Do performance reviews diligently and more frequently. There is no better time to clarify expectations (and probably get a positive up-tick in performance) than now.
  

• Provide Leadership like never before.
  
  • Your employees look to you for stability and guidance during difficult times.
  • Give them articles or have short seminars about money management, positive news, and future challenges.
    
  • Educate and communicate.
  • Share positive news regularly.
    

• Consolidation of jobs is common place as volume decreases and activity reduces.
  
  • Good job descriptions and knowledge of your workforce’s abilities and potential are critical to doing this analysis well. These make those performance reviews a lot easier!
    

• Rank your staff by their contribution to the bottom line and/or the ROI of their cost to the organization. Sales and production staff become disproportionately valuable in an economic downturn.

• Adjust wages, benefits, and perks to better align with shrinking revenues and margins.
  
  • You are the steward of this economic ship and are responsible for its success and must make hard decisions.
  • Is there someone who is overpaid or underperforming?
    

• In many cases, layoffs are necessary.
  
  • Your best employees deserve consideration for their hard work and loyalty.
  • Many considerations need be thought through before taking actions: will several employees share in the layoffs and work alternating weeks to draw unemployment periodically; will you provide job attached status to key employees you want to return, will you offer a return to work bonus after the period of layoff ends, etc.

• Possibly reducing hours is an alternative, either in select slow parts of the business or across the board.

• The labor force market has turned around over the last six months and this might be a time to upgrade talent and experience.
  
  
• If you are hiring, there are some great people available. However, be aware that not everyone is a top performer. For many companies, when they are letting go of people, they are laying off those who are the poorest performers - their bottom 20%. May sure your hiring process includes Leadership and Communication Style assessments.
  

DO NOT WAIT to take the necessary actions required to right your economic ship until you are overly vulnerable and might not survive. DO WHAT IS NECESSARY so that you have cash yet are poised for recovery when the tide comes back in.

Customer Advisory Board

Regardless of the economic climate, it is always easier and cheaper to keep customers rather than go find new ones! If you are a “market-driven” company, then you will want regular feedback from your customers. One way to solicit input and have an on-going dialog from your customers is to have a Customer Advisory Board. A Customer Advisory Board is typically made up of “strategic” customers and/or partners and key members from your staff. You will want to have a set of customers that represents a broad segment of your market – different industries, segments/markets and user types. Establish a meeting on a regular basis (perhaps quarterly or twice a year – depending on your business). Ideally you want to be face-to-face. If that isn’t possible there are a number of technologies that you can use. Consider mixing it up –maybe face-to-face meetings twice a year and then video, conference calls, webinars, etc. for other dialogs.

Topics for your Customer Advisory Board can include product direction (new markets, products or features), getting feedback on marketing messages, documenting service/support requirements, or testing out new pricing and/or packaging ideas to name a few. Another key topic will be to continue to keep your pulse on your customers business and how the economic and political climate is impacting them. These can be some important early indicators for your business, especially to gage when they feel that they are heading out of the recession.

The Advisory Board will often have topics for you too! When I ran Customer Advisory Board’s, customers always came up with new ideas that hadn’t been thought of. The Customer Advisory Board is there to provide you with inputs, ideas and validation. Your customers will benefit as they often get to see/hear about what is coming next before everyone else and you are continuing to build a strong relationship with them by making them an integral part of your business. Make sure you have an agreed upon agenda prior to each meeting that states what you will cover and what you want to accomplish during the meeting so that everyone walks away with value. Your customer’s time is valuable (as is yours) so make sure there is something in it for them too (WIIFM – what’s in it for me).

When you are selling your product/service, you can tout that you value the inputs of your customers so much that you have a Customer Advisory Board to provide on-going feedback to the organization. Be prepared to be amazed at what you will learn from your customers, not to mention that they will be feeling your “love” knowing that you pay attention to them.