Disaster Planning (Revival)

In January I posted an article about the Haiti earthquake and wouldn't it be terrible if the same thing happened in NZ. How would your business cope? Well, the same sized quake has hit Canterbury and many businesses are severly affected. Wake up and smell the roses. It is time you gave some serious thought into some disaster planning of your own.

I thought it timely to reproduce that January post below:

For more than a week now we have been shocked at the scenes of utter devastation and chaos that is happening in Haiti since the magnitude 7.0 earthquake struck on the 12th of January. In New Zealand we also live in fear of “the big one” hitting us one day as we exist in a similar area of tectonic instability. It’s not a question of if, but when.

How would your company cope if a major earthquake struck tomorrow and have you done anything about planning for how you would recover as fast as possible? A disaster plan will allow you to make decisions before a disaster strikes your business and forces you to determine how you are going to deal with one should it happen.

A disaster plan will allow you to deal and come to terms with the disaster situation in those first critical hours or days rather than deciding on how you are going to deal with it.

A plan is ideal for recognising physical disasters such as fires, floods and the very real act of terrorism. It will help you to identify possible threats and take the necessary preventative action while preparing the business to deal with it effectively. The first step may be to set up a disaster planning team that includes staff responsible for: HR, buildings, PR, IT, general management. Consider including an outside advisor in the group as often they will see risks that people from within the company may miss.

Next the team should assess the risks to the company. This would include such things as: insurance cover levels, building and equipment maintenance, alarm systems, fire detection and evacuation, back-up off site of records, power, etc. From here a disaster plan can be designed and implemented. Remember to update it every year and modify it to suit the changing situation.

Below is a suggested checklist in which you will need to assess, implement and determine for your disaster plan. Contact the auther with help in pulling this together, so you can better focus on core activities.



The Disaster Plan:

Key Issues Must address:

• Key personnel and their out of hours contact details
• Key personnel responsibilities and authority
• The location of the Disaster teams control centre (this should be off the work site where possible)

Items to Cover
(consider all functions and areas of your business including employees, customers, etc)

• Functions and procedure prioritised
• Floor plans
• Evacuation area
• Evacuation procedures
• Precautionary measures
• Procedures for jobs to be done while the recovery is taking place
• A list of all suppliers and businesses for emergency equipment and supplies
• Other emergency numbers or contacts

Employee Information

• Ensure all employees have provided their details and/or phone numbers for after hours contact
• Have a counselling service or agency decided so that they can provide counselling and help to employees to deal with the disaster
• Communicate with employees about what is going to happen, etc to keep them in the loop of what is happening and what they should do, etc.
• Advise employees of who to contact should they have any problems
• Consider an alternative to pay employees should the usual method be destroyed or unavailable

Alternative Premises

• Determine an alternative place to carry on business should yours be destroyed
• Consider making arrangements with other businesses to share space until things are back to normal

Operations

• Determine possibly delays should something happen
• Aim to be operational as soon as possible after the disaster (next day)
• Inform customers and suppliers immediately to let them know what has happened otherwise they may disappear
• Brief and prepare your PR representative to deal with media

Communications

• Advise your telephone company and request them to forward your calls to your designated place
• Prepare your personnel so that they know what to tell your customers, suppliers, etc.
• Decide on where your mail should be sent

Equipment and Resources

• Ensure that you know and are able to identify where critical documents are so they can be retrieved
• Store backups off site of materials, documents, etc
• Define which resources would be needed during the recovery period and make them available
• Make sure money is available at all times
• Consider hiring instead of buying new equipment – it maybe the best option
• Keep the Disaster Plan in a number of locations so that it can be accessed should it need to be

A Formula For Great Results

There is a formula in business (one of many!) that states:

Decisions X Actions = Results

If you can make GOOD decisions or GREAT ones, and do something about implementing them, then you are likely to achieve good or great RESULTS. This made perfect sense to me when I was shown the formula as part of a wider discussion about choices and the things we need to do in order to succeed. But when I went away I started to wonder: how do you make good decisions, or at least make more good decisions than bad?

I gave this some thought and came up with the following list of five principles that help me make good decisions and which you may find helps you. I stress that this is MY list and you may want to add or change one or two things. I would welcome feedback on what YOUR list looks like.

1. The principle of GOAL SETTING. In military terms having a clear objective is vital to a successful campaign. Flexibility of manoeuvres may be required to achieve the objective and the time frame may change, but both are perfectly acceptable. When making a decision ask yourself: “Will this move me closer to my objective or move me further away?” If it moves you further away, you may want to rethink the decision.

2. The principle of INTELLIGENCE. Also borrowed from the military. Get the facts before making a decision. If you haven’t got enough facts then seriously consider postponing the decision. Also in a wider sense, always be open to learning opportunities.

3. The principle of FOCUS. Do what you do best. Either drop the rest or delegate it. Know when to say NO to people who want to suck up your time and prevent you from focusing on what is important

4. The principle of VALUES. Decide on your core values and stick to them. Pass on things that don’t measure up to your values, even if it seems that you may be passing up on a chance to make some quick money. That is the real test of your values.

5. The principle of ACTION. Once you have made a decision be prepared to move swiftly to implement it. Commit enough resources (but don’t waste too much either) to ensure the success of the action and the achievement of the goal.

That is five ideas that will help you make better decisions and in turn help you achieve better results. If you have other ideas that help you that I haven’t listed, please drop me a line. Thanks

I Love It When a Plan Comes Together

Watching the All Blacks take apart their opposition, like they did the Boks on Saturday, is always a satisfying experience. Doing it in the clinical and comprehensive way they did was doubly satisfying. To a man everyone had a great game. They all seemed to have a specific role and executed it well, both on attack and in defence. The Boks were simply shut down at every stage and never allowed a look-in.

That type of performance does not come about by chance. Sure, the Boks probably took the game a bit lightly and figured that sooner or later they would get an intercept try and things would swing their way, but the All Black’s game plan did not allow that to happen. The All Blacks obviously had a plan and they stuck to it. And it was beautiful to watch.

So too in business it is a beautiful thing when a plan is well put together and executed with focus. The game of business is a lot longer than 80 minutes and a lot of outside factors influence the run of play, but some good planning and day to day actions that are aligned to the plan will help a business achieve a winning score. So what are some important elements of a good business plan?

Objectives. Setting clear, realistic objectives help to provide a long term target and also help to measure decisions against. Will this help us achieve our objectives? Yes, then let’s do it. No, then let’s think again.
Realistic Financials. Setting a lofty target is one thing, but financial predictions of super profits and huge returns are not helpful. Targets and assumptions need to be defensible, especially if you are taking the plan to the bank or other investors.

Cash Flow. Along side projected P&L figures, attention should be given to the effects of cash flow on the business. Having a growing profit is one thing, but how will this be financed and will the company run out of cash before the goals are half way achieved.

Brevity. It is not necessary to write a 30 page plan to be effective. It is better to keep the plan to under 5 pages and put the detail in some other supporting documents. A weighty document is likely to be relegated to the shelf because it is too long to be referred to on an on-going basis. I would rather see a 5 page plan that is covered in hand written notes, with coffee cup stains and bent edges being used. At least it is more likely to be read and updated on a frequent basis.

Review. The best plans and more like a blueprint for a house. They are a living document that is referred to on a constant basis and updated due to changing circumstances. The ultimate goals may not change, but the path or timing towards those goals may.


Those are a few points that will help to keep the planning process real and effective. There are others and I will cover off on subsequent posts. Meantime I look forward to another AB win on Saturday and will be interested how they adjust their game plan to take account of the wounded Boks. Go ABs!!

New Strategies for a New Financial Year

The past year has been one of survival for many businesses. One of battening down the hatches, shedding costs, looking inwardly and waiting for the storm to pass. Well, the storm appears to be on the wane and now is the time to start looking outward and identify new opportunities that will be there.

The storm that was the global financial crisis has left some lingering damage however and this will make taking advantage of opportunities difficult for some. Credit is still tight, banks are risk averse and many businesses have consumed what fat they had while in survival mode. Despite this I have listed a few tips below about areas that business owners should look at during the new financial year as possible strategies for re-growth.

Tip #1: Innovate Across The Business

Make a commitment to researching and testing new ways of getting things done, from production to marketing, product design to packaging – in short, find a way to renew the energy and enthusiasm for new ideas you had when you first launched your business, then improve on it with the wisdom of experience.

Tip #2: Pursue New Growth Opportunities

Most business owners are well aware that in order to be a success a business needs to grow its sales and profits; therefore you need to diligently establish sales and profit targets and measure your progress. Research under-served segments of your markets, explore value-add sidelines and incentives to encourage more sales, more frequently.

Tip #3: Improve Quality

Quality issues have been at the heart of business management issues since the 1960s, culminating in the strategies of Total Quality Management (TQM). Quality issues are interwoven into the very fabric of business ownership, and include issues such as customer relationships and customer satisfaction, supplier relationships, manufacturing and service delivery.

Tip #4: Explore New Marketing Methods

Marketing in its broadest sense encapsulates advertising, public relations, selling and distribution. It is basically the act of letting people know what you have to sell, where they can get it and what value it has. In order to grow a business, a business owner must be constantly looking at creating and putting in place new marketing methods in order to gain access to new prospects and customers for the business.

Tip #5: Deal With Staff Issues

Good employees are critical to the growth of any business, but more especially SMEs. Therefore don’t let staff issues remain unresolved. Take care of employees and develop them, making sure they are satisfied in their jobs and have the knowledge and resources to perform well. Employee loyalty is especially important in times of recovery when you want employees to achieve more – while pay rises might be out of reach, actively offer smaller rewards such as lunches, unqualified praise, training or mentoring. Some of your staff (especially the good ones) may also use the period of recovery to start looking for a new job. Make sure you keep communicating your thanks to them for a job well done in 2009 and what plans for growth you are now thinking about.

Checklist for business owners:
1. Innovate in at least one area of your business over the next 12 months.
2. Focus on growing your sales and profits in new areas.
3. Institute some form of quality management into your business.
4. Add at least one new marketing method into your business this year
5. Take care of your staff.

For help in implementing any of these strategies contact the author at andyburrows@iconbusinesssolutions.com

Is It Time to Fire Some of Your Customers?

The customer is always right. Correct? Wrong!

The RIGHT customer is always right for your business. Unfortunately most of us don't know who the right customers are for our business. So we take on board anyone who has a heart beat, without ever identifying the right customer profile for our business.

But who is the right customer for your business and how do you identify the ones to avoid, or actively send elsewhere? Master this and you will build a much stronger business in the long term, have happier staff and more money in the bank.

FIRSTLY, IDENTIFY YOUR PERFECT CUSTOMER.

One of the best ways to identify your niche is to paint a picture of the perfect customer for your business. Which customers do you love to deal with? Which customers are the most profitable and professional? Which customers pay on time and never complain about the price? Which customers do you want to get referrals from?


An easy way to do this is to look at your top 20% of customers, and identify what they all have in common. It could be a common need or amount of money they spend with you each month...or how often they buy from you.... or where they live.... or why they came to use your products or services in the first place. Are they '30 something", with 2 or more children who live on the North Shore and drive a Toyota Camry?

THE MORE CLEARLY YOU CAN IDENTIFY YOUR PERFECT CUSTOMER THE MORE PROFITABLE YOUR BUSINESS WILL BECOME.

Once you have done this, then you can start to develop a strategy on how you are going to get more customers like these. It will make a HUGE difference in how you market to these people and how cost effective your advertising and marketing will be. History is 20/20 vision and a great information source for your future, only if you use it to your advantage. Every ad that doesn't work or campaign that doesn't get you results is a learning opportunity... but only if you learn from it.


DON’T GET DISTRACTED BY THE “D” CLASS CUSTOMERS

The idea of actively sending a customer away from your business, possibly to a competitor, is contrary to what many business owners this is logical practice. But pick your customer (or prospective customer) and it can be one of the most empowering feelings that you can achieve in business and will set you on a path to better profitability and better customer service.

The customers to chase away are the ones who seldom buy from you, often complain about minor things, are often the slowest payers and generally a pain in the butt. While you were building your business you put up with this type of buyer, because you felt that any business was better that no business. In reality this type of customer is unprofitable and you would have probably been better off without them to start with. If a business has too many ‘D’ class clients then it surely will go bust, life will be hard and the business will be too susceptible to all sorts of troubles from employees not wanting to work there, to deliveries going missing, to dirty workspaces etc.

Now you know better, so go out there and target more “A class” customers to build you business on and while you are at it, save you and your staff a lot of grief by firing a “D class” customer or two.

For help in defining what sort of customer is right for you an d how to attract more of them, email the author at andyburrows@iconbusinesssolutions.com

The Power of Margins

If there is one certainty in a growth business it is that it is going to consume all the cash you can get your hands on.

If all you had to do was fund work in progress, you just might be able to cope, but there are very large costs associated with growth which need to be funded well in advance of sales. Staff need to be recruited and trained, accommodation needs to be in place, inventory needs to be purchased and stored, computer software and hardware systems need to be implemented and so on. Infrastructure and support costs are lumpy and often need to be in place well before they are needed. Without access to a ready source of cash, growth businesses stall and lose their momentum.

The obvious solution is to have a source of finance available to meet the increasing demand for funding. But banks tend to shy away from high growth enterprises, as they typically don't have the bricks and mortar to secure the debt. That leaves equity funding as the only practical external source of funds.

However, new equity dilutes existing shareholdings. If the business is privately held, then the funds will have to come from the private equity sector and the money will come with conditions.

The only practical path out of this trap is to generate higher levels of cash organically. You do this by increasing margins - reducing expenses or increasing prices. While this may seem a bit impractical, in fact, the high growth business is well positioned to do exactly that. While some progress may be made by reducing expenses, the major source of extra cash will need to come from increasing prices.

High growth businesses are in a unique position. They achieve high growth because they have a number of key product/market characteristics. Typically they satisfy a compelling need, have a sustainable competitive advantage and target a well defined niche market.

Generally, they work in emerging markets where demand exceeds supply. This unusual situation actually allows them to push up their prices as, at least at the margin, the market is not sensitive to small increments in price. A lift in prices increases their margins and generates additional free cash.

Apart from fuelling growth, higher margins allow the business to take greater risks, recover from mistakes and fight off competition. It is like having a war chest which you can use at your discretion to use in the best interest of the business. It could, for example, be used to increase the rate of R&D and thus improve your long-term competitive position or it could be used to undertake an acquisition to overcome a market or growth constraint.

We should never take our sales prices as a given. By changing product positioning, target customers, problems addressed and distribution channels, we can often find ways of increasing the price and therefore the margins. Any sustainable increase in margins will greatly improve the resilience, growth prospects and profitability of the business.

Where is the new customer? He's in the new world... are you?

This week I have a guest post from Jeffrey Gitomer. Jeffrey is a leading expert in the area of sales and sales management. If you want some no-nonsense advice and techniques to improve your sales conversion, I highly recommend you buying one of his sales bible books.

"The customer is making a comeback - slow though it may be. And when he (or she) returns, you're going to notice a change. A big change. FAIR WARNING: How you prepare for the new customer will determine your long-term success.

REALITY: While your customers were away, online has officially taken over. It's the new showroom and comparison shopper. You can chat, or phone in a heartbeat. You can see every option and some you never knew existed. It's fast, it's accurate, and anyone can choose anything, any time of the day or night.

Yes, the Internet has been there for a few years, but it has taken a firm hold as a trillion dollar option for consumers and customers every place in the world. Your world.

It's a different world now. We are not going to "recover," per-se. We're going to revive and revise. And you can be in it, or watch it pass you by.

Here are some examples of "different" on the business side. Car dealerships, stock brokerages, insurance companies, banks, homebuilders, commercial real estate agents, residential real estate agents, and mortgage lenders have all revised and restructured their business - and that's the short list.

And the customer is different too. Way different.

Let me give you the details of what the new customer (both business and consumer) looks like: (NOTE: I'm using "he" but I also mean "she.")
* He's going to decide somewhat slower. He's been hesitating for more than a year.
* He's angry about the value of his home, and the value of his investments.
* He will not be doing business the same way it's been done before.
* He will not be banking the same way he banked before.
* He will not be advertising the same way he advertised before.
* He will not be buying a car the same way he did before.
* He will not be buying a home the same way he did before.
* He will not be investing the same way he did before.
* He's online. Checking out your website - and your competitor's website.
* He's socializing. Telling everyone what's happening in his world and the world.
* He's Tweeting, Facebooking, and Linked-In-ing. Social media is still a firestorm.
* He's blogging about his experiences with you, for the world to read.
* He's YouTubing about his experiences with you for the world to watch - by the millions (any questions United Airlines?).
* He's Googling, not yellow-paging.
* He's texting. A lot.
* He's using his mobile device to do damn near everything.
* He's WiFi-ing in his hotel room, on the plane, in Starbucks, and at home.
* IF he's reading a paper, or getting the news, it's online.
* He's as likely to watch The Daily Show, The Colbert Report, or listen to Howard Stern for news as he is to watch a network "news" person read a tele-prompter.
* He's purchasing after midnight. By the billions.
* He's looking for ease of doing business with you.
* He is value oriented, but will look to price as part of the decision.
* He wants a relationship.
* He wants, needs, and expects GREAT service after the sale.
* He does not want to wait for anything or anyone.
* He needs help and expert advice.
* He's looking for ideas and answers.
* He can check your price and your facts in two seconds or less on Google.
* He knows as much about your product as you do.
* He knows MORE about your competitor's product than you do.
* He can pay right now IF you can take a credit card online.
* He expects someone to answer the phone when he calls that can actually HELP.
* He is SICK of off-shore call centers, erroneously called "help desks."
* He is SICK of you telling him how important his call is while he stands on hold.
* He is SICK of your recorded hold message.
* He demands the truth. All the time.
* He no longer trusts the institutions he used to hold sacred.
* He expects you to be as computer literate as he is.
* He needs to be understood and feel your sincere concern.
* While you are qualifying him, he is qualifying you.
* If he needs a referral or recommendation, he'll go to Craig's list or Angie's list or Google or his next door neighbor, or anyone else but you...UNLESS you have video testimonials online.

As you're thinking about (and making excuses about) these statements, you better be thinking about your answers and responses to them. And you better be making the strategic decisions and game plans to make them happen.

The economy is coming back - BUT NOT TO THE WAY IT WAS. Don't take my word for it. Ask any daily newspaper.

After reviewing these statements, ask yourself this BIG question: Will your new customer buy from you, or your competition?

One final warning that is only available online. Go to www.gitomer.com and enter the words NEW CUSTOMER in the GitBit box."

Jeffrey Gitomer is the author of The Little Red Book of Selling and eight other business books on sales, customer loyalty, and personal development. President of Charlotte-based Buy Gitomer, he gives seminars, runs annual sales meetings, and conducts Internet training programs on sales, customer loyalty, and personal development at www.trainone.com. Jeffrey conducts more than 100 personalized, customized seminars and keynotes a year. To find out more, visit www.gitomer.com. Jeffrey can be reached at +001.704.333.1112 or by e-mail at salesman@gitomer.com

The Best Advantage in Business

A lot of people (including me) talk about competitive advantage and how it is vital to the ongoing success of a business. This is very true, but what is the BEST sort of competitive advantage to have and what is plan B if you don’t have one.

Without doubt the best competitive advantage to have is competitive UNIQUENESS. This means the features of your product or service that is unique in the market and your competitors cannot match it. This could mean that your whole product or service is totally unique, or perhaps just certain features of it. For example, you may have a unique chemical compound for preventing rust on marine steel, protected by patent, that no one else has available. This is a totally unique product. Another example could be a photocopy machine that has a unique feature of low toner use. Lots of other companies have photocopiers that do what yours does (in general terms) but don’t have your one unique feature.

Does your product or service have elements of uniqueness? If so focus your marketing on these points. Target customers who will benefit from that particular feature and dominate that segment of the market.

Don’t have a UNIQUE advantage with your product or service? Don’t worry. All is not lost. Plan B is to look at your offering and determine what your COMPETITIVE advantage is, i.e. What do we do/offer to our customers that our competitors also do, but we do it BETTER and we can prove it? This will also provide you with a focus for your marketing and sales efforts and provide a better return on investment. Going back to my rust prevention compound, an example of competitive advantage would be where two companies have the same type of compound available, but one can be applied to wet or dry steel, but one can only be applied to dry steel. The ability to apply to wet OR dry steel is their competitive advantage.

If no competitive advantage exists, you may need to create one by focussing on the reputation of your company, use of customer testimonials, adding extra value through enhanced service to create a positive reputation.

For help in determining YOUR competitive advantage and what to do with it, contact the author at andyburrows@iconbusinesssolutions.com

A Problem Shared....

Last month I started the first group “coaching” program for 2010, called the Icon Business MasterClass, at my office in Albany. Participants are well through the first “Your Business Defined” diagnostic phase and already seeing the benefits of coming on-board.

I knew from my experience that participants would receive tremendous value in the 3-way analysis that is conducted on their businesses, but I was pleasantly surprised of a benefit to the program that I did not rank nearly as high as the participants themselves.

That benefit is the power of working in a group of like minded business owners and the opportunity to share their dreams and frustrations with people who they don’t know (yet), but can relate to very easily. This benefit is ranked ahead of the much lower cost that the group format affords and was the key driver to most people joining. The fact that they can save themselves a heap of money in the process is just a bonus!

If you have been thinking in the back of your mind that getting some outside advice on the business would be useful, but the cost and risks of signing up to an intensive 1-on-1 program are too high, I urge you to look at a group training type program. Obviously I would like it to be mine, but it doesn’t have to be. Look around in your area as to what is available, weigh up the benefits and costs of each and then DO IT. You won’t regret it, as long as you implement what you learn, steadily and consistently through the program and beyond.

For further details on how my Business MasterClass works and the commitment required, send me an email to andyburrows@iconbusinesssolutions.com

When Will Business Owners Take Exit Planning Seriously?

My last posting mentioned that there are a lot of businesses out there that will be coming on the market in the next few years and not many owners who are doing anything constructive to plan for a successful and lucrative outcome. Many owners seem to have their heads in the sand, or simply not the time available to put some thought into what options exist out there to exit their business and what tactics are then required.

By way of comparison I have met two business owners recently going through the exit process, but with very different stories. Both are true stories, but I have changed names to protect their identities.

Owner A (let's call him Jim) owns a small plastic injection moulding business. He has owned it for more than 20 years and is aged in his early 60’s. In recent times it has gone backwards a bit and his original business partner has pulled out, leaving Jim as sole owner. The facilities look tired, but the machines are in good condition. No long term contracts are in place from customers, but they do receive regular orders due to their high quality reputation. Jim still owes a significant amount to the bank for the purchase of one of the injection machines, secured on his private home. The business is in leased premises.

Jim wants to exit the business and due to no long term plan in place is looking at the most likely scenario of selling the machines, shutting the doors and walking away from the business, still owing money to the bank. Not much of a retirement to look forward to.

Contrast this with owner B (Lets call him John). John has owned an optometrist practice, for about 15 years. It started as a sole practice, but it grew to employ another optometrist, originally shared with another practice. About 8 years ago John realized that one day he wanted out of the business and to follow his passion for travel and geology with his wife. A couple of years after that he needed to hire a new optometrist graduate and was lucky enough to hire Sally. When John broached the idea of Sally buying into the business, she was enthusiastic and a plan was put in place. A new company was formed with both Sally and John as shareholders. A shareholders agreement was thrashed out and a share valuation conducted. Over the next 5 years Sally has slowly invested her drawings into buying John’s shareholding and within the next couple of months this process will be completed and John leaves on the first of what he hopes will be many trips overseas with his wife.

Which outcome do you want for your business and your life? Putting some longer term planning in place will help you achieve a successful exit from your business, or at least maximise the chance of a successful exit happening.

Join me in a 2 hour workshop in Albany on March 3 to start this process off and start planning what you will do when your exit plan has been successfully executed. Register by emailing me at andyburrows@iconbusinesssolutions.com Tickets are $49 +gst per business.

Put the Success into Succession Planning

According to a study by the Centre for Small Enterprises at Massey University, during the next 10 years 64% of business owners intend to exit their businesses. For the North Shore, where I live, that means about 16,000 businesses may come up for sale during the next 10 years. That’s 130 a month, every month, summer, winter, good times and bad, for a decade!

If you are thinking about selling your business during that time, do you think you will achieve the sale price you need to fund your ideal future in such a potentially crowded marketplace? Of those business owners who intend to exit their business in the next 10 years, 70% intend the sale to fund their retirement, but 87% have no formal plan on how they will do this.

The message of planning a successful exit from business has not yet been taken to heart by the majority of business owners and this may result in a lot of unfulfilled dreams of a long and happy retirement. The general attitude of: “I’ll get round to it when I have to,” is all too prevalent and the point of early planning to maximise value at exit is lost on many.

To a lot of people, exit planning is viewed in a similar way as painting a house before it is put on the market i.e. something done close to the point of sale. Yet good exit planning should start much earlier. The benefits will be a wider range of exit options and a bigger pay cheque for the owner on handover day.

So what are the recommended steps?

1. Decide to put a formal exit plan in place and include it in the general, long term planning of the business.
2. Determine the strategic and tactical decisions that are required to progress the plan.
3. Look at risk factors that could knock an exit plan off its course, such as: shareholders’ agreements, share types, wills and shareholders’ insurance.
4. Look at all the exit options available and draw up a short list of the most preferred.
5. Establish a personal plan for the owner(s) to make sure as much of this value ends up with the owner(s), with the least tax paid and a long term retirement plan in place.
6. Identify and deal with possible impediments to a profitable exit.

If nothing else, following this process will result in a business that is running better, with higher profits and less reliance on the owner. At best it will result in the type of comfortable retirement that the owner wants and enable him or her to really enjoy the fruits of their labour. Not following it could result in the owner standing in line with lots of other business owners with similar offerings, hoping for a quick trade sale while facing retirement not as well off as hoped. The choice is yours.

To learn more about this process, join me at a workshop on exit and succession planning on the 3rd of March in Albany, North Shore City. Email me at andyburrows@iconbusinesssolutions.com for venue details and time.

A final word:

“The best time to start planning your exit is from start-up. The next best time is NOW!”

Don't Quit!

About September last year I started working with a new client to help him improve his business. He was in a desperate situation. He was working ridiculously long hours because he was taking on any work that came his way, but making no money because of poor credit control and the lack of other management controls. It took quite a while to sign him up as he forever cancelled appointments due to this emergency or that.

Eventually we made a start on the journey to change his business and his life, but no sooner had we been going for a couple of weeks that he "went to ground" again, reneged on his first payment and did not return emails, texts or phone messages. This went on for 3 MONTHS. Me leaving message after message; visting his office in the vain attempt to catch him in, and texting in between times.

Eventually I decided to call him at home one evening. Something that I don't like to do, but the complete lack of response had left me no option. Surprisingly he was glad to hear from me and recounted the stress he had been under for the past couple of months. He actually thanked me for getting hold of him and it looks like we are going to get back on track with the original plan. Here's hoping anyway!

It reminded me of the dogged determination you need to exhibit to be in business. When you get to the point of giving up on something, just try that one more time, make that 1 extra phone call or hang on just that little bit longer. You don' know how close you are to succeeding.

To quote Walt Disney, "The difference in winning and losing is most often... not quitting." I am also reminded of the last verse of a poem I had on my wall from an unknown author.....

Don’t give up though the pace seems slow –
You may succeed with another blow.
Success is failure turned inside out –
The silver tint of the clouds of doubt.
And you never can tell how close you are.
It may be near when it seems so far:
So stick to the fight when you’re hardest hit –
It’s when things seem worst that you must not QUIT.

I think I will print that poem out again and hang it up in my new office.

Are You a Fox or a Hedgehog?

I started this blog with the intention of focusing on ways in which a business can improve its competitive advantage. To keep on this track this post is about one of the fundamental strategies that provides the cornerstone of developing a sustainable competitive advantage over your competitors. That strategy is, FOCUS.

Jim Collins in his classic book, Good to Great, retold the story of “The Hedgehog and the Fox”. The fox knew many things, but the hedgehog knew one big thing. The fox was a cunning creature, able to devise a myriad of complex strategies for sneak attacks on the hedgehog. Fast, sleek, beautiful, fleet of foot and crafty – the fox looked like a sure winner. The hedgehog , on the other hand, was a dowdier creature. He waddled along, going about his simple day, searching for lunch and taking care of his home.

One day the hedgehog wandered in front of the fox. “Aha, I’ve got you now!” thinks the fox as he leapt out towards the hedgehog. The hedgehog, sensing danger, rolled up into a perfect ball, sharp spikes poking out in all directions. The fox retreated back into the forest to plan a new line of attack. Time and time again the fox tried different ways to attack the hedgehog, but every time the hedgehog won by following the same, roll into a spiky ball strategy.

What has this got to do with business? Well, lots actually. Jim Collins used this parable to classify companies as either hedgehogs or foxes. A hedgehog company generally had a crystal clear understanding of what they can be the BEST in the world at, the single KEY economic driver that had the biggest impact on their profitability and PASSION for what they do best.

Fox companies, on the other hand, were quick to jump on new opportunities, even if they were in a significantly different market to where they had most of their business and were more passionate about “doing the deal” than their core business. Senior management were generally driven more by their egos.

Hedgehog companies generally outperformed similar sized fox ones in the same industry by many times over. The important message is that to be successful in the long term and develop a sustainable competitive advantage, you are better to focus on one thing that you CAN be the best at, even it appears to be rather boring in comparison to your flashy competitors’ try everything approach.

To receive help in determining if you have a hedgehog concept that will help to build your sustainable competitive advantage, and what to do about it if you don't, contact the author at andyburrows@iconbusinesssolutions.com

Disaster Planning

For more than a week now we have been shocked at the scenes of utter devastation and chaos that is happening in Haiti since the magnitude 7.0 earthquake struck on the 12th of January. In New Zealand we also live in fear of “the big one” hitting us one day as we exist in a similar area of tectonic instability. It’s not a question of if, but when.

How would your company cope if a major earthquake struck tomorrow and have you done anything about planning for how you would recover as fast as possible? A disaster plan will allow you to make decisions before a disaster strikes your business and forces you to determine how you are going to deal with one should it happen.

A disaster plan will allow you to deal and come to terms with the disaster situation in those first critical hours or days rather than deciding on how you are going to deal with it.

A plan is ideal for recognising physical disasters such as fires, floods and the very real act of terrorism. It will help you to identify possible threats and take the necessary preventative action while preparing the business to deal with it effectively. The first step may be to set up a disaster planning team that includes staff responsible for: HR, buildings, PR, IT, general management. Consider including an outside advisor in the group as often they will see risks that people from within the company may miss.

Next the team should assess the risks to the company. This would include such things as: insurance cover levels, building and equipment maintenance, alarm systems, fire detection and evacuation, back-up off site of records, power, etc. From here a disaster plan can be designed and implemented. Remember to update it every year and modify it to suit the changing situation.

Below is a suggested checklist in which you will need to assess, implement and determine for your disaster plan. Contact the auther with help in pulling this together, so you can better focus on core activities.



The Disaster Plan:

Key Issues Must address:

• Key personnel and their out of hours contact details
• Key personnel responsibilities and authority
• The location of the Disaster teams control centre (this should be off the work site where possible)

Items to Cover
(consider all functions and areas of your business including employees, customers, etc)

• Functions and procedure prioritised
• Floor plans
• Evacuation area
• Evacuation procedures
• Precautionary measures
• Procedures for jobs to be done while the recovery is taking place
• A list of all suppliers and businesses for emergency equipment and supplies
• Other emergency numbers or contacts

Employee Information

• Ensure all employees have provided their details and/or phone numbers for after hours contact
• Have a counselling service or agency decided so that they can provide counselling and help to employees to deal with the disaster
• Communicate with employees about what is going to happen, etc to keep them in the loop of what is happening and what they should do, etc.
• Advise employees of who to contact should they have any problems
• Consider an alternative to pay employees should the usual method be destroyed or unavailable

Alternative Premises

• Determine an alternative place to carry on business should yours be destroyed
• Consider making arrangements with other businesses to share space until things are back to normal

Operations

• Determine possibly delays should something happen
• Aim to be operational as soon as possible after the disaster (next day)
• Inform customers and suppliers immediately to let them know what has happened otherwise they may disappear
• Brief and prepare your PR representative to deal with media

Communications

• Advise your telephone company and request them to forward your calls to your designated place
• Prepare your personnel so that they know what to tell your customers, suppliers, etc.
• Decide on where your mail should be sent

Equipment and Resources

• Ensure that you know and are able to identify where critical documents are so they can be retrieved
• Store backups off site of materials, documents, etc
• Define which resources would be needed during the recovery period and make them available
• Make sure money is available at all times
• Consider hiring instead of buying new equipment – it maybe the best option
• Keep the Disaster Plan in a number of locations so that it can be accessed should it need to be

How To Build a Competitive Advantage

With a blog title of “Your Competitive Edge”, I remind myself to try and post topics that will help business owners to gain just that; a competitive edge. Of course making small, incremental improvements in many areas of a business will always help to improve the competitive situation of a business. But what should be the main, over-arching strategy that an owner should follow in order to direct all other activities in the business and ensure efforts are going in the same direction? Where does our competitive advantage lie?

Competitive advantage can be simply stated as: Something your customer considers extremely important, at which you excel. If this advantage is something that your competitors find very hard or impossible to copy, then you have a sustainable competitive advantage. That’s even better.

Competitive advantage can be gained through price, differentiated products or services, or niche strategy. There is a saying that a business can offer Price or Quality or Service. You cannot successfully offer all three at the same time and expect to remain profitable. At best you can offer two. Deciding on which one or two you have a natural strength in will help you develop a competitive advantage strategy and focus your efforts where your chance of ongoing success is greatest.

I suggest you take the following test. Be as objective as possible and score yourself in each category:

5=We are the best in the industry
4=We are better than average
3=We're OK
2=We stink at this
1=Say what?

Controlling our supply chain. [ ]
Setting up channel partnerships. [ ]


We have great products/services. [ ]
Basic research and development. [ ]


Creating marketing materials. [ ]
Building customer relationships. [ ]


Keeping existing customers happy. [ ]
Getting customers to refer prospects. [ ]



Total each pair. The highest numbered pair indicates your core competency.
Match that with the strategy you should embrace, below.

• First pair is highest: embrace a “lower your price” strategy.
• Second pair is highest: embrace a “uniquely better product” strategy.
• Third pair is highest: embrace a “hassle-free experience” strategy.
• Fourth pair is highest: embrace an “ownership of results” strategy.

Warning: if no pair adds up to more than 6, your company may not be a viable competitor.

For help in relating this to your particular situation and tailor making a competitive advantage strategy for you, please contact me at andyburrows@iconbusinesssolutions.com or post a reply below.

Do Something Different in 2010

So it is early January, 2010. The beginning of a new decade. A chance for a fresh start and to really achieve better results than last year. So what are you going to do different this year that will actually make a change in your situation more likely?

Having goals of how much extra profits you will make or how much extra time you will spend with the family are great and essential to drive you forward. But that is only half the story. The other essential element in the planning process is converting ones goals into practical action plans and tactics that affect your day-to-day activities. It’s what you ACTUALLY DO that really counts, not what you PLAN to do.

So take a stock of your activities last year in various parts of your business. What marketing activities did you undertake? What generated leads and what did not? How many leads did you convert into sales and what techniques did you use in the sale process? Did your customers pay on time? How many complaints did you receive?

Take stock of what worked in your business and what did not. Then decide to make a fundamental change or two in some areas and reinvent part or all of your business to drive change. Some areas you may wish to consider:-

Delegation.
Look at your lower level tasks that sucked up too much of your time last year. Decide to pass these tasks to someone else (either internal staff or an outside contractor), put in some measures and controls and focus more of your time where it will pay you more.

Plan more.
Make planning a weekly event, either with yourself or key staff. It is easier to make lots of small adjustments as you go through the year than put up with inefficiencies and try to make big changes once or twice a year.

Learn more.
Read more business books. Attend a seminar or two. Pick a topic you don’t know much about and aim to become proficient at it. Consider skills outside business as well. Take up archery or cycling or something.

Get rid of that frustration.
Maybe you have an old printer that jams all the time or a phone system that does not work properly. Consider throwing it our and getting a new one. The new equipment will be far more efficient, will reduce everyone’s stress and may even improve customer relations.

Network.
Join a business network group. This can be a low cost way of making business contacts and promoting your business, especially if you pick a group that is heavy on prospective customers and lighter on competitors. At worst you will get to talk to other business owners, share your frustrations and ideas and learn from others in a similar position as you.

Whatever you do in 2010 aim to do something DIFFERENT to what you have been doing for the past year, or years. If you keep doing to same stuff you will only get what you have always got, or possibly even less as the competition passes you by. Drop what hasn’t really worked and move on. Something better will turn up if you work at implementing new strategies and tactics consistently through the year.

I welcome you comments and feedback. Click on "comments" below to post your thoughts