A good friend messaged me on New Year’s Day wishing me:
“A very happy New Year David. I hope it brings you everything for which you hope”.
His message got me thinking. What are the things for which I hope? What are the things for which you hope? Are you hoping for the right things? And how do you get the things for which you hope? Is it by luck or chance? Or do you make your own luck? As small businesses go into 2021, the pandemic shows no signs of abating for the time being (until we get the vaccines rolled out). So what can you do to get your business in as good a position as you can in these tough days?
Crises also bring opportunities when we are forced to make changes. We can look back later and find those changes were the best things we ever did. We may also realise that we would never have made them, had we not been being forced into them by circumstances such as this awful pandemic.
A simple business plan such as ‘Strategy on a page’ (https://smestrategies.co.uk/resources/) is a great starting point in thinking through our business. It is an invaluable tool to help us take stock. The beauty of it is that it is neither complex nor time consuming to put together. But having got the basics of a good business plan, what can we do to increase the chances of success?
Here are ten practical things that we here at SME Strategies believe can help small business owners bring about that for which they hope in 2021.
1) What are the benefits of your product/service?
Having a great product/service of itself with great features is not enough. You need to sell it to your customers. Customers buy benefits. So what are the benefits that come from the features of your product/service? All too often features are mistakenly thought of as benefits.
Think of dog kennels who house dogs whilst the owners go away. It will have features giving rise to benefits such as:
- Feature – 24hr CCTV and personnel living on site. The benefit – the safety of the pet.
- Feature – twice daily walks of the dog. The benefit – the contentment of the dogs.
- Feature – a qualified veterinary nurse is on the staff team. The benefit – the health of the dog if s/he becomes ill.
It is no coincidence that kennels that are marketed as pet hotels are doing so well!
My local dog kennels exercise the dogs in well matched pairs (with permission of the dogs’ owners) so the dog makes a friend on holiday! I have never known any other kennels do this. The benefit to the owners knowing their beloved pets are having fun with friends on their own doggie holiday is priceless. No wonder dogs arrive bursting to get into such great kennels run by a couple who clearly love dogs to bits.
This might all seem very obvious – the benefits are self-explanatory given the features of the kennels. But with, say, technical products, it is far more important to be clear. Your television recorder product may have top of the range features of refresh rate, resolution and storage capacity. But these features are meaningless to the uninitiated unless the feature is translated into benefits such as ‘four times the sharpness of a standard television’ or ‘100 hours of recording capacity’.
So what are the benefits of your products/services? What differentiates you from your competitors? If your product is seen as a commodity, it will be a race to the bottom on price. Many people may well deliver your product as a commodity at a cheaper price. So don’t go there – instead highlight the value/the benefit that only you can bring. If you can’t think of any such benefit then you probably shouldn’t be in business with that product/service!
You may differentiate in a number of ways such as being in a niche market, speed of service or allowing the product/service to be customised or being socially responsible. It can be the physical packaging that differentiates you. I was given a bottle of wine at Christmas in a beautiful hand-made cloth sleeve – it was a very thoughtful addition to the gift. Differentiation could be a money back guarantee or after sales service or help with product installation/support etc. It is such added value that can significantly differentiate you. For many small business owners, don’t forget the importance of your own character, your cheerfulness and helpfulness – the personal touch goes a long way.
What is the process of doing business with you like? I am currently altering a bank mandate with a high street bank and it has become a tortuous, stressed out fiasco. Think of the current retired medical volunteers who are offering to help with Covid jabs but have been asked for 21 pieces of information (now reduced to 15!) including evidence of anti-radicalisation training before they jab someone’s arm! Is doing business with you, a joy from beginning to end? Is it a pleasant experience working with you? Are you able to be flexible? Is that part of your product?
2) Know your target customers
Now you know the benefit of your product/service, who will want to buy it? Be as clear as you can about your target customers. It’s easy to generalise and think we can sell to everyone but that, truth be told, is lazy thinking. We can’t and we won’t sell to everyone in our overall marketplace. Successful businesses target carefully.
Where are you positioned in the marketplace? Are you a John Lewis or a Tesco? A Ryanair or a British Airways? A successful business can be positioned in one of a number of marketplaces but it will not be “all things to all men” (people). Related to this, what are the expectations of your customers? Knowing this is vital.
Who are the people who will want to buy from you? Once you know that, next, you need to know everything you can about those people: their age, sex, where they live, shopping habits, lifestyles, the films they watch, income levels, their hopes and fears. Understand their psychology – what motivates their buying decisions?
3) Network, network, network
As small business owners, relationships will be key to you. You may well be able to sell and expand your business through the use of the internet, your website, facebook etc but a network of relationships with customers and suppliers will be vital for you. This is especially true of small businesses before they start to scale up. It is your network that is likely to give you new business and repeat business, to give word of mouth recommendations and referrals for you.
You should be expanding your network all the time with quality contacts of customers, suppliers, strategic alliances, supporters of your business and even your competitors. Look at your network in terms of those people who might buy from you directly, and also those who know people who might buy from you or who might recommend you or give you a referral. These are your stakeholders. Knowing what they want from you and also what you want from them is really important. To avoid paying lip service to this dificult question – write down the answer to this! Remember that nearly all of these stakeholder relationships will be two-way. It may at first seem strange to say this but allow your stakeholders to influence your strategy – stakeholders often guide us to good places. By definition, they have a different and incredibly valuable perspective on our business, so engage with them!
4) Learn new skills
It is said that “you can’t teach an old dog new tricks”. For small business owners, it’s vitally important that you are learning new tricks and new ideas all the time. Taking new things on board, taking ideas you come across and shaping them and making them authentically your own – all this will help to grow your business. None of us can afford to live in the past – some big names in retail have discovered this to their cost in recent years. It’s no different for the small business owner, your customers will always be expecting more, expecting better. They may well have half an eye on how they might get your product or service from someone else either better or cheaper or maybe both better and cheaper! As you successfully differentiate though you will protect your business.
So what are the new skills you might get? It is likely that many of you as small business owners will have a strong skillset related to the trade/business in which you are engaged. Running a small business though requires a host of skillsets across business disciplines. These may include marketing, finance, HR, contracts, legal matters as well as softer skills such as sales and negotiation. As you develop new skills so you will be positioning yourself more effectively in your marketplace. As you acquire new skills so you will grow into a more rounded and effective businessperson.
5) Face your fears
All of us have got fears of one sort or another – many of which come from our backgrounds and childhoods. Some of our most successful and entrepreneurial business leaders had an incredibly difficult background. Out of the demands and challenges of their early years, inspiring leaders have been developed and emerged.
As small business owners, we need to be self-aware and recognise where our comfort zone lies. If we are to develop into fully rounded and inspiring businesspeople we do need to face our fears and be prepared to move outside our comfort zone. As we do so, we will discover to our joy that the light at the end of the tunnel is not necessarily an oncoming train!
6) Ask for feedback
It really helps our self-awareness to ask trusted friends and colleagues for their feedback on us and our products/services. Such feedback may highlight some weaknesses on which we can work. There might be areas where we already recognise we are not that strong. However we might not realise that in some areas we are a disaster zone and a nightmare with which to deal!
You might be surprised also to discover that some of your strengths and qualities that you take for granted and ignore are actually your strongest asset. Because they are so natural to you, you may be oblivious to them and discount them. Those qualities may well though be part of your differentiation.
Feedback is so incredibly invaluable and working with a mentor (https://www.associationofbusinessmentors.org/) has been proved time and again to be invaluable. Remember, continuous improvement is vital.
7) Work with people better than yourself
It takes some personal courage to look for and work with people who are better than us. That is natural since in all likelihood better people will be able to see our weaknesses and that may make us feel uncomfortable. But our businesses will only thrive and improve when we have got great people around us to help us. They will be able to offer us so much if we let them. Having fantastic people on our team means we can trust them implicitly to get on with their particular work. Great people may well only want to work with us though if they believe we have an open mind and are not defensive. Great people are committed to innovation and creativity.
8) Be enthusiastic
Enthusiasm makes up for many weaknesses. When your enthusiasm is genuine and authentic, it is obvious for all to see. People love working with enthusiasts who are committed to doing a really good job, to go the extra mile and to ensure customer satisfaction. So believe in yourself.
When you realise your enthusiasm is fading and you are falling out of love with your business, that is a good time to pause and reflect on what is happening. It may be because of things outside your control. You may be running a bigger business that needs different skillsets to your own. You could find yourself worn out with ever more cumbersome compliance issues, red tape and so on. When that happens something needs to change or you may be on a slippery downward slope.
9) Work on your numbers – they really matter and yes, cash is king
Keeping on top of your numbers and strong cash discipline is vital to all businesses. Many a good business has gone under because of slow cash receipts. No amount of money promised tomorrow is of any use if you need to pay your bills today.
Two great tips on financial forecasts are (a) to keep them simple and (b) avoid optimistic assumptions. Many a forecast can look great on paper with mouth-watering cash coming in. These can be based on assumptions which are far too optimistic creating cash flow which is pie in the sky! Base your business on actual cash flows that have occurred or can be proven. New ideas, stronger marketing should all lead to better cash flow but it probably won’t happen overnight. Your business needs to be throwing off enough cash now for your needs or to have cash available to cover today’s shortfall.
Remember, cash projections need to be treated with extreme caution. Many a business has burnt through its cash pile long, long before it became profitable. So this leads us to looking at our overheads. How can you minimise your overheads whilst still having your business run on a sound professional footing?
10) Be kind and give something back
Kindness needn’t cost anything but it means so much. In all you do, be kind to others, be polite and courteous in your business dealings. Be honest and have integrity – not in a holier than thou way but in a simple way such that your word is your bond. Deliver on what you say you will do. Kindness keeps us humble.
Most of us have benefitted at some time from what someone has done for us. We will have been helped out, given an opportunity, put in touch with a contact or believed in when our self-belief was failing us.
Likewise, we should also be on the lookout to help others where we can. We know we can’t solve the problems of the world but we can help those whose path we cross. It may be a word of encouragement, a useful tip, a referral, a contact from our network or it may be we can even give them a job. When we do a good turn for somebody, when we go out of our way to help someone that of itself gives us enormous reward although we don’t do it for that reason. In these times of Covid we need to help one another as much as we can.
So we go into 2021…
We at SME strategies wish our clients and the businesses with whom we work a very happy New Year. May we each have the wisdom to hope for the right things and then the business acumen to work hard with enthusiasm to make our own luck.
Then when we come to the end of 2021 we will be able to look back and see that even if we didn’t get everything for which we had hoped, we got everything that we needed and more.
Happy New Year!
If you would like to talk to David about a business issue (it could be about the benefits of your product/services, finance, business planning or another area) give him a call or drop him an email.