Resource Tools

Table of contents
Accounting and Tax
Xero
R&D Tax Credits
Management Consulting
Websites & social media
Branding
De Bono’s Six Thinking Hats
Reverse Brainstorming
Michael Porter’s Value Chain System
Everything on one page!
The 4 Ps of marketing
Competitive advantage and market positioning
A few books to whet the appetite

In the SME Strategies Network we use a variety of tools and insights to serve our clients. The need may be obvious such as for a more suitable cloud based accounts package, cash flow control, to take advantage of the Government’s R&D tax credit system or create a social media strategy.

The solution may not be so obvious such as with a need to generate new business for an otherwise excellent product or a client wants to look at their business in a different way. We bring not only our experience but also our current learning as together we work creatively on challenges and opportunities to deliver tangible results.

The resources we use are as diverse as the issues our clients face and which is why we ensure we also have access to the very best specialists when needed.

Accounting and Tax Tools

Xero

Xero allows a business to be run and accounts accessed from a Mac, PC, tablet or phone. Your accounting professional can view your accounts and provide valuable real-time advice. Your data is completely secure even if your computer is lost or stolen.
https://www.xero.com/uk/#section-id-overview

R&D tax credits

We partner with JumpStart to help our clients make the most of the great incentives provided by HMRC to encourage innovation. R&D tax credits are available for a much wider range of expenditure than most of us think.
JumpStart – http://www.jumpstartuk.co.uk/

“We’re not scientists.” The biggest remaining misconception about R&D tax relief is that it is only available to companies with laboratories full of scientists in white coats. Nothing is further from the truth. As long as the R&D project is intended to push forward knowledge or capability in an area of science or technology it is worth exploring its eligibility.

HMRC’s statistics for 2014/15 reveal that the most common areas for claims are manufacturing (30%), information and communication (25%) and professional, scientific and technological services (20%), none of which should come as any surprise. Sectors where more than 100 claims were made in the year include administration and support services, construction, transport and storage, arts, entertainment and recreation, education, health and social work, and finance and insurance. That covers a wide range of activities, in many of which there’s not a single white coat in sight.

Management Consulting Tools

Websites & social media

Virtually every business needs a website either through which to do business e.g. ecommerce or to explain its services and give credibility to potential customers. The wonder of the internet enables anyone to set up a website almost for free in an afternoon, but getting the site to give the right message to the right audience to prove value to a customer is not quite so straightforward. Whilst a company may occasionally benefit from starting from scratch with a new website, many of our clients just need their websites modified. This might get them on a more appropriate website theme, give increased functionality, be better focused on their target audience, having SEO (search engine optimisation), be linked into their social media and include Google Analytics which are used to develop the business.

Whilst there are a plethora of great companies who design and build websites, we found relatively few who both can and want to work with existing websites and fewer still who understand the marketing intent that the website is supporting. We have taken a stake in a great firm ProWP run by Jay Downing which does just that and is now part of the SME Strategies Network.

If a new website is needed we work with our clients in developing a clear brief from which to short-list suitable firms to take on the design and building of a website. One of the keys to a successful website is taking as much care addressing the target audience as in explaining the products or services offered.

Social media (such as Facebook, Twitter, LinkedIn etc) gives fantastic opportunity to get your message out to both existing and prospective new customers. It needs though to be used wisely and consistently. Hootsuite is a great social media management tool. Social media can come into its own when different elements are used in a coordinated way and thus following a carefully prepared social media action plan will pay handsome dividends. One of the secrets is to be targeted and not try to use all social media platforms as if they are confetti! Doing a few things well as part of a clear plan is a much better investment than doing a lot of things poorly.

Branding

Branding is an important aspect of any business, large or small, retail or B2B. An effective brand strategy gives you a major edge in increasingly competitive markets. What though exactly does ‘branding’ mean? How does it affect a small business like yours? Simply put, your brand is your promise to your customer. It tells them what they can expect from your products and services, and it differentiates your offering from your competitors’. Your brand is derived from who you are, who you want to be and who people perceive you to be. Skoda is an example of how a brand has gone from laughing stock to top dog.

Are you the innovative maverick in your industry? Or the experienced, reliable one? Is your product the high-cost, high-quality option, or the low-cost, high-value option? You can’t be both in the same brand, and you can’t be all things to all people. Are you British Airways or Ryan Air? The former is the respected national carrier whilst the latter takes an innovative, aggressive and combative approach. You can however own two very different brands as long as you keep them separate. Thomas Cook successfully owns Club 18 -30 but keeps the brand well separated from their escorted tours around cities for the retired market! Who you are should be based on who your target customers want and need you to be.

Branding has seven foundation blocks:

  1. Strategy – Identify your core values? What do you believe in? How do you want your customers to perceive you? What is your core messaging and visual identity? What do we want your company to represent?
  2. People – Appoint people who share your values and can do the job you need them to do. A single wrong staff appointment can undermine your brand in an instant.
  3. A strong logo – Designing a logo is no easy task as there are many elements to consider. Make it simple, unique, adaptable, timeless but most of all, memorable. It needs to be striking. Logos need to translate across different mediums but still evoke the same meaning.
  4. Common formatting – Ensure that your website, brochures, stationery, any advertising boards, packaging and promotional materials etc all of which should integrate your logo, communicate your brand. Use a consistent font and layout to documents. Choose your colours carefully.
  5. Tone of voice – Should you be formal or relaxed in your writing and other communication. Make sure your tone is consistent with the message (strategy) you wish to communicate and is consistently given throughout the organisation from CEO to switchboard to delivery driver.
  6. Delivery – Make sure the overall customer experience delivers the product or service (including after sales) that supports the quality of your brand.
  7. Consistency of message – Having developed your brand, stick to it rigorously to ensure you do not give mixed messages.

Many businesses can improve their branding by following these steps. Where a firm though needs a strong brand we work with branding specialists to develop a brand strategy.

De Bono’s Six Thinking Hats

The Six Thinking Hats developed by Edward de Bono teaches how to run better meetings and make better decisions. Meetings are a crucial part of all our lives, but too often they go nowhere and waste valuable time.

Through the Six Thinking Hats de Bono allows meetings to be transformed to produce quick, decisive results every time. The Six Hats method is a devastatingly simple technique based on the brain’s different modes of thinking. The intelligence, experience and information of everyone is harnessed to reach the right conclusions quickly.

These principles fundamentally change the way you work and interact. They have been adopted by businesses and governments around the world to end conflict and confusion in favour of harmony and productivity.

‘An inspiring man with brilliant ideas. De Bono never ceases to amaze with his clarity of thought‘ – Richard Branson

Reverse Brainstorming

Reverse brainstorming helps you solve problems by combining brainstorming and reversal techniques. By combining these, you can extend your use of brainstorming to draw out even more creative ideas. To use this technique, you start with one of two “reverse” questions:

Instead of asking, “How do I solve or prevent this problem?” ask, “How could I possibly cause the problem?” And instead of asking “How do I achieve these results?” ask, “How could I possibly achieve the opposite effect?”

At first it sounds strange but it works by using the brain’s natural tendency towards negativity which we developed as part of our natural survival when we lived in caves.

Michael Porter’s Value Chain System

The value chain is a useful way of looking at the whole organisation while the value system helps you look at how you fit into a bigger picture.

A well-maintained chain helps your business to run more smoothly. So how does your organisation create value? How do you change business inputs into business outputs in such a way that they have a greater value than the original cost of creating those outputs? This isn’t just a dry question: it’s a matter of fundamental importance to companies, because it addresses the economic logic of why the organisation exists in the first place.

Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers bring together a range of products and present them in a way that’s convenient to customers, sometimes supported by services such as fitting rooms or personal shopper advice. And insurance companies offer policies to customers that are underwritten by larger re-insurance policies. Here, they’re packaging these larger policies in a customer-friendly way, and distributing them to a mass audience.

The value that’s created and captured by a company is the profit margin:
Value Created and Captured – Cost of Creating that Value = Margin

The more value an organisation creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage.

Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. Michael Porter discussed this in his influential 1985 book “Competitive Advantage,” in which he first introduced the concept of the value chain.

A value chain is a set of activities that an organisation carries out to create value for its customers. Porter proposed a general-purpose value chain that companies can use to examine all of their activities, and see how they’re connected. The way in which value chain activities are performed determines costs and affects profits, so this tool can help you understand the sources of value for your organisation.

Everything on one page!

Increasingly business plans are no longer long documents but succinct and brief. Whether it is called a one-page business plan, an executive summary or a pitch, it should contain the following:

  1. A description of the problem your customers have
  2. Your solution (your product or service)
  3. Business model (how you make money)
  4. Target market (who is your customer and how many of them are there)
  5. Competitive advantage
  6. Management team
  7. Financial summary
  8. Funding required

A great refinement of this is to use Porter’s value chain and portray the whole business diagrammatically on one page and show how the different aspects of customer segments and value propositions relate. It identifies the resources and activities a company needs along with key partners, customer relationships, communication channels, the competition and the financials – all on one sheet of A4!

A classic version of this is the Business Model Canvas by Strategyzer AG. Download here: Business Model Canvas

The 4 Ps of marketing

The 4Ps is one way, probably the best-known way, of defining the marketing mix which is the creative process through which a product or service moves from an idea to the customer. It was first expressed in 1960 by E J McCarthy.

  • Identification, selection and development of a product,
  • Determination of its price,
  • Selection of a distribution channel to reach the customer’s place, and
  • Development and implementation of a promotional strategy.

Product/Service

  • What does the customer want from the product or service? What needs does it satisfy?
  • What features does it have to meet these needs?
    • Are there any features you’ve missed out?
    • Are you including costly features that the customer won’t actually use?
  • How and where will the customer use it?
  • What does it look like? How will customers experience it?
  • What sizes, colours etc should it be?
  • What is it to be called?
  • How is it branded?
  • How is it differentiated versus the competition?
  • What is the most it can cost to provide and still be sold at a profit?

Price

  • What is the value of the product or service to the buyer?
  • Are there established price points for the products/services in this area?
  • Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase not be noticed and so lead to extra profit?
  • What discounts should be offered to trade customers, or to other specific segments of the market?
  • How will your price compare with the competition?

Place

  • Where do buyers look for your product or service?
  • If they look in a store, what kind? A specialist boutique or in a supermarket or both? Or online? Or direct via a catalogue?
  • How can you access the right distribution channels?
  • Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
  • What do competitors do? Can you learn from them or differentiate yourself from them?

Promotion

  • Where and when can you get across your marketing messages to your target market?
  • Will you reach your audience by advertising online, in the press, or by television or radio, or on billboards? By using a direct marketing mailshot? Through PR?
  • When is the best time to promote? Is there seasonality in the market? Are there any wider considerations that suggest or dictate the timing of a market launch, or the timing of subsequent promotions?
  • How does the competition do their promotions? How does that influence your choice of promotional activity?

Competitive advantage and market positioning

Identifying the competitive advantage (the unique selling proposition – USP) which is what makes you better than the competition in your customers’ minds is key. You need to be clear on the benefit you provide to your target market that is better than the competition. That’s your competitive advantage. Marketing effort needs to be directed to targeting ruthlessly the right market for your business.

Michael Porter’s Five Forces for competitor analysis is a powerful model used to explore the world in which a business operates to generate competitive advantage. The Five Forces are in the image shown.

A well-positioned company will beat the competition that has a comparable offering. The company that clearly articulates what it does, why it’s relevant and how it’s different helps customers make better and faster decisions to buy from them. In positioning, a business creates an image for the product based on its intended audience. This is created through the use of promotion, price, place and product. The more intense a positioning strategy, typically the more effective the marketing strategy is for a company. A good positioning strategy makes the marketing efforts more effective and helps a buyer move from knowledge of a product or service to its purchase.

We work with our clients and specialist marketing firms to identify where our clients currently are in the marketplace, where they should be and develop the path to get them there.

A few books to whet the appetite:

What’s Stopping You – Robert Kelsey, Capstone, 2012
Strengthsfinder 2.0 – Tom Rath, Gallup Press, 2007
Thinking Fast, Thinking Slow – Daniel Kahnemann, Penguin, 2011
The Strategy Book – Max McKeown, FT Publishing, 2012
The Innovation Book – Max McKeown, FT Publishing, 2014
WealthBeing – Malcolm Durham, Red Door, 2015
NLP for Business Success – Jeremy Lazarus, Crimson, 2013
The Harvard Business Review is an excellent resource to use.