Posts Tagged ‘SME’
Thursday, January 26th, 2012
“The stove doesn’t work,” said my wife. “Uh-oh” I’m thinking, “kitchen stuff.” This wasn’t starting well and it wasn’t going to end well.
The largest, main burner on our cook-top stopped working. “We’re supposed to host Christmas dinner and I need all my burners,” exclaimed my wife. She called the warranty company – because the repair man told us to always buy an extended warranty on today’s electronically sensitive appliances – and this commenced a lengthy exchange. She provided the serial number and the warranty company needed to send out the local service representative to take a look. Two weeks later, the service rep showed up, made a diagnosis, and left. Then, nothing.
My wife called the warranty company back. They never received any information from the service rep. My wife called the service rep. He said that he faxed the information and will resend it. We waited, and waited. My wife called the warranty people, to whom she wished a “Merry Christmas” because the season was upon us and we, well, my wife, weren’t cooking anything on the main burner. The warranty company still hadn’t received any information.
We called the service company, again. Eventually, my wife helped everyone figure out that the service company had the wrong fax number and sent our information to fax purgatory. Finally, my wife connected the service company’s information with the warranty company.
This is why consulting is so easy, sometimes. Large companies lack management skills and processes and don’t test their own products and services. Small and medium business managers can run circles around any big company manager who has a single department specialty and is busy protecting his turf, but I digress.
Our local company sent the information for the third time. We appreciated their persistence. My wife was now on a first name basis with the warranty people and had elevated her concern to the supervisor. The repair was finally authorized, then scheduled and, finally, performed.
Total time: November 24 to January 17. Only 54 days to fix a burner.
Tags: business owner, business owners, Business Success For Life, Customer Service, DUDS, entrepreneurs, Phil Symchych, profit, profitable growth, small business, small business consulting, SME, Symchych, Symco, Symco & Co., why are big companies so slow
Posted in DUDS - Dumb Unilateral Decisions | No Comments »
Monday, October 10th, 2011
I recently spoke to a business owner who wanted to maximize short-term profits and increase long-term capacity in the business. It’s very difficult, if not impossible, to do both at the same time because they are in conflict. However, I hear the question often, and here’s why: The person isn’t thinking clearly, they are thinking like the owner/manager.
The worst job in the world, in fact, is ‘Owner/Manager’ because the two roles are always in conflict with each other.
Are you the owner, trying to achieve a return on investment from what should be a passive investment?
Or, are you the manager, trying to maximize revenues, profits and growth while consuming resources and spending money on training, advertising and other things that may not have an immediate payback-things that reduce short-term returns desired by owners?
Are you in conflict with yourself?
Just imagine what your role looks like to your employees? Are we maximizing profits today by cutting expenses because the owner is worried about a dividend or are we building for the long-term by increasing expenses and investments?
To help you sort out your roles, here are questions to think about.
Questions for owners:
- What is my return on investment?
- What is my return on equity?
- How can I build equity in the company?
- How can I protect my equity?
- How can I position my investment for eventual sale?
Questions for managers:
- How do we make our customers happier, improve our competitive position and grow revenues?
- How do we beat our budget and forecast (you have one, right?)?
- How do we allocate resources to increase our capacity and speed?
- How do I attract and retain key talent, regardless of what the economy is doing?
- How do I develop my people to replace me so that I can move up in the organization?
If you’re thinking about your wealth, you’re thinking like an owner. If you’re thinking about growing the company, you’re probably thinking like a manager.
Which hat are you wearing? Which hat should you be wearing?
If you’re not sure, here’s my recommendation: “You’re fired!”
Fire yourself as manager, build a management team, and give the team your performance targets that will meet your ownership returns of investment and equity. Then, get out of the managers’ way.
Copyright Phil Symchych 2011. All rights reserved.
Tags: business owner, business owners, Business Success For Life, entrepreneurs, owner/manager in conflicting roles, Phil Symchych, profit, profitable growth, small business, small business consulting, small business leadership, small business management, small business owners, SME, Symchych, Symco, Symco & Co., the roles of owner/manager
Posted in Business Growth | No Comments »
Thursday, August 18th, 2011
A business colleague from the U.S. recently asked me how to raise funding so that his client would have more cash to invest in business growth. You can generate funding internally from your profits and externally from your banker. Here was my response:
1. There are two kinds of bankers: lenders and collectors. Make sure you’re dealing with a lender. I have a couple of blog articles on bankers if you want more info.
2. Verify that they’re not using their working capital to purchase long-term assets. These assets should be financed with matching long-term debt or leases.
3. Strengthen equity retained in the business (retained earnings) to increase borrowing power-by reducing dividends paid out, or reducing unnecessary expenses.
4. Maximize internally generated financing by accelerating inflows from deposits and customer payments, and reducing outflows by stretching suppliers and reducing unnecessary expenses (using subcontractors instead of employees, renting equipment vs. owning).
5. Making sure they track cash flow regularly (daily, weekly, budgets) so they know how much fuel they have in the tank and how fast they’re burning it up or putting it back in.
There are more financing, cash flow and profit improvement tips in my weekly Profit Points newsletter that may be of help and applicable to your opportunity.
Copyright 2011 Phil Symchych. All rights reserved.
Tags: bankers, banks, business, business financing, Business Growth, business owner, business owners, Business Success For Life, cash, Cash flow, entrepreneurs, improving cash flow, leadership, marketing, Phil Symchych, profit, profitable growth, small business, small business banking, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co.
Posted in bankers | No Comments »
Tuesday, August 16th, 2011
Big companies spend kazillions running focus groups, test-marketing their products and figuring out what their customers are thinking. For private business with fewer resources and an advantageous relationship with their customers, I recommend interviewing your customers to gather critical marketing information about their needs, preferences, buying process and product utilization.
To demonstrate the customer interview process, I’ve recruited my daughters Anastasia (age 13) and Julia (“almost 12”). Their reward was an ice cream drumstick treat (I paid them in advance). So far, so good.
The questions: What are your favorite stores and what do you like about them?
Julia
“My favorite stores are Garage Clothing (for young women) and iTunes.”
What do you like about Garage?
- “They have excellent service, they always help you different sizes and styles and put together outfits for you that you may like, and they’re really nice.”
- “Their clothes are super-cute.”
- “They have a large variety of clothes, accessories and basic make-up.”
- “Their prices are fairly reasonable.”
What do you like about iTunes?
- “I can buy songs and apps for my iPod and can download games on my Dad’s iPad.”
- “They have new songs, they have a large selection of everything such as apps, songs and games, and some are free.”
- “It’s pretty easy to use and I like how you can search things and find the newest and coolest apps and songs.”
Anastasia
“I like Chapters (book store) and One Tooth (they sell yoga and athletic wear).”
What do you like about Chapters?
- “They have so much on different series of books that you’re looking for.”
- “They have different genres.”
- “The staff is very helpful to find different books and making suggestions that I might like based on other books I’ve bought. They know what they’re talking about.”
What do you like about One Tooth?
- “Their clothes are really cute and comfortable, especially for dancers (like my sister and me).”
- “We only go once a year during dance competitions in Moose Jaw so it’s a special trip and a treat. We get to buy a whole outfit every year.”
- “The staff is very helpful and friendly and find different sizes and bring them to your change room.”
- “The clothes are so comfortable.”
Lessons from these young customers:
- Have a clear strategy and focus. Sell and service a specific range of products (quality, price points, style) for a certain demographic. All the stores mentioned above have ‘product supply’ as their strategy driver, although iTunes is also a distributor using technology. What is your strategy driver? It isn’t price!
- Make sure that your staff are properly trained how to serve customers, proactively make suggestions, find inventory, and make it easy and fun for the customers to try clothes on, for example, or peruse alternate choices in books. Which staff are your best salespeople? Can they demonstrate successful behaviours and train the others?
- Provide free samples to keep your customers coming back to see what’s new and to eventually upgrade to the paid versions. Book stores could email sample chapters from authors. Clothing stores could send gift certificates or coupons to increase store traffic during slower periods. What could you give away for free that would increase sales?
- All the stores have a unique culture and strong level of quality. Even though you can buy everything at Wal-Mart and probably for less (although you may not get the brand equity and prestige), we, as parents, will spend extra because of the higher quality, improved customer service and savings in time. In other words, we trust these retailers. Your customers trust you! How can you help them buy even more?
Thanks, Anastasia and Julia.
If you want real market data, then interview your customers.
Copyright 2011 Phil Symchych. All rights reserved.
Tags: business, Business Growth, business owner, business owners, Business Success For Life, continual learning, Customer Service, entrepreneurs, marketing, Phil Symchych, profit, profitable growth, Sales, sales training, small business, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co.
Posted in Marketing Mastery | No Comments »
Tuesday, August 9th, 2011
Baby boomers around the world are getting ready to sell their businesses. However, the economy is gyrating, banks are nervous, and stock markets are on a roller coaster! These are perfect times to find a great deal and get control of your own future so that you’re not depending on the economy, the banks or the stock markets for your financial future.
Here are some questions to ask the seller if you are considering buying a business:
- Are you planning on selling the assets or the shares?
- Will you be available to assist in the management transition, introductions to customers and suppliers and ongoing training and mentoring of the new owners?
- What are your needs and expectations for the types of payments and timing of payments? Do you need a pile of cash upfront or some upfront and some over time?
- Have they consulted with their professional advisors regarding this major transaction?
- What are they going to do when they retire? (This will tell you their emotional commitment or attachment to the business)
- Are there any major changes planned for business operations, strategies, staffing, technology or suppliers?
- How do the financial results compare to prior years?
- May we see the internally prepared financial statements and the accountant prepared financial statements?
- Are transaction volumes, frequency and average value increasing or decreasing? (Note, some of these will move in opposite directions)
- Are your competitors getting larger and more aggressive?
- What is the staff turnover?
- Do you have a budget?
- Do you have a business plan?
- Do you have a contingency plan?
- What is the fair market value of your assets and how does this compare to your book value?
- Is the company generating or consuming cash?
- What are the earnings before interest and taxes (EBIT) and earnings before interest, taxes and amortization (EBITA) numbers?
- Why are you selling?
Many business owners sell for health reasons…and the number one reason is that they are sick of the business.
Beware of a business that is in decline due to owner health, apathy or neglect, or increased competition.
The worst thing you can do is pay too much for a dying business. Don’t pay for your own goodwill, that is for the potential improvements that you will generate with your own sweat equity and risk-taking.
There are lots of great businesses out there as the boomer generation retires. By keeping your eyes and ears open, and talking to accountants, lawyers and bankers about potential business sellers, you should be in a good position to find a lucrative business, at a good price, with vendor financing available.
The key factor is to align your strengths and interests with a viable business opportunity. Besides, retirement is for wimps.
Copyright 2011 Phil Symchych. All Rights Reserved.
Tags: be an entrepreneur, business, Business Growth, business owner, business owners, Business Success For Life, buying a business, cash, entrepreneurs, how to buy a business, how to sell a business, medium business, mid market companies, Phil Symchych, profit, profitable growth, retirement is for wimps, selling a business, small business, small business banking, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co.
Posted in Buying or Selling a Business | No Comments »
Monday, July 4th, 2011
“Thanks for your business. By the way, may I ask how you heard about us?”
That single question, which costs nothing to ask, will give you real-time market research and valuable information on your sources of business.
I once visited an auto-body shop and they handed me a clip-board with several marketing questions about their business. That was smart, cost nothing, and gave them great information.
The most common sources of business are:
- existing or repeat customer
- former customer (a best practice-maintaining contact with your former customers!)
- word-of-mouth (your general reputation)
- referral (a specific recommendation to a potential customer)
- driving by, convenient location
- family or friend works for you
- website or blog
- billboard
- print advertisement
- Yellow Pages listing
- saw the “OPEN” sign
- store front presence on a busy street
Track the results to your question for a couple of normal days. Now, measure the results. Are you investing your marketing budget and activities on the most effective methods based on your research?
Everyone has a limited marketing budget. The main point is to invest effectively based on what works and track the results. Beware of proactive sellers of advertising. When you have the real data, you can make decisions that generate a higher Return on Investment and increased revenues.
Which steps are the most effective for your business? How do you know?
Copyright Phil Symchych 2011. All Rights Reserved.
Tags: business, Business Growth, business owners, Business Success For Life, Customer Service, entrepreneurs, how to improve profit, leadership, marketing, medium business, mid market companies, Phil Symchych, profit, profitable growth, small business, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co.
Posted in Phil's Profit Points | No Comments »
Wednesday, June 29th, 2011
Prince Philip, the Queen’s husband, recently celebrated his 90th birthday. He says that he’s going to start taking it easy and working less. “It’s getting difficult to remember people’s names,” he quipped. The Queen, however, is still going strong at 85.
They must have a good health plan in their little family business.
I wonder what Prince Charles, who is 62, thinks of this whole family business succession plan. I’m pretty sure he would be a fan of mandatory retirement, perhaps at age 80.
Succession planning in privately-held or family businesses is about two things. First, it’s about management. Second, it’s about ownership.
Management is the most important factor to deal with, and the easiest.
Privately-held businesses, and especially family businesses, need clear communication and plans about what the future will look like. This is a leadership role that some people are unwilling to discuss within their companies. That’s too bad because it makes it more difficult to attract and retain great management talent that would increase the owner’s freedom from the business and enhance their wealth.
Here are some tips:
- Write out your organizational chart with positions and names for your current business.
- Now, do the same for your business in five years and ten years. (I know, it’s hard work to think that far ahead. But you’re the best person to do it.)
- Analyze the people that you have and determine who will make the leap to the future, perhaps with additional training and development.
- Identify your gaps.
- Start to make development plans to ensure that your people will be able to meet their new responsibilities.
- Start to develop talent recruitment and retention strategies to attract the people that you will need in the future. The faster that you attract them, the faster you’ll get there.
- Implement, immediately, a contingency plan that clearly specifies who does what, who can sign cheques and contracts, and who can make board decisions, if you can’t do so due to illness, injury or worse.
- Have a discussion with your business partner or family on what you want to happen to the business if you can’t be there anymore. If you’ve built a management team, you may be able to retain ownership (and wealth).
- If you’re not sure what to do, then fire yourself. Now, you’ve got lots of free time to work on the big picture things. Your management team will run the rest.
- Don’t wait until you’re 90.
Succession planning is about protecting the value of your business by ensuring that there is a management team in place. There is a significant opportunity for business owners to retain ownership by building a management team and running their business like a business, not like a family.
For more advice on what not to do in succession planning, just watch the Royal Family, and then do the opposite.
Copyright Phil Symchych 2011. All Rights Reserved.
Tags: business, business contingency plan, Business Growth, business owner, business owners, Business Success For Life, contingency planning, entrepreneurs, family business succession, leadership, Phil Symchych, profit, profitable growth, small business, small business consulting, SME, Strategy, Succession Planning, Symchych, Symco, Symco & Co.
Posted in Succession Planning | 1 Comment »
Monday, June 20th, 2011
I was standing in the car rental line at the humid Savannah, Georgia airport watching an incredibly bored employee going through the motions of pretending to listen to a customer’s problem while the same customer tried to carry on a separate cell phone conversation. Looking around, I couldn’t see another agent so I was preparing myself for a painful transaction. Finally, another agent appeared through a hidden entrance and I bolted to the counter. This was no time to be a polite Canadian and wait for permission to get some service. The agent gave me the keys to a Ford Explorer which, I thought, should be high enough to drive right over any alligators roaming loose on the highway. I figured driving over snow drifts in Saskatchewan was perfect training for handling southern wildlife.
We rent cars because they are cheap, easy, convenient and provide high flexibility at relatively low cost. We need to do this in our businesses as well.
When it comes to obtaining assets for our business, we have three choices. We can make our own – this is often impractical or impossible. We can buy it – this takes financing, creates debt on our balance sheet and requires future cash flow obligations. Or, we can rent – a temporary solution to a temporary need.
The advantages of renting:
- You get what you need when you need it.
- You send it back when you don’t need it.
- If it breaks, they’ll send you another one.
- You don’t need to wash it, fix it, insure it or worry about it.
- Your cash flow improves immediately by increasing your capacity and minimizing acquisition costs.
- You can usually charge equipment rental costs to your customers on certain projects or jobs, often at a small mark-up. A 20% return on an asset rental is a pretty good return.
- Avoids unproductive and expensive downtime when the asset is not being utilized – this is a very significant and usually under-estimated cost of ownership.
- Avoids long-term hidden and indirect costs of ownership such as depreciation, interest on debt, repairs and maintenance, storage, license and insurance, people to manage the asset inventory and other overheads.
- Avoids using up valuable working capital for down-payments.
- Avoids using up scarce borrowing capacity with unproductive or low-productive debt.
- You can try before you buy to see if you can make money using a certain piece of equipment.
- Improves your flexibility and profits.
The Savannah trip was a success. No alligators were encountered. And I tossed the keys back to the car rental company. Wouldn’t renting be a great way to increase your business capacity when you needed it most?
Copyright Phil Symchych 2011. All Rights Reserved.
Tags: business, Business Growth, business owner, business owners, Business Success For Life, Customer Service, entrepreneurs, financing, how to improve profit, improve cash flow, leadership, marketing, Phil Symchych, profit, profitable growth, renting equipment, small business, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co., working capital
Posted in Phil's Profit Points | No Comments »
Monday, June 13th, 2011
I had tea today with a successful business man who used to be the controller for a conglomerate of 17 restaurants, before the days of computers! We had a great chat about how the cost drivers and challenges haven’t changed but the management skills and information systems have changed.
Food, labour, front of the house, back of the house? That’s restaurant lingo for analyzing costs and running a restaurant, one of the most difficult businesses to own and operate.
Many entrepreneurs run restaurants very successfully, and franchises are typically more profitable than non-franchised entities, primarily because their systems are documented (to enhance consistency and accelerate training) and they have detailed information on costs.
The main costs in any restaurant are food, the labour that prepares the food (back of the house) and serves the food (front of the house) and the overhead for the equipment that cooks the food and the building that houses the restaurant.
Here are some profit points:
- Do you analyze your costs each month, as a percentage of sales?
- Do you compare your costs to budgets or targets each month?
- Do you compare your costs to your standard cost?
- Do you ask your managers to explain the cost variances that compare actual to budget?
- Do you have a detailed breakdown on sales of products or is revenue lumped into one account that can’t tell you anything?
- Do you know your staff turnover, training costs, and time required to get a new employee up to speed?
- Do you know who your most productive employees are in terms of sales, profits and customer satisfaction?
- Do you know your inventory waste?
- Do you know your most profitable products (beverages and desserts)?
- Do you know how to retain and reward your management team?
Running a restaurant very challenging. Your inventory is sensitive and must be stored properly and used up quickly. Tim Hortons advertises ‘Always Fresh’ and throws out their coffee after 20 minutes. What do you do with your old inventory?
If you had to throw out your unused inventory every twenty minutes, you’d probably keep a really good eye on the numbers!
Now I’m off to have a bowl of chili at Tim Hortons.
Copyright Phil Symchych 2011. All Rights Reserved.
Tags: business, Business Growth, business owner, business owners, Business Success For Life, cash, CFO, controller, Customer Service, do you know your costs, do you know your numbers, entrepreneurs, how to improve profit, managing costs, marketing, mid market companies, Phil Symchych, profit, profitable growth, restaurant profit, Sales, small business, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co., Tim Hortons
Posted in Phil's Profit Points | No Comments »
Wednesday, June 1st, 2011
In a world of computerized accounting systems that generate tons of data in nano-seconds, I’ve found that fastest growing and most profitable businesses focus on one number.
The good news is that you can post this number on a white board in the shop or on a sticky note on the coffee maker.
One number can align your employees and managers to improve it and grow it.
What’s your number?
Here are some examples.
In a service company, it’s ‘billable time’ where employees provide service to your customers.
In a drive through restaurant, it’s average wait time in the queue. The lower the wait, the faster the service. You can see this on the count-down clocks at Tim Hortons.
In a retail store, it’s average transaction value. This measures how much each customer spends with you. The better the service and experience, the higher this number will be.
Retail display at Crocus & Ivy
In a manufacturer, it’s unit of production, whether measured in square feet or lineal feet on the elusive widget.
CNC Machine at Luxury Granite
Many managers struggle with improving performance and start tweaking ten different things. This can be very confusing to people who are then guessing at what is really important. Or, people just wait for the temporary fad to pass and go back to their daily routines.
When you measure, communicate and publicize this number on a daily basis, you can hold your entire team accountable, because everyone knows the score.
That’s a low-tech solution that’s guaranteed to get you a great result.
Copyright 2011 Phil Symchych. All Rights Reserved.
Tags: business, Business Growth, business owner, business owners, Business Success For Life, Customer Service, entrepreneurs, leadership, marketing, mid market companies, Phil Symchych, profit, profitable growth, small business, small business consulting, SME, Strategy, Symchych, Symco, Symco & Co.
Posted in Business Growth | 4 Comments »
