Piloting your agency through the Covid-19 pandemic: 11 Steps to take

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Piloting Your Business Through the Covid-19 Pandemic

As an business owner, it’s critical that you are prudent and effective as you set about dealing with the Covid-19 pandemic of 2020  and its realities. We have an ever growing economic impact and despite governments around the world taking strong economic action, we will all be affected to a greater or lesser extent. 

The Australian Government has announced details of its financial package aimed at helping small businesses. These measures will help but they don’t address the issues of individual businesses.You will need to do a whole lot more yourself. 

Nothing that you planned is valid anymore

Whatever your 2020 plans were; however you thought 2020 would play out and what you would be able to achieve, things are going to be very, very different now. There is no avoiding that. All the plans you had are going to need to shift and you will need to make whatever changes you need to make to strengthen your position in the light of these developments. 

There are few relevant precedents for a pandemic like this, none within the Australian context. We have had various outbreaks before, even in the more recent past, but nothing on this scale, with this level of contagiousness, with such mortality rates and with such global financial implications.

Even though we are looking at a human health driven phenomenon, the restrictions and measures that are being put into place will drive tremendous economic changes that simply cannot be averted.

The eleven steps outlined below comprises a framework for you to work through. It does not pretend to be a solution. Indeed there may be elements of your business that are not addressed here. But it will get you started and thinking about what you should be doing to minimise your business risk.

Step 1: Communicate

All relevant authorities have been doing a lot of communicating and so should you. When there is a crisis, people start to worry. When people worry, they become negative. When people are negative, they hunker-down and tend to be more cautious in their reactions and responses. With all the restrictions on gatherings, with social distancing becoming the way people now have to interact, communication must be a key focus for you.

So you need to keep in constant communication with everyone relevant to your business. Your team and stakeholders, your customers, your networks and your community. They all have questions, they all feel insecure, they all are hungry for information. So you need to be updating them daily on:

  • what you are doing
  • what’s changing
  • What you next moves are going to be etc. etc.

Keep your clients up to date on how you are responding, what you are doing and what measures you are putting in place to help and serve them.

In a crisis, you cannot over communicate. So keep in touch on a regular basis.

Step 2: Be Positive

Back in 2008, during the Global Financial Crisis (GFC), I saw businesses who felt that world was ending for them, and guess what – in many cases it did. But most came through by upping their game, seeking out opportunities, looking at what they could do that they had not done before and that changed their outcomes dramatically. 

So make sure you do that. Sit down with your team and think about what you sell that’s like toilet paper. 

Turn off the news

The media saturation that we are subjected to can be counter productive. In their anxious state, people are consuming a lot more news than they normally would and frankly, it’s depressing and scary. Too much negative input could stifle your business creativity at a time where that’s exactly what you need. You need to be positive and lead your people and your clients through this. If you keep positive and actively look for ways to support your team and your clients, you will succeed.

Negativity is going to be around you all the time under the circumstances. Expect people to gravitate around positive people, so be that positive person for your family, your staff, your customers and your community.

Step 3: Understand the cycles and the environment

The world economy operates in a cyclic fashion; with a  period of 7-10 years usually. Each cycle comprises phases very similar to the four seasons. Understanding these will give you further insight into what is likely to happen that should inform your decisions and actions.

The main question is: will this event trigger a complete economic cycle or is it going to be a shorter term glitch? The GFC triggered a complete cycle that we were just emerging from.

Financial Cycles

Step 4: Change

Most people understandably avoid change. But to effectively deal with the current situation one has to understand that change is inevitable and this change needs to be affected quickly; you simply can’t wait. There’s a lot to deal with and one can’t let things overwhelm you or paralyse you into inaction. Taking action and getting ahead of things is the best tactic. Waiting to see what happens in the hope that it will blow over, which is the same as doing nothing, is a recipe for problems. A changed world requires a changed approach.  

Without taking action you may not be buying yourself enough time. If you make the shift to a leaner, faster, better business and say things do blow over, then you still have a leaner faster better business!

You need to consider every aspect of your business: products, services, pricing, delivery, staffing and of course communication. Each one of these needs to be dissected, examined and adapted. Perhaps your entire business needs to shift or pivot, not just parts of it.

One thing to note: The old saying “if it aint broke don’t  fix it” does not apply in this situation. This may be a case of fixing it so that it won’t break! Be ready and prepared for that if it’s necessary.

Step 5: Cut Back

In agriculture, when autumn comes, there are specific things that need to be done. Old growth needs to be cut back. It just has to happen or the next season’s crop will be adversely affected.

Despite the economic measures that the government is putting into place, they are not going to make cash payouts if your business is short of cash. So you need to take measures to preserve your cash. This will mean curtailing your spending on certain things. That doesn’t mean you stop spending on marketing and sales and other things that will help you bring on business. Look at things that are unnecessary right now and put them off. If you were going to upgrade something, say, but can put it off, put it off for the time being.  

Do a thorough analysis of your expenses, cut back where can, renegotiate what you can. Think of this from a cash flow point of view. You need to do things to maximise how much cash you retain.  But be careful not to throw the baby out with the bathwater, because at some stage this will be over and you don’t want to have any regrets. To use a simple analogy, If your doctor has put you on a course of medicine say, don’t cut back on that to save cash because that will affect your ability to do your job and generate cash!

Step 6: Extend Credit

This is very important. Extend your credit now. Get more credit cards, get any kind of credit you can. At the time of writing, the banks are still in the credit business; they’ve not cut back. If you don’t act quickly, you may miss the boat. Remember this: The banks will not give you credit when things are tough – only when things are easy. It’s far, far better to have your lines of credit open and never use them, then to be refused when you need them. So act now on this. 

You may have a very conservative approach to lending and credit in the normal course of events and have been able to manage fine and that’s understandable. But we are not talking about credit for the sake of expansion or any other type endeavor with an abnormal level of risk. That’s a different scenario entirely. Here we are talking about lubricating your business so that it can operate smoothly from a cash point of view should it be needed. If you don’t need it you don’t use it. But if you need it and you don’t have it, that could be bad.

If you need to refinance or renegotiate anything, get onto it right now. Do not wait. This one is all about rapid action because the banks are likely to change the rules as things tighten up.

Step 7: Staffing Cuts and Changes

This is one of the most difficult things to deal with. If your business serves certain categories of business: travel, restaurants, pubs, anything where people need to congregate, amusements etc.,etc. You will quickly and severely be affected by this. Already we have seen a precipitous drop in airline bookings, restaurant attendance etc. Sporting events are all being cancelled or are closed off to live audiences. This will continue and the organisations and employees that are part of those ecosystems will take a massive hit.

Layoffs are a terrible morale killer, so if you can get away with not having to do any, don’t.  There are other options to explore to get around this such as reduced hours, and possibly pay cuts. Wherever possible use leave; paid and unpaid. Try and keep staff because the cost of hiring afresh as we emerge from this needs to be borne in mind.

If you are faced with doing layoffs, do as many as you need to all at one time. They are tough to do and you don’t want to subject yourself or any of your staff members to a long period of emotional stress. 

Suspend bonus programs. It’s just part and parcel of what we all have to do to get through this.

If you know cuts are inevitable, don’t wait until you are sinking. That won’t help at all. Act preemptively and in the right measure to ensure you can make it through. It’s like pulling off a bandaid. Doing it slowly is much more painful than a short sharp action.

Step 8: Plan Work From Home

It’s most likely that you will want to have as many of your team as possible work from home.

Investigate how you are going to be able to have people work from home and be productive.

Go through all your processes and map out solutions paying particular attention to the informal communication that takes place in an office environment and things that are done in person. There are many, many businesses that are working like this already so you will not be breaking any new ground. But there are many options and variations you will need to research.

With staff members working from home, don’t forget to communicate with them very regularly. They will immediately miss the camaraderie of the office environment and may feel isolated. The teamwork element will need special attention. 

Don’t think of this in terms of a short term measure. You may have to operate like this for an extended period of time. So make sure you do things thoroughly and be sure to do some shakedown tests to verify that your processes and solutions are as robust and productive as possible. 

Step 9: Service Delivery

For anything other than online delivery this is very important. Sending staff members to spend time at client sites may present challenges if we look at some of the lockdown measures being taken in other countries likely to be introduced in Australia. 

If you are dependent on 3rd party deliveries such as courier services, there are two possible scenarios:

  1. They stop or curtail their services so as to protect their staff
  2. Their services become oversubscribed because everyone else has started using them.

Either way, this needs special consideration.

Step 10: Marketing, Selling and Business Development

Maintaining steady revenues should be at the front of your mind. Accordingly, you cannot stop things like marketing and selling, in fact there are good arguments for increasing your business development activity. Don’t assume that the marketing you were doing before the current crisis should continue unchanged. The environment has changed and chances are your marketing needs to change in sympathy with that.

It’s advisable for you to keep a close check that your marketing and sales work continues to be effective. Don’t assume that what you were offering last month is still valid. You may need to reformulate your offers.

It’s advisable to firm up your credit policy and go for cash up front wherever possible in these circumstances.

Step 11: Repeat Business and Client Retention

In these times, there is no more important priority than keeping your clients and have them continue buying from you. You need to be in regular communication with your clients and customers all the while to keep them happy and to show that you care. Make sure they feel like they are getting great value. 

You should pay special attention to devise innovative strategies in this area.

What you should be doing about all of this

There is a lot to do. The survivors in times of economic hardship are those that take action on a timely basis. That means making good decisions based on thorough analysis and understanding.

If you are carrying on in a ‘business as usual’ fashion, you are just adding to your risks. 

If you are unsure of how to deal with this, feel free to reach out 

A Guide to Business Valuation

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Business valuation methods vary and are used to determine a value that represents the price that a business can be sold for at a particular time. No method is precise.

Your business is likely to be your largest asset, so it’s natural to want to know what it is worth. The problem is: business valuation is not an exact science. It has a purely financial component that can be calculated. It also has a subjective side where the value perceived by each potential buyer varies with each buyer’s circumstances.

The price that will be finally achieved is only what a buyer is willing to pay. This may be a lot less that the value the seller has calculated.

This article covers the most common business valuation methods. These methods are true for smaller business as opposed strategic sales, where a business’s value is based on what it would be worth in the acquirer’s hands.

Income based

Earnings Multiple: The most commonly used business valuation method is the Earnings Multiple or (Price/Earnings ratio) method. As the name suggests, the value of the business is quoted as a multiple of its future maintainable income. The earnings multiples vary for businesses of different size within the same industry and between industries for businesses of the same size. One arrives at a business valuation by looking at comparable business sale multiples and applying them to the business under consideration.

Discounted Cash Flow: The discounted cash flow method looks at the forecasted cash flows and then applies a discount rate to bring them back to a value in terms of today’s dollars. The discount rate used increases with the level of risk, possible forecast variances, and the length of time over which the cash flows occur.

Essentially the drivers of value when you use this method are
• how much profit your business is expected to make in the future
• how reliable those estimates are.

Assets-based

This method considers the value of a business’s hard assets minus its liabilities or debts owed. One uses the net asset value to value the business as if were to be closed down and no longer be able to generate any profits.
This business valuation method often produces the lowest value because it takes no account of ‘goodwill’. Goodwill is defined as the difference between a company’s market value (what someone is willing to pay for it) and the value of the net assets as described above. Goodwill should take into account all of the intangible value aspects of the business, such as: its earnings potential; reputation; and the ongoing relationships with customers and suppliers. Coming up with a valid sum for goodwill then becomes the issue.

Market based

The market based approach looks at businesses that operate in the same industries. If there are sufficient examples of sales available, then a common rule-of-thumb valuation method can be applied, such as an earnings multiple.
Other examples are:
• “x” times book value – of relevance for real estate management companies
• “y” times EBIT – Earnings before Interest and Tax – applies for most businesses
• “z” times EBITDA for businesses who have high capital costs, and so are assessed before depreciation or amortisation are taken into account.

Size of a business plays a big part in determining the relative value of businesses in similar or comparable industries. Typically, it is the larger, often publicly listed business whose sales price becomes public knowledge. Compared to those, most smaller business sales are concluded at much lower relative valuations. Anyone contemplating a sale should bare this in mind.

The difference between a vendor’s and a purchaser’s business valuation

Every time a business goes on the market, the owners either have the business formally valued or come up with a notional value of their own. This then becomes the asking price.

Purchasers on the other hand may use any one or more of the methods described above to arrive at what the value of the business is to them. Needless to say, these numbers are usually quite different. The difference is usually settled by negotiation. The seller invariably has to discount his asking price.

Strategic purchases

Sometimes a business is acquired for very strategic reasons, such as patent ownership, technical capability or market access. In these cases none of the business valuation methods described has any relevance.

Take for example Facebook’s $1bn acquisition of Instagram in 2012. Here there was certainly no consideration made for the earnings of Instagram – it had none. Five years later, Instagram’s 30 million user base had grown to 600 million. With what Facebook had in mind in terms of future monetisation from advertising, it was one of the shrewdest Silicon Valley acquisitions in history. A brilliant investment even at that eye-watering price.

Strategic acquisitions break all the rules and lead to business valuations that are much, much higher.

How should you approach value maximising your business?

In the first instance, you need to fully understand what valuation maximisation issues your business faces and then work out how these need to be addressed should you wish to get top value (and in fact, find a buyer!). Its best to have your business assessed by an independent and impartial 3rd party.  Then you can decide on how to move forward.

Avoid disappointment when it comes to selling a business

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By Evan Rubenstein

When it comes to selling a business after many years of hard work, will you walk away with a tidy fortune or suffer the gut-wrenching price disappointment that is so common? Many hard working business owners live for the day that they can sell their business and retire comfortably on the proceeds. Yet when that day comes they discover that there is no queue of buyers eager to make a purchase, and in reality the business is only worth a fraction of what they originally thought.

Avoid price disapointment when seling a business

A business is not a commodity that people are buying every day. Any person or business looking to acquire a business will usually have more than one option that they are looking at. When one is selling a business by contrast, you will generally only be dealing with one potential buyer, so the odds of making a sale are stacked against you.

When selling a business, a scarcity of interested parties has the effect of lowering the selling price

Prospective buyers, especially if they know they have no competition, have nothing to lose and everything to gain by submitting a low-ball offer. And they will.

But, you say, you’ve heard stories of other people selling their business and doing really well? And of course that may well be true. What you don’t know about is what they did to prepare and how they conducted the negotiations and the sale.

The common perception is that a solid profit history is the key determinant of value. It is very important no doubt, but by no means everything. A potential buyer sees a business differently to a seller. Sure, profitability is up there, but they will have a number of other criteria in mind that will play heavily in determining the business they decide to buy. The person selling the business is often quite oblivious to the importance and impact these criteria will have to the value and sellability of the business. After all, the business is doing fine, what more do you need, right?

Past profitability is not an accurate indicator of future value

This is at the heart of the matter. A business  buyer is not buying history, he or she or it (in the case of a corporate entity)  is buying the future! They are looking at a business’s ability to provide reliable, sustained profitability and cashflow in relation to comparable investments. Also in the mix is the amount of effort that will be needed to operate the business. So the details of how your business is set up and operates as a going concern, become very important in determining not only the value of the business to the prospective buyer but also its desirability.  And it may not measure up that well in the buyer’s eyes..

So what are the ‘Deal Damagers’?

Apart from the underlying financial performance, here are some other issues that will factor into the value of the business:

  • How involved is the current owner in the running of the business?
  • Does the business have too much dependence on any staff member, customer or supplier?
  • What are the customer satisfaction levels of the business?
  • How much working capital is required to operate the business?
  • What proportion of revenue is recurring?
  • How much market share/competition does the business have
  • As it stands, can the business expect to grow?
Selling a business checklist

This all seems like common sense, and it is. Yet time and time again, businesses for sale fall (expensively) short in one or more of these areas.  If they are not adequately addressed and if the owner is eager to sell within a short period of time the only yield point is price. The best strategy is to recognise these shortcomings in the business and address them in a timely manner. In this way, when the business goes on to the market, there will be no flaws for a potential buyer to fixate on and the business will be able to achieve its highest possible valuation.

How to ensure maximum value by the time you want to sell

  • Have a strategic plan with timelines for your exit well thought through and sufficiently generous to allow for all the work that needs to be done to take place well in advance
  • Don’t leave out the things that you don’t like doing or don’t understand.
  • Get professional advice and help. Unless you’ve done this a few times before, don’t go it alone. By doing so you put a considerable proportion of realizable value at risk.

A good way of assessing how your business measures up from a business valuation point of view is to use the free Value Builder System™ assessment. The Value Builder System™ assessment will give you a score out of 100 that gives a statistically valid relative measure of how well your business measures up. Once you have this score, you will have a pretty good idea of where your business stands in relation to achieving its maximum possible valuation.

Click here to do your free Value Builder System™ assessment.

8 Key Business Skills You Absolutely Need

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Success in business hinges on a range of key business skills. Without them your progress in the face of ever increasing competition will be held back and your frustration will increase. It is true to say that if you compared two businesses in the same market doing the same thing, the difference in performance will be down to the differences in the leadership, and the differences in the leadership will be primarily governed by the skills and knowledge of the leaders. So the sooner one gains these skills the quicker you will be successful.

Having worked with hundreds of business owners over the years, these are the most important skills someone in business should have.

What are Key Business Skills?

Business is a multi-faceted undertaking that combines a range of activities and concepts. The central product or service being delivered is obviously something that has to be done well but that is only a small factor in determining overall success. Wrapped around that central product or service is a range of ancillary activities that are vital to producing the desired business outcomes of profit growth and business value growth. It is not uncommon for people to start businesses where not only is there a lack of key business skills, but no awareness of the key business skills that are required.

Key Business Skills

1 Strategic Thinking

Business is not a short term play. Strategic Thinking is the thought process one engages in to devise long term competitive advantage for a business. The quality of this process is what will ultimately bring profound and lasting benefit to the business.

2 Planning

Arguably, nothing happens without a plan. Planning is the process used to develop the sequence of actions that will ultimately culminate in achieving a goal or objective. A plan will identify and quantify the resources and time required. It helps deal with challenges and problems at an intellectual level, less expensively and more quickly than if these were dealt with in a real world situation

3 Leverage

Leverage is probably the most fundamental business concept there is. In fact, business itself is nothing more than an exercise in Leverage. There are many definitions of Leverage but essentially it relates to being able to take small actions and to get comparatively big results. The most important form of leverage is knowledge. The more knowledge you have, the more power and influence you can wield and the less risk you take.

4 Business Finance

One engages in business in order to generate profit. The way we measure the value of a business is by the amount of profit it makes. Business finance is all the numerical logic behind the determination of profit. Without a grasp of Business Finance it is very difficult to measure progress or gauge performance.

5 Emotional Intelligence

Businesses employ people and have people as their customers. People’s behaviour and actions are significantly affected by their emotions. Emotional Intelligence is ones ability to recognise ones own and others emotions and to use this information to guide thinking and behaviour.

6 Business Software

Software is an important leverage tool. In this day and age, business needs to move quickly and be efficient. There are many categories of business software and a business leader should be aware of all of these; their uses and their benefit.

It almost goes without saying that proficiency with business productivity software is hugely advantageous. Any business owner who does not know how to set up a basic spreadsheet that contains formulae is at a distinct disadvantage.

7 Organisation

Businesses have a degree of complexity that is unavoidable. There are many details, activities and actions that need to harmonise to produce a good result. For this to be the case everything needs to be well organised.

8 Sales and Marketing

The most crucial skill of all is how to generate revenue in your business. This aspect should receive the most attention and be the centre point of most business that have a growth agenda. Once most of the other business actions and arrangements are in place, the issue of revenue generation continues to be an ongoing focus of any business forever and ever.

Is this the complete list of skills you need? Depends who you ask.

What skills do you think are critical?

Making Strategic Initiatives Succeed

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A strategic initiative is the set of actions one takes to close the gap between one’s current situation and one’s future vision. Making your business’s strategic initiatives work is key.  Business in the 21st century requires agility and adaptability. So failure to deliver on strategic initiatives will mean your organisation will struggle to survive as the competition continues to improve. Put another way, organisations that are able to make their strategic initiatives succeed all the time will be more profitable and will be more highly valued that those that don’t.

Strategic Initiatives Challenge

Almost by definition, a strategic initiative will be a stretch for all concerned. It will be a major change in the way things are done and will have an impact on all those involved. So, easy – it’s not. In many SME’s either strategic initiatives are never undertaken or they are abandoned part-way through or they simply fizzle out.

So why is this?

Here are the main reasons behind the failure of strategic initiatives:
  1. An absence of “Intent Mindset” To execute successfully requires a comprehensive approach and mindset. A relentlessness and commitment to outcomes that defines the entire process.
  2. LAck of stakeholder buy-in. All key people have to be involved and fully subscribed to the entire process; from conceptualisation through planning and implementation. Naysayers and stragglers need to be brought on-board and evangelised.
  3. Effective ongoing communication. The initiative’s goals and implementation progress needs to be properly communicated to both management and staff throughout the process. In addition proper communication and coordination must be maintained to keep everything on track and milestones achieved.
  4. Inadequate resource allocation. Strategic initiatives have to be implemented while the business continues its regular operations. Without providing additional resources to deal with the added workload, the process will struggle for oxygen.
  5. Management of change. Any change initiative will require people to change what they do or perhaps even switch jobs.  This will need work. Most people are change averse and will produce various forms of resistance that will need to be overcome.

When you look at these 5 points it looks pretty straight forward – almost common sense!  But what what looks simple on paper does not translate to simple in practise, otherwise this would not be the challenge that it really is.

 

 

Is your Business Networking Best Practice?

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Many people have a love-hate relationship with networking. We know we ought to do it, but its time consuming, a pain and wins seem rare. If that sounds like you, you’re probably a networking novice; unfamiliar with the finer points and techniques that can make networking a rewarding and profitable exercise.

Networking should be part of your lead generation repertoire, no matter what business you are in. A common mistake for people doing networking for the first time is that they are underprepared; not so much for the networking itself, but for what it takes to get to a point where business can be expected to be done. They tend to simply show up, try and make the most of the opportunity without understanding enough about what they are getting into and how best to deal with the follow-up activity required to make something of it. The result is that there is no result.  So lets examine how best to make networking a real success.

networking-group

Here are three common ‘no result’ networking scenarios:

  1. You introduce yourself to a number of people, grab their business cards and either never look at them again or quickly forget who the actual card owners were and their relevance to you, if any
  2. You meet someone you like or have things in common with and spend far too much time talking to them, with little or no prospect of an outcome
  3. You meet relevant people, get their details, attempt to follow up but somehow never manage to achieve anything beyond that.

These are just some of the things that can happen. Like any lead generation strategy, if you really want networking to work for you, you have to put some thought, focus and effort into it.

There are two levels networking operates at: primary and secondary. Primary networking refers to the activity of meeting people, with a view to doing business with them directly. Secondary networking refers to accessing the contacts of people you know or people you have met through your networking efforts.

There are basically two types of networking activities you can participate in:

  1. Join a structured networking organisation. This usually requires an ongoing commitment, but the structure and processes improve the odds of you achieving some level of success over a period of time. This sort of networking usually focuses on developing close relationships with people in the group. Whilst there is clearly a primary networking opportunity here, the much bigger opportunity is the secondary network. Whilst structured networking is certainly effective, it takes time to build trust before members will start to give you referrals.
  2. Attend ‘informal’ networking events. These events can vary tremendously in size and scope and the way they are organised. They usually have little or no structure and so it’s up to you to make it work. In this context, virtually any gathering of business people can be considered a networking opportunity. Unless you are a committed hermit, this is an opportunity too big to ignore. The rest of this article will focus on this type of networking.

But before we go any further, here are two basic networking realities that will shape the strategies you should use:

  • Most people that you meet at a networking event that you may be interested in talking to further, will not remember you the next day unless you are specifically relevant to their needs at that moment.
  • There is a high likelihood that your network target will receive a number of emails from other network participants the next day, so yours will not stand out. Even if this is not the case, with most people receiving a great deal of irrelevant email these days, your follow up email may not be read, or may not register with the reader

Group of young executives in modern space smiling and making introductions.

So what’s the best way to proceed? How can you make sure that the time you spend networking will yield results?

It’s best to prepare yourself well; have a plan. Make sure that each step of the plan is organised and in place beforehand, otherwise you will lose the initiative. Here are 7 points you need to have in your plan:

  1. Be clear about who would constitute a worthwhile networking “target”; industry, type of business, role within company etc. Choose events where your targets are likely to be found in concentration. Unless you have a good idea of who you are looking for and where to find them, you are likely to waste time and even confuse yourself as to the validity and value of some of the contacts you make
  2. Develop a ‘script’ that you are comfortable with and practise it. Include your elevator pitch and a few relevant questions to ask when you meet someone. This gets the conversation flowing and them talking, which relaxes them and makes them feel good. Without being rude, try and ascertain the degree of fit they represent to your target, i.e. qualify them. Qualify them for further follow up, that is
  3. Don’t spend too long with each person. The idea is to find as many qualified contacts as you can in the time that you have available, not to try and develop a relationship then and there, Relationship building comes later. Work the room, collecting business cards, where relevant,  as you go
  4. On the business cards you collect make simple notes immediately. Write down pertinent points that you can then use as part of your follow-up. Ideally you should have a quality rating system, say a scale of 1-5 that will help you prioritise your follow-up
  5. If a contact looks relevant to you, ask them if it would be okay for you to contact them after the meeting. In this way when you you contact them, you can say “You said it would be okay for me to contact you” – makes it harder for them to fob you off or turn you down
  6. Immediately after the event, send them a handwritten postcard, expressing your pleasure in meeting with them and informing them that you will be in touch with them shortly. This will make you stand out from most of the other networkers they may have met; they will mostly send emails
  7. Next is to make contact with them. Preferably by calling them or by email. It is good to have a promise of something of value for them; this is sure to trigger some reciprocity, which you can use to move the relationship forward, culminating in a meeting where you can explore the opportunity with them further.

Unless there is an immediate and obvious fit, most chance encounters such as those one has at networking events, are not memorable enough for people to remember who you are, or care. For this to happen there should be several follow up contacts done in such a way as not to make yourself a nuisance. Working this all out before you go-a-networking, is a good way of bring consistency and results to your efforts.

Your emotional Intelligence in the Workplace

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What is it that allows some managers to get productivity, loyalty and initiative out of people, while others are struggle, even when they seem just as intelligent? We usually say he or she has better “people skills”. And that’s about right. Most people in business would agree that to get results through or from other people is key to one’s success – unless you are a dedicated ‘soloist’.

You’ve seen or perhaps experienced the nightmare boss – the guy who is fussy, short tempered and demanding. Clearly, hard to work for. Why? Because he unbalances people emotionally, and does not care about how he makes them feel. Their emotional reaction drastically affects how they respond and what they will or will not do in return.

 

Angry Boss

 

So how much more effective would that boss be if he were patient, calm and understanding in his approach?

We’ve all had the experience of ‘losing it’ out of frustration or stress and saying things in the moment that we regret later. Things, that upon reflection, have further slowed or exacerbated the situation – hardly what we wanted in the first place.

One’s ability to perform work or function properly in a job can be broken into three areas:

  • Technical competency and skills
  • Intellectual capability – our cognitive ability commonly known as IQ (Intelligence Quotient)
  • Emotional capability – often referred to as Emotional Intelligence or Emotional Quotient

Emotional Intelligence (EI) is a measure of one’s ability to recognise, understand and manage emotions in ourselves and others. Getting results and performance from your team, demands that you master some basic skills in this area.

The concept of Emotional Intelligence (EI) became widely known through Daniel Goleman’s book of the same name back in the 1990’s. It’s a “must read” for anyone who works with people on any level (as are several of Goleman’s other books). Goleman argues that EI is a far, far greater predictor and ingredient of business success than cognitive intelligence.

Goleman developed the Emotional Intelligence Competencies Model which breaks this concept down into something that is easily understood.

 

Emotional Intellignce Competencies Model

Daniel Goleman’s Emotional Intelligence Competencies Model

 

  1. It all starts with Self Awareness. One has to be able to recognize one’s emotions and the effects your emotions have on others. You also need to have the correct measure of self-confidence.
  2. This leads to two things:
    • the ability to exert self-control and manage the characteristics that will lead greater achievement: Drive, conscientiousness, adaptability etc.
    • the ability to empathise and be aware of the people around you and your role within the organization and the community.
  1. With self-management and social awareness, one can successfully operate relationships where you can exert your influence, and drive results through others.

In business there is a range of relationships you need to be effective in:

  • Your employees
  • Your peers
  • Your manager
  • Your customers
  • Your suppliers
  • Your strategic partners

And don’t forget your social relationships, family and friends.

So what are the ingredients for being emotionally intelligent in a business setting?

  • Be direct and to the point. Be clear about the facts and tell it like it is. Don’t use sarcasm or emotive words for effect and never be personal.
  • Say what you mean and mean what you say. Be the model of consistency so that people learn to trust you. People will find it difficult to play games with you and the outcomes will be greater.
  • Be transparent. Tell people what they need know. Share. If you treat people like adults, they will respond positively. Don’t be paternalistic or patronising.
  • Be positive. Your team is scrutinizing you every moment of every day. They take their lead from you. You need to show confidence and control.
  • Be caring. Don’t forget how important your team is in helping you to achieve your goals. Get to know the people that work for you. To make your business more important to them, you need to show interest in what’s important in their lives.

happy team

Being emotionally intelligent in the workplace will yield dividends. Your team will enjoy their work more and they will naturally do more. Your business will gain a reputation as a great place to work and recruitment will become easier.

Not only should you take this on, but why not educate your team in Emotional Intelligence too?

Business Lessons You Should Not Learn The Hard Way

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Everyone who has done it, knows that success lies at the end of a series of business lessons and learnings; some easy some hard. If one were to analyse these lessons, you would likely find that most business owners will have made many of the same mistakes. Most could have had a much easier time had they instead, sought to learn from the mistakes of others first.

Every business owner will experience their own trials and tribulations. Here are some of the most common:

business lessons

  1. Learn how to delegate effectively early on. As a business develops and progresses, the owner has to keep moving his or her focus and activities up the food-chain of importance and presumably difficulty. One cannot do this effectively unless you are able to get rid of the lower order tasks, to free up your time and head-space. Remember that “success in business is a team sport” and delegation is at the heart of a good team effort.
  2. Focus. There is always a strong temptation to get involved in other things that you believe will make you more money. It’s very hard to be good at selling antique furniture and at the same time do justice to your social media software product. If you keep focussed you will become known as a specialist that people will value. You will be able to charge more. That said, if there is a service or add-on that will make your core product better, provide it.
  3. Get your business model right early. Running your own business is hard work no matter what it is. So make sure that you optimise your business model, otherwise you will be pouring a lot of effort into something that at best may only be mediocre.
  4. Beware of Discounting. In certain situations, discounting is an appropriate mechanism. But unless you fully understand the financial implications, avoid it like the plague. The common notion that one will make up for the lower price by increased volume is true; it’s just how much volume you need that will catch you out. Do the math. You will quickly concur that discounting will seriously affect your businesses profitability.
  5. Your product is probably not as good as you think it is. At the end of the day, it is only your customer’s opinion of your product that really counts. In-house use and testing will never be as tough as having indifferent customers using it in the field and beating it up. So seek customer feedback and act on it. There is nothing worse than product-complaint-deafness. Don’t be like the contestant on Australia’s Got Talent who’s family and friends think is great, but on a real stage, has obvious shortcomings.
  6. Keep a tight reign on receivables. This is especially important if you provide a service, you don’t have much bargaining power when you are only selling time. But it’s key for all businesses. Have a clear and enforceable credit policy that you stick to relentlessly. If you let things slide, not only will your business be cash-starved, but you will end up having to pay more to collect old receivables which will reduce your profits.
  7. Develop products against specific demand. If you think “Wow, I think xx industry could use XX” you could be very disappointed. Once you factor in development, marketing and distribution costs for commercialisation, you could be up for a big investement. On the other hand, if a customer comes to you with a specific request; you build a product for them and then discover that there are many more customers for that product you will be in the pound seats.
  8. Never enter into a partnership without a buy/sell agreement. Irrespective of how well you think you know someone, you just don’t know what is going to happen in their lives. Having such an agreement worked out before problems arise, makes for a clean (and inexpensive) separation when the time comes.
  9. It’s much more expensive to prove you are right than admitting you are wrong. When you have an unhappy customer, apologising, refunding them and moving on is much better than trying to prove you’re right and save the sale. They will burn too much of your time and badmouth you. They are not your ideal client; put them in the D for “Dead” category and move on.
  10. Thoroughly understand leverage. To grow and prosper means to be leveraged. Make sure that every aspect of your business is set up to get the biggest outcome for the least effort, over and over and over again.
  11. Get really good at hiring. All too often employees are hired too readily and without sufficient rigour. Chances are your candidates are better at handling interviews than you are. Before you start recruiting, develop a thorough process that will unequivocally eliminate under performers, and an equally thorough process for monitoring their progress through their probation.
  12. Leave your ego at the door. Neither your customers nor your team members will pander to your ego until you are a big player in the market. As a general rule, being humble and generous trumps egotistical and mean, convincingly. If this applies to you, learn how to manage yourself.
  13. Poor managers make poor employees. Don’t expect employees to do a good job all by themselves. A few will, most won’t. A good manager can make all the difference; turning mediocre employees into good ones. A good manager will have outstanding communication skills and be very clear about building a productive work environment that addresses the businesses vision and customer promise.
  14. Document, document, document. Most of a business’s success will be attributable to the knowledge of its people. When people inevitably leave, they take their knowledge with them, even though it belongs to the business. So make sure that everything you learn and develop in your business is properly documented for the use of those that follow; otherwise you will continually be paying to re-invent the wheel.
  15. People leave because of people, not companies. People’s actions are largely based on how they feel. Everyone, staff and customers alike, like to feel valued. Customers will stop using your product if they are dissatisfied or feel you don’t care; staff will leave. All this, a reflection of management’s understanding of Emotional Intelligence.
  16. Make customer acquisition and retention you key focus. You can have the greatest products, the best customer service, the most efficient operations. Without the requisite number of customers required to make your revenue targets, all of that serves very little purpose. When you have a sufficiency of customers, most other business challenges can be dealt-with with comparative ease. If your top-line is a continual struggle, no matter how good everything else is, your business will struggle and eventually succumb.
  17. Understand how to make the Internet really work for you. We live in a world where customers do their homework before they show up to buy. Your business needs to be part of that story. There are many options and opportunities online that you should be abreast of. Make it your business to understand them in relation to your business.
  18. Cash is more valuable than profits. You can run your business at a loss for a while, even a couple of years, but if you run out of cash it’s all over. Have a safety fund with two to three months operating costs in it, and for safety sake, a line of credit even if you don’t think you need it.
  19. There is no shame in getting help and advice. Many entrepreneurs are out to prove themselves and feel awkward asking for help. In business the stakes can be high, so better to be proved right with help and advice, than wrong without. And even if you are confident you don’t need help, it’s astonishing how much value an emotionally detached outsider can bring – which is why big companies have external directors. You will be amazed at how many of the world’s top business people stay at the top of their game by using coaches and mentors.
  20. Don’t overdo things. Always have the CFO pay for drinks.

Your business lessons are inevitable. You have to learn them to ultimately succeed. It’s just up to how you choose to learn them. Either through your own mistakes, or by studying the mistakes of others.

What’s Stopping You Getting Your Business to the Next Level?

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“I want to take my business to the next level” is a phrase one often hears from people in their own businesses. We talk about “levels” of business, but what do we actually mean?

What is the next level?Taking your business to the next level

From the business owners point of view, this is significant because the “level” implies the degree of personal involvement required, which is a function of the management structure of the business.  The more developed the management structure, the easier the business is to run. As such, the business’s level is somewhat independent of traditional measures such a turnover. Through the typical evolution of a business from micro to small to medium to large etc, the role of the owner changes dramatically. So in order for the business to get to the next level, the owner has to continually redefine and adapt their role to the requirements of the level they would like to get to; a perennial challenge for most.

Level 0: Micro

This level is a one man show with perhaps occasional helpers that require close supervision on a daily basis. Most of the business’s revenue is due to the efforts of the owner. At this level the majority of time is spent doing low order tasks and what the business really needs is for the owner to step up as quickly as possible to doing higher order, higher value tasks. The Level 0 business’s biggest challenge in moving to the next level is appointing capable staff to whom meaningful work can be delegated to. At this level, the owner usually has little money and has to use his time to compensate. As such the owner does not have a lot of control of how time is spent, hindering progress to Level 1.
The most difficult aspect of moving out of Level 0 is to know when and how to appoint the first employees.

Level 1: Small

At this level typically, there would typically be up to 6 or 7 employees working under the owners direct management. Some effort will have gone into structuring and organising the team and the owner’s time is a lot more discretionary. The biggest ongoing challenge is to avoid revenue fluctuations and to stabilise cash flow by working on the sales and marketing such that there is a steady flow of business. The owners skill at hiring staff and making them effective and productive, will be properly tested and be the biggest determining factor for transition into Level 2.

Level 2: Medium

Medium sized businesses are characterised by a management layer between the owner and the team, and the existence of proper systems to ensure the smooth running of the business. The owner’s focus is now on empowering the managers and he or she is now removed from the day to day operations and decisions of the business. This is a major shift for the owner as their personal significance in the business must be subordinated to that of the business itself. It is often a real struggle for the owner to let go of tasks, responsibilities and decision making that he or she has owned since the start of the business. For the business to run effectively at this level, there needs to be a proper management infrastructure in place. Businesses processes have to be well documented and systematised, and appropriate and robust metrics need to be in place. The owners vision for the business has to be well understood and the team needs to be committed to the business’s mission.
The owner spends most of their time doing strategic work such as planning, networking with important prospects, customers and suppliers. The owner now has full discretion on how he or she chooses to spend their time.

What it takes to get to  the next level

If one looks at the distribution of businesses as a function of stage, you will find that the further up the scale one goes, the smaller the number of businesses at that level. What is the reason for this? Well, taking a business from micro all the way to through to medium size (and beyond) takes considerable acumen, fortitude and time. There are many factors that can either aid or hinder this process. For example, recruiting an exceptional individual early-on can have a big impact on the speed of progress. Market conditions can have a big impact, either slowing things down or hopefully helping to speed them along.
During the Micro and Small stages, the business owner has to work hard and needs to have the moral and emotional strength to deal with the multitude of issues they have to face.  In addition, many business owners discover after some time in their own business that they require skills and knowledge they do not have to continue to grow the business. Some rise to this challenge, others don’t and their businesses therefore plateau.
As a function of the available knowledge, capital and capacity, a business will reach an equilibrium point with market forces and stop growing. To get to the next level, i.e. to continue to grow,  it is usually the knowledge and emotional strength components that will provide the impetus for further growth.

7 Key Tips For Business Networking Success

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There is no doubt about it, it’s getting harder and harder to prospect by phone and by email. That’s why networking has become such an important and effective way of generating business. For some businesses, this is all they need to do. For others it’s just one of several lead generation strategies that they may be using.

Networking

Networking is not an activity that should be trivialised. It is a serious lead generation strategy that takes thought and planning in order to achieve success. Getting a good business result from networking is not as simple as it may at first seem. One has to do much more than simply show up and be friendly. Even within structured networking organisations, it takes effort and skill to find the people who meet your needs who either go on to become star referrers or perhaps customers.  So it does not stop at meeting them. You will need strategies for developing partnerships so that you end up with a win-win relationship that endures and you will need to clearly understand the law of social reciprocity to be successful.

So here are the top 7 tips for successful business networking:

  1. Don’t go looking for people who can help you. Go looking to help others. Showing a genuine desire to help others, will make them be more open to trusting you, and being willing to do business with you. The very first thing you should do is provide something useful to the person you are looking to get referrals from. If you do, they will feel obligated to you and much more likely to give you referrals.
  2. Don’t just go and network. Have some goals and have a plan. An exercise that is goal directed will always be more productive than one that is not. Keep track of how you are progressing and adjust your efforts and technique accordingly.
  3. If you are planning to join or are a member of a networking group, make sure to choose your networking group carefully. You will be investing time and effort over a long period of time with your networking group. So check out different groups and make sure the one you choose has the right sort of contacts that you are looking to work with. Remember, the real objective in networking is to gain access to your network partner’s contacts and not necessarily the partner themselves. Make sure that the group’s members are a good fit before committing.
  4. Make use of the Law of Reciprocity. Good networkers understand that time has to be invested in getting to know one another before sufficient trust has been developed and a referral can be expected. So if you fail to invest time with them, don’t expect any referrals. From a different point of view, according to the law of reciprocity, you are far more likely to get a referral once you have given one, or at least made a sufficiently valuable gesture.
  5. Be super clear and concise in articulating the value you provide, and concentrate on making a good first impression. If you are not, you could find yourself being passed-by or not taken seriously.
  6. Make sure you practise proper referral etiquette, or you may risk losing out on future referrals. When you get a referral, act quickly and keep the referrer in the loop in relation to the progress you are making. After all, he is risking his reputation in referring you, and is looking for kudo’s if you do well.
  7. Build a network of trusted referral partners, so that when you meet someone new, you can be resourceful by introducing them to people you know and trust. This will make them trust you more and have more confidence in you, and help you greatly in gaining another new source of referrals.

Of all of these, I think point No 2 is the most important. Most of the people that I talk to that express frustration with the outcomes they get from networking, are guilty of just turning up.  If you are already putting in the networking time, doesn’t it makes sense to use that time as part of a bigger picture plan?