Growing your building business is not as hard as you might think.
Some of you will know that I used to have a building company. It’s been a while now, I founded the company in 1983 and I sold the company to my junior partner in 2003, but I have many fond memories of my building days (and some not so fond).
Because of my background I am often asked how to grow a building business, while keeping margins up. In my experience, business growth in the building industry comes down to implementing Five Golden Rules:
Under-promise and over-deliver
Probably not the Rules you were expecting, so let me explain:
Muddy boots and cream carpets
The building industry in Australia is a strange beast. On the one hand, because of it’s widespread system of contractors and sub contractors, I believe it’s probably one of the most efficient building industries in the world, but on the other hand I also believe it is one of the unruliest building industries in the world. Most of us know one or more horror stories of builders going bankrupt, subbies walking off site, costs spiralling out of control, tradies walking muddy boots through cream carpets, leaking bathrooms, disputes before tribunals and indecipherable quotes on the back of enveloppes.
I’ve certainly have my fair share of war stories from my 20 years in the building industry in Sydney. And to be honest, I’ll even admit that I and my company might even have been at the root-cause of a couple of those stories.
It’s not easy running a building or building-trades company in Australia. But there’s two sides to that coin. There’s great opportunity in the building industry to grow your business and make good money, because there are so many drongos out there and customers are desperate to find professional reliable businesses to deal with.
Laying out the red carpet
It was that way in my days as a builder. The good, professional, reliable, tilers, bricklayers, carpenters, painters, plumbers, electricians, concreters, renderers and roofers were always busy. I would have to book them in 6 weeks in advance, I’d have to pay them well and lay out the red carpet for them, or they’d go somewhere else. And I learnt that I’d better do all of that, and then some, because getting the cheaper, available tradies always led to disasters of one kind or another and most importantly, unhappy customers.
The Golden Rules:
Hence my Five Golden Rules for Growing your Building Company above, because this is what I learned about developing a growing Beautiful Building Business (and Life):
Be empathic: Building contracts are big things, in dollar terms as well as scope. Customers enter into building contracts with great trepidation, because it’s usually the biggest contract of any type they’ve ever signed and they can’t even see what they’re buying yet. You need to be sensitive to that anxiety, that all customers experience at some stage in the journey. You deal with big contracts and big turnover every day. For your customers it’s a great source of stress. Stress makes people behave irrationally… Make allowances for that.
Be predictable: People are happy to pay your price if they feel confident they’ll get what they are expecting. If they don’t have that confidence, they’ll shop on price because that’s the only thing they can control.
Under-promise and over-deliver: If you say you’ll be ready with something by Friday, surprise them and finish by lunchtime on Friday and then take some time to really clean up, dot the I’s and cross the T’s. Don’t ever tell the customer you’ll be all finished by Friday and then when they come home from work on Friday it’s still unfinished and a mess… That’s just asking for trouble.
Say No: Don’t take on work you don’t feel confident you can deliver, fully, properly, on time, profitably and with a smile. Say yes, only when you are 100% confident you can do it how it’s meant to be done.
Communicate: The three C’s: Communicate, Communicate, Communicate. If you come to the conclusion on Wednesday that you can’t complete the job on Friday as you promised… Tell them… on Wednesday… By email, by letter, by carrier pidgeon, by SMS, or by Whatsapp or Twitter… But for Pete’s sake, tell them. They won’t know, they expect to have a Barbeque on the new deck on Friday evening and they’ve invited their friends to celebrate. Similarly… If you strike something unexpected, you hit rock where you didn’t expect it, asbestos in the roof, an aboriginal artifact in the footings, a conflict on the drawings, you find out you’ve made a mistake in your calculations, ordered the kitchen benchtop 100 mm too short, or forgotten to order it at all… TELL THEM. Seriously. They’ll understand. They’ve made mistakes in their life as well.
And if you do all of that… If you live and breathe those rules, every day, and you hammer those rules into the heads of your employees and subbies, your business will grow and grow and grow, because your customers will be your Raving Fans and they’ll do your marketing for you. They’ll tell their friends all about how you finished the deck early on Friday, cleaned and tidied up and left a bottle of wine to have with the barbie on the deck when you came home from work. They’ll talk about you to their work-mates and convince their neighbours to have their own decks built by you as well, even though they’ve had cheaper quotes.
The alternative means you’ll have to endlessly compete on price and competing on price is a dog’s game… trust me on that.
Do these 5 things right every time and your business will never stop growing
I’m often asked by clients to help them grow their service business. I nearly always tell them that growth is easy in a business based on services, anyone can grow a small business.
All you need to do is this:
Deliver what you promise
At the time you promise it
For the price you promise it
For a profit and
With a smile.
That’s all… Honestly
If you do those 5 things, every day, customers will break down your doors, because so few small businesses do.
Most small businesses fail doing those 5 things consistently and stunt their growth, because of the classic problem of small business growth:
It’s easy when you’re small
You see, when your business is small, you and a couple of people delivering all the services, be it plumbing, washing machine repairs, fixing cars, bookkeeping, designing websites or building houses, then it’s easy to manage and be in control of everything. You can make sure things happen the way you want them to happen.
Once you start to grow with 5, 10 or more employees, and you have a number of teams, or vans on the road, suddenly you’re not in touch with everything that goes on anymore. You don’t even get to meet all the customers and you won’t personally see all the services that get delivered. You have to rely on others, and hope they do things the way you want them done. That they communicate with customers they way you expect them to and that they take their dirty boots off before they traipse in through the house.
Managing by keeping your fingers crossed.
And guess what? It doesn’t work. Your customers start being less than happy, they start looking elsewhere, you’ll believe you need to lower your prices to keep them and it all becomes a dog’s game.
So here’s the biggest secret of all to growing your business:
Learn to say no.
Learn to say no, until you can handle the growth. Never taken on any work, any new business, unless you are confident you can deliver it to those 5 standards above.
If you do that, you’ll be in control of your business, you won’t have to compromise on price and you will build a Beautiful Business and Life. And the customers? They’ll keep coming. There is never a shortage of customers for businesses who deliver on all of their promises, with a smile… I promise you.
This is the tenth post in the series of The Ten Priorities: Laying the Foundations for a Great Business and Life. The tenth Priority is about Managing the marketing. The introduction to this series on The Ten Priorities is here.
The second rule of Seth Godin is to make sure lots of people know about your great product or service.
It may seem obvious. No matter how great your products, your people, your systems, your visions and your plans are, if nobody knows how great they, there will be no business.
Many business owners will go out of their way to build a great product, but forget the second Rule. (BTW, the inverse is also true, more about the two different types of entrepreneurs here)
But both rules are equally important.
A business owner who wants to build a great business must learn that in business:
Marketing is everything, and everything is marketing.
A great business owner asks himself about the marketing dimension of every aspect of the business. Marketing is as much about the way the business goes about collecting its debts, or about the way people answer the telephones, or about its product warranty, as it is about the Facebook advertising campaign it’s running.
In fact, it can be said, that any activity in the business that does not have a marketing dimension to it, is a waste and should be stopped immediately. (more about the basics of marketing here)
When you learn to ask yourself about the marketing aspect to every decision you make, every system you develop and every action you take, every day, your business will flourish… I promise you.
Now that you’ve finished Ten Priorities, find out more about yourself and take “The Entrepreneur Type Survey”
How to grow your business is the most enduring of The 7 Big Questions. All of us business owners have felt frustrated at some stage in our journey to building a Beautiful Business The business feels stuck at one level and we are not sure how to get it to the next level.
So many misunderstandings and myths about business growth:
I have written about the general topic of business growth in many different places. I think there are a number of misunderstandings about business growth that are not helping us, as business owners, to feel better about ourselves. The first article is about that (and you can also read about the misunderstandings about growth in my book: The Ten Truths for Making Business Fun):
I believe that to grow a Beautiful Business that Stands the Test of Time you must be able to answer the question: Why does your business exist and why would anybody care? Most business owners can’t answer that question succinctly and powerfully. That’s bad, because if you don’t know why your business exists, your customers certainly won’t be able to tell, and then all it comes down to is price. Competing on price is a dog’s game, unless you’re Aldi, where price is your Purpose. The second reason you need to be able to answer the question clearly is that if you can’t, you will never master the greatest skill of effective business owners, namely the ability to say “NO”.
We’ve all heard that to grow your business you must start with Goal setting. But effective Goal setting is more complicated than you might think. Most Goals we set for ourselves and for our businesses are at best ineffective and at worst actually hinder our progress. Goals are often arbitrary, unrealistic, and unrelated to what really matters in our lives. A Goal to make $2 million revenue is an arbitrary and meaningless number, why $2 million? why not $1,956,384.13, or $2,163,927.46 for example? And so what when you reach the goal? Will you be better off somehow? What if you fall short? By $100, or by $1,000, or by $100,000? Does that mean you are a failure? Goal setting really makes a difference, as long as you understand that Goals are like a compass, they provide a direction on your journey, they are not the destination.
Marketing is about creating opportunities to sell your stuff. As such, I fervently believe that:
Marketing is everything and everything is marketing
And it is. To grow your business you have to look at every aspect of your business. Marketing is about advertising campaigns, and social media and designing your logo and your website, but it’s also about how you answer the telephone, about your pricing policies, about ensuring that your customers are happy with what you sell them. It’s about how you dress and about how you present your quotes and about your Public Relations strategies and about your warranty return policies. One of the greatest marketing strategies is a relentless focus on quality in everything the business does, in order to “Create Raving Fans”, because if your customers are all Raving Fans, they will actually do your marketing for you.
I don’t mean to imply that online marketing is somehow something different from all other forms of marketing, it isn’t. But it is useful to pay special attention to online engagement and marketing to build and grow your business, because it has become such an important aspect of any marketing strategy. Whether your business is a cafe or a building company or a law practice, or it imports widgets or makes whatsits, you can not ignore a bunch of different forms of online marketing. Email marketing, content marketing, Search Engine Optimisation, Search Engine Marketing, Social Media Engagement, Social Media Marketing, online PR, online reputation management (The ubiquitous star ratings), video marketing. The list is near endless and constantly changing.
You could easily argue (and I have in one of the articles I refer to below), that the principles of marketing haven’t changed, we’ve just got a bunch of new tools to do it with. And at one level that’s true, people still want to get to know, like and trust you before they will do business with you. But on another level things have changed drastically. Ten years ago, you’d give someone a business card with your web address on it and they would immediately want to know if you also had a bricks and mortar store. These days they want to know you’ve got a high functioning web presence and that you’ve got a presence on Facebook and on Google local and ideally a bunch of 5 start ratings on Yelp and Trip Adviser. Whether or not you have a bricks and mortar presence, simply doesn’t matter anymore. Online engagement in all forms must be part of your marketing strategies or you will not be taken seriously.
That’s a quote I saw hanging on the wall at a big office once, many years ago. And it’s true. No business growth, no business, without sales. No matter how great your product is, how beautiful your logo is, how smart your website is, or how wonderful your employee conditions are, if you’re not selling, the business will cease to exist.
Sales is often seen as a subset of marketing, but I’m giving it it’s own section here, because I think of marketing as getting the customers to your door and sales as actually getting them to hand over money. Lead generation v lead conversion. Sales is about skill and it’s about mindset and systems and above all, it’s about making it easy for people. And this last word is the key to the whole shebang. It’s always about people. The old saying is:
People do business with people they know like and trust
You must always remember it’s about people first and foremost and in small business especially it’s about people in both directions: People do business with people. Your whole approach to sales, especially in small business, all aspects of it must be built on a people to people philosophy.
A business without a Plan achieves everything in it
business growth, planning, strategy
Nothing in other words. Your business growth depends on planning. No human endeavour ever amounted to anything without a plan. Yet planning is guessing. It can never be anything more than guessing, because we can not know the future. So if planning is guessing, why does it matter so much and how can we do it so it works? There are two important answers to those questions:
1) You must understand that there are two entirely different types of business plans: Internal Plans, and External Plans. External plans are designed to impress others about your business and form part of the documentation to obtain a loan or other form of funding or make a proposal to a third party of some sort.
Internal Plans are documents designed to help the business focus. They are combined with meaningful goals (see above) and they help people in their day to day decision making processes. Internal and external plans have different functions and are presented quite differently as well.
2) Planning is a verb. It’s not static, it’s an activity that never stops. As soon as one plan is created, we start again. John Lennon said: Life’s what happens when we’re making other plans. Planning is like that, we make a bunch of assumptions and plan our actions accordingly. Then we go ahead and check reality as it unfolds and make changes to our plans to suit the new realities, every day, every week, every month and every year. Business Plans that work, that make a difference, are living documents.
Customer service is also a subset of marketing of course, if done well it leads to more business from those customers, and as I said above, everything is marketing and marketing is everything, but it’s worth mentioning separately, because of the concept of Raving Fans. Ken Blanchard wrote a little book that said it best in the title: Create Raving Fans and have your customers do your marketing for you. It’s a great little book and there’s a link below to get yourself a copy of it.
The principle of Ken Blanchard’s book is that your business should always be working to do one better for your customers than they expect. If you do so, your customers will become your advocates (Raving Fans) and advocates will go out of their way to help your business grow. They will talk to their friends about you, they will drag their colleagues to your door. They will defend your business against the competition and best of all, they won’t quibble about price. If your business focuses on turning it’s customers into Raving Fans, you will be able to slash your marketing budget in half, over time, for a better result.
Grow your business with systems and quality improvement
My clients often ask me to help them grow their business, and I often tell them to stop worrying about that. Getting more customers is actually the easy part. The hard part of business is:
To deliver what you say you will
By the time you say you will
For the price you say you will
At the quality you say you will…
With a smile
If you can do that all the time, the customers will come flocking to your door and you won’t have to spend much money on marketing (for one thing because you’ll be creating Raving Fans, see the previous topic). And right now, you may well be doing all those things, with a smile, but the trick is to be able to keep doing that as the business starts to grow.
I can’t tell you how many businesses I have seen struggle and fail in my years in business who couldn’t maintain their product or service quality and dependability and price, at scale. Once the business starts to grow and you, yourself, are no longer in charge of every step in the process, things start going wrong. Quality becomes inconsistent, delivery times become unreliable, prices go up or profitability suffers and your smile starts to disappear. Once the rot sets in like that, your reputation starts to suffer and customers start to look elsewhere.
There are only two answers to this dilemma: Either, don’t grow, stay small, learn to say NO and say it all the time… Or systematise. Developing systems for all aspects of the operation is the only answer. Systems for how the phone is answered, systems for estimating, systems for quality checking, systems for calendar management, systems for inventory management, systems for callbacks and warranty repairs. Systems for marketing, systems for hiring and firing etc etc. Above all, systems allow you to create Continuous Improvement Loops into your organisation. And continuous improvement is the Holy Grail of business. It’s what made companies like Toyota great.
Inventory management is a big specialised topic, and it’s really a subset of the systems section above. There are whole management libraries written about the various philosophical approaches to managing stock when building and growing a Great business that Stands the Test of Time. My earliest lessons of inventory management came from the owner of a big hardware store I dealt with a lot in my days as a builder, Colin. One of the reasons I bought so much of my material from Colin was that he always had everything in stock. Colin clearly knew what it took to create business growth, because his business was booming.
I asked Colin once if keeping such high stock levels of everything a builder such as myself might need from time to time was economical for him. I imagined that it was a very expensive way to run a business, having all that money tied up in timber and hardware and bits and bobs. His answer was:
If I don’t stock it I can’t sell it.
I have often thought about that statement in the years since, now that most operations run on the principle of “just in time”. Supermarkets have made an art form of stocking just enough and not a jar more than required, to minimise shelf apace and inventory cost.
I don’t know what the answer is, but I know that Colin got all my business for 20 years and most Sydney builders had an account with him, because everything we needed was always ready to be picked up.
Grow your business with hiring, firing and engaging people
Michael Gerber in his famous book “The E-Myth” wrote that it’s impossible to manage people and hence great businesses focus on systems, and manage those instead. And that’s certainly what grew McDonalds into the enormous business it is today, no argument. And as I’ve written elsewhere before, if you set out to make as much money as possible from selling restaurant food, it is undeniably the case that the McDonald’s model is the one to emulate. But, I can’t tell you how happy I am that not everyone in the restaurant industry wants to build McDonalds, because the world (and my palate) would be the poorer. The same philosophy can be applied to any industry.
If you’d like to build and grow a unique business, a business with an individual character, you’re going to have to manage people. You’re going to have to get good at putting the right people on the bus, sitting in the right seats, facing in the right direction and also know which people to get off the bus. If you don’t learn how to find and keep the right people and get them to do great work, your business will always struggle.
That means developing hiring policies, being prepared to hire people who might be better than you are at certain things, learning how to do great interviews, implementing induction and development training programs. It means learning how to coach your people, encourage them and hold them accountable. And it means learning about effective delegating. It means doing the HR admin and compliance effectively, writing job descriptions and doing performance reviews. It means learning what it takes to be a leader and it means being prepared to take the tough decisions when required, and take them quickly and respectfully.
To build and grow a Great business that Stands the Test of Time, you can’t afford to be left behind. The pace of change and innovation is relentless and what was ok even a few years ago is no longer ok now. Not long ago it was still fine for a cafe to have a sign saying “cash only”, but in 2018, you’ll lose a lot of business if you don’t accept cards in payment. Even in a business as simple as mine, people expect me to be able to accept online bookings. Cloud computing combined with smart phone technology and advanced GPS systems mean that customers now expect to be informed that their plumber is on its way and can be expected to pull up in front of their house in 13 minutes.
You don’t need to be Uber or AirBandB to implement new technology and come up with new ways of doing business. I just bought a house in a different state of Australia. The real estate agent gave me a private showing of the house via Skype. I engaged the conveyancer, the building inspector and a surveyor all without setting a foot in the house or the state.
A client of mine with a creative marketing agency has a team of designers and copywriters and marketing assistants all over the world and she rarely even meets her clients face to face. Another client with a small supermarket chain has technology in his stores that allow him to see what’s going on in any part of any store and to get live access to each of the store’s Point of Sale systems. He’s also just implement a bunch of tablet screens in his stores allowing people to find dinner recipes incorporating the fresh vegetables he has on special.
And all this stuff is only the beginning. It won’t be long before artificial intelligence is integrated in doctor’s surgeries and lawyer’s offices, and copywriting agencies. If you think that technology and innovation isn’t going to have a massive impact on the way you do business and how to create business growth, you are kidding yourself.
Each of the 7 Big Questions has a dedicated page on this website, with links to many relevant resources both within my website as well as throughout the internet. Scroll down or click on the links above for a summary of each of the 7 Big Question with a link to that question’s full page.
Summary: To build aBeautiful Business and Life, we need growth. Seth Godin made a great statement some years ago on his blog. He said: To build a great business you only have to do two things: first you have to do great work or deliver a great product and second you have to make sure lots of people know about it. And that’s exactly how simple it is to build a Great Business that Stands the Test of time. But, as with so many things in life, it’s easier said than done.
Business growth is about research and product and systems and quality assurance and innovation and inventory management and people management and everything in between and then when you get that right, it’s about customers, and marketing and sales and social media and communications and PR and SEO and content marketing and advertising and design and branding and of course leadership and you might well argue that before all of that comes Visioning, Mission, Purpose, Goal setting and Strategic planning. In short Business growth touches all aspects of business. Read More Here…
Summary: To build a Beautiful Business and Life, we need to make profit. A business that doesn’t make profit and that doesn’t generate cash flow isn’t a business, it’s a hobby. Profit is not the Purpose of business, and nor is generating Cash the reason the business exists, but without profit and cash it is not possible for the business to deliver on it’s Purpose.
Business growth will have an impact on the flow of profit and money in the business, both positively and negatively, but many other aspects of business have an impact as well. There’s pricing, discounting, inventory management, costing, trade terms , collection policies and procedures, expense management, cost control and many other aspects of business will determine the profitability and sustainability of your business.
And on the other hand there is financial management. The management , reporting and analysing of the flow of profit and money through the business. Having your fingers on the pulse of all of the key indicators of the health of your business every day, week, month and year. Management of the numbers in other words. Read More Here…
How can I become less overwhelmed and feel happier every day?
Summary: To build a Beautiful Business and Life, we need to get unstuck. In my experience, business owners operate in a state of overwhelm many days of the week. They’re often first in the door in the morning, last out the door at night and have to catch up on their admin and email after dinner. They run around from crisis to crisis most days, extinguishing brush fires along the way.
Staff don’t seem able to tie their own shoe laces without input and supervision from the boss. Customers expect the business owner personally to solve all their problems, immediately, rather than the perfectly qualified and expensive staff that are employed by the business for that purpose.
As a result, the critical business development projects are constantly pushed back and the business gets stuck in the mud. The way out of this overwhelm is to learn to focus on three letters FUN. Fun in Business is the opposite of overwhelm. Developing a discipline on making Business Fun again works, because when business is fun it means everything is working. Read More Here…
How can I find the right support, advice and guidance?
Summary: To build a Beautiful Business and Life, we need support. One of the most consistent complaints I hear from business owners is that it’s all down to them. They feel alone and unsure of themselves. They need to have a sounding board. The people around them don’t get it. The staff are affected by the decisions the business owner needs to make, and so are their spouses and family.
Human beings work well with external accountability and advice. Independent external support is invaluable to any business owner who wants to build a Great Business that Stands the Test of Time. External support can take many forms: A mentor, a business or life coach, management consultant, a virtual board, an executive coaching group, a regular get together with a group of fellow business owner buddies or all of the above.
One thing is for sure: Don’t think you can do it on your own. But how do you go about finding the right support for you? Read More Here…
How can I find work-life-balance in my business and my life?
Summary: To build a Beautiful Business and Life, we need to create a balance between the demands of the business and those of the rest of our lives.
In the many years I’ve worked with business owners, I’ve come to believe that business owners are the most ‘guilt driven’ people on the planet, “worse than Catholics” I sometimes joke. Business owners generally go through life believing they are not up to the job in some way. They tell themselves (and me), that to compensate for their perceived failures, they’ve got to work harder than anyone else in their business or else how could they ever ask their people to put in the hard yards when required? (see also what I wrote above about overwhelm). But in the mean time they’re missing out on the important stuff in life. Their health and well-being suffers, as are their families.
For business owners to create a greater balance between work and life, the first step is to acknowledge that owning a business is never a 9-to-5 job, you probably won’t ever be able to close the door behind you on the way home entirely. The business is your baby, you’ve put your heart and soul into it and it’s part of who you are as a person.
Once you acknowledge that fact, the immediate next step is to recognise that your own time, your health and your general well-being are the most valuable and important assets of your business and as the business owner it is your prime responsibility to look after your assets. In other words, not looking after yourself and ensuring you are in a great physical and mental state means you are not taking your responsibilities as the owner of the business seriously. Once you’ve learnt to accept the realities of those two principles (contradictory as they might seem from time to time), you’re on the path to create the business and life you dream off. Read More Here…
How can I become a better business owner and leader?
Summary: To build a Beautiful Business and Life, we have to become better business owners. As I’ve said above in the “work – life – balance” summary, most business owners feel they’re not quite cutting it as entrepreneurs. Oftentimes, business owners start their business on the back of their profession, trade or skill they have learnt (plumber, architect, accountant, chef) and they feel confident in that particular skill. But when they start a business based on that profession, they suddenly realise that it takes a lot more than being a great plumber to build a great plumbing business.
Few business owners have studied to be a business owner, and even those who have attained an MBA or similar qualification, find that they’re not prepared for the realities of life as a small business owner. Suddenly everything is down to you, the big decisions about whether or not to bid for that contract, or hire that expensive employee, or sign the lease for the new office, as well as making sure the toilets are stocked with toilet paper and that there’s ink for the printer.
To top it off, your people look to you for having vision, having the answers and being the leader. It’s a frightening place to stand in the middle off, but there are three pieces of good news: (1) You got this far and you’re still breathing so you must be doing something right. (2) Your people actually want you to be the leader and they’re ready to forgive you just about any balls up you’re going to make along the way. (3) Leadership is something you can learn, practice and get better at. Read More Here…
Family business: How can we negotiate our roles as business and life partners better?
Summary: To build a Beautiful Family Business and Life, we need to get good, both at working with our spouses as well as living with them. As I’ve said above in the “better business owner” summary, many businesses are founded on the profession of the business owner. The plumber starts a plumbing business and the lawyer starts a law practice. A little way into the life of the business, the founder of the business, along with the spouse of the founder starts to appreciate that it takes more than being a great lawyer to build a great lawyer business and the business flounders.
Often, it is at this point that the spouse decides to enter the business as well, to sort out the chaos, in no small measure, to protect the interests of the family, and the family business is born. 70% of all businesses in Australia are family businesses and a large percentage of those can be classed as husband and wife family businesses.
In my experience there is wonderful opportunity in being in business with your spouse. It holds the possibility of providing for your family very well and there is a great opportunity to grow as a couple. But waking up beside your business partner in bed every morning also comes with a bunch of unique challenges. Read More Here…
I have collected a bunch of great resources and information for family business and husband and wife business owners. If you come across any particularly good E-books, articles, infographics, videos or links yourself or better yet if you have created any yourself, please let me know so I can add them here.
Worry less about growth and more about how you keep your customers happy all the time
I have a client who owns a car mechanics business in Sydney, let’s call him Garry the Grease Monkey (not his real name, in case you were wondering). Gary is around 30, and he took over the garage from his mum and dad some years ago. For the past few years, it’s been him and his dad doing the work and mum doing the books. Gary and his dad make ends meet, just, but dad is ready to retire, and Gary wants to build a business that gives him the opportunity to work a bit less than 60 hrs per week and afford him the income to start a family and more of that good stuff.
So Gary found me and asked me to help him grow the business. (Read more about growing your business here) You need to know, that Gary is a great mechanic and that Gary and his dad do great work, significantly cheaper than the major mechanic’s workshops and dealerships, and that they do everything in their power to make your life as easy as possible. Gary and his mum and dad are nice people, they’re the kind of people you’d love to give your precious car to for a service or repair, because you know they’ll look after it as if it was their own.
Keeping the clients happy
So the first thing I did was that I told Gary to stop worrying about where the extra clients were going to come from. Getting new clients was going to be the easy part. The hard part is ensuring that when he doubled and tripled the turnover of the workshop, his clients would continue to be as happy as they are now while maintaining and improving his profit margin on jobs.
How do you keep delivering consistent quality and reliability, day in day out when your business doubles and triples?
A year later, that’s exactly how it played out: the easy part was getting the clients. Gary joined a local business referral group, launched a new website, improved his local SEO, developed strong referral relationships with a few chosen businesses in the local area and the phone has started to run hot with new clients, the kind of clients who ring up to book in their car without even asking about price.
What’s been much more complicated for Gary is managing the extra work. There have been three big challenges for Gary in the past year, and these are the three things that challenge all Small Business owners in Gary’s position:
Finding, hiring, training, motivating and keeping the right staff.
Developing and implementing systems and processes that create regularity and predictability in the business.
Finding and implementing business management software and applications.
Bad experiences with small business
In a city such as Sydney, most people have had bad experiences with Small Business of all kinds. Tradesmen turn up late or not at all, work is shoddy, they leave a mess when they leave and charge unexpected fees for all kinds of spurious reasons. If you do what you say you’re going to do, for the price you say you’ll charge at the time you say you’ll do it, consistently and with a smile, the customers will break down your door. We as consumers are desperate for people who offer such simple dependability and trustworthiness, and when we find someone like that, word travels fast.
But that’s exactly where the problem lies. Most Small Business owners start their business with great intentions and when they do most of the work themselves they offer exactly that kind of dependability, but when the business starts flooding in they lose the ability to manage the extra workload, they have to rely on employees that they haven’t trained and mentored properly, they have little or no established systems in place, and they don’t know what goes on between their employees end their customers.
Keeping your fingers crossed
I call it management by keeping your fingers crossed… It doesn’t work and it leads to unhappy customers and customers that go off looking for the next small business to put their faith into.
Gary and I spent most of our year together on the three challenges above. It’s what I call the work of the business owner, as opposed to the work of the business. Gary has made major strides, and he’s found a couple of great employees already and is giving them every opportunity to stay great; he’s started writing down a lot of the systems in the business, and he’s found and started implementing a big piece of software that is designed specifically for the management of mechanic’s workshops.
The clients are starting to flood in and they tell their friends about the cleanliness and efficiency of the workshop and at how easy Gary makes it for them to have their car serviced at their convenience, and those friends can’t wait to have their car serviced by Gary’s business, and they tell their friends, and so on.
Getting clients is easy, how you deal with what comes after is what differentiates the business owners from the hobbyists… Just ask Gary the Grease Monkey.
This is a guest post about micro influence marketing by Philip Piletic, more about Phillip at the end of this article
Why you (and I) may be more influential than the Kardashians
Hiring actors and actresses, singers and dancers, and everyone in-between is nothing new to the world of marketing. Since the advent of modern day marketing, advertisers have long seen the potential in using human billboards as a way to peddle their merchandise. Though times and technology have changed, using influencers as a method for pushing brands has not.
In an article published by Forbes, Tim Ward, a successful entrepreneur, and author, wrote that the influence trend is not showing signs of slowing down anytime soon – we are just getting started, as a matter of fact. So what has changed since the good old days when cigarette brand Kodas began introducing baseball cards of famous players with their pack of smokes.
Generally, consumers are becoming far savvier than they used to be. Most people of adult age (and most likely a few teenagers) are beginning to understand how they are being influenced by ad placements in cinema and other entertainment venues. Similar holds true with Instagram and other social media spaces – people can tell when someone is being paid to promote a product.Thus, they are becoming more skeptical of these ploys to buy into brands. This has given birth to the increased use of micro-influencers.
What is a micro-influencer?
There seems to be a general set of specifications that win someone the title of “micro-influencer.” Turns out that the number of followers an influencer has seriously affected their power of influence over the masses writes Yuyu Chen of DIGIDAY. Those with 1,000 followers or less seem to have the highest rate of likes at eight percent. At the top of the scale, those who boast 1 million to 10 million followers only receive 1.7 percent likes. Nevertheless, that is a huge number: 17,000 people influenced.
The article goes on to explain that when Sarah Ware, co-founder, and CEO of Markerly, joined with Jenner and Kardashian sisters on Instagram in order to market a weight loss tea brand, they were able to win hundreds of conversions. Yet, when she analyzed and compared what Jenner and Kardashian were able to do versus about 40 micro-influencers, the dietary tea brand was able to convert a far larger number.
Note: For those who want to read the negative press the Kardashians and other stars received over this “detox-tea” sponsorship, read this article. It’s kind of funny.
If you read the article in the link you will find that using famous people to “influence” your brand can have dangerous consequences (and this can be true for both sides). Though the Kardashians have a huge social media following, that following doesn’t mean anything. The Kardashians have been known throughout their history to be controversial at the very least. Therefore, using such high-profile and sometimes risque endorsements for a brand could be a bad strategy.
Micro-influencer or celebrity influencer?
Social media ad platform Gnack has strictly defined micro-influencers as those people who have 10,000 followers or less. Anything more than that is pointless. They love to use people whose following is primarily made up of friends and family and a small group of fans. These influencers are usually more down to earth and genuine when they present a product that they endorse.
In an interview with DIGIDAY, Chico Tirado stated, “More than 55 percent of our agency partners have incorporated ‘micro-influencers’ as a part of their [current] strategy,”
“We’ve seen some ‘micro-influencers’ on certain campaigns get up to 25 percent engagement,” Tirado continues.
In March of 2016, following the Google and other search engine models, Instagram has moved to using an algorithm to control content quality. This means what used to work by some influencers won’t work so well now. Social media and search engines make their money from people using their services. These companies know that if their venues become playgrounds for spam and nonsense marketing strategies, they will soon find themselves in hot water. This has made it more important than ever for companies to show integrity when choosing a marketing strategy and who they choose to market them. But I guess that’s the purpose, isn’t it?
So what is the verdict?
The statistics are plain as day: if you want people to respect your brand, it is better, in the long run, to build up a network of micro-influencers that have a following of fewer than 10,000 people. The more grassroots these followers are the better.
Guest article by Philip Piletic: Philip’s primary focus is a fusion of technology, small business and marketing. Freelancer and writer, in love with startups, traveling and helping others get their ideas off the ground. Unwinds with a glass of scotch and some indie rock on vinyl. You can read more of Phllip’s work on his Linkedin profile here: https://au.linkedin.com/in/philippiletic
We must all become believers at the Church of Gross Profit
Tracey launched her business about 4 years ago, and in that time she’s built something quite special. Tracey’s business sells a unique home delivered fresh food solution online for busy professionals who want to have a healthy balanced diet that tastes great as well.
Tracey’s business model is in fact so successful that it attracted not only growth but competition. Entrants copy what she’s been doing so well for the past 4 years. Some of those competitors are trying to compete on price, some are offering delivery to different areas of Sydney and others are offering different payment models.
Tracey is annoyed, she’s worried and she’s determined. Annoyed that others are stealing her ideas, worried that they’ll kidnap her customers and determined to fight the bastards. Good for her, and I’m going to fight right alongside with her and teach those upstarts a lesson they’ll never forget.
Good news and Bad news
As always, there’s good news and bad news: The bad news is that it seems that some of these bastards have actually gained a foothold in Tracey’s market, but the good news is twofold:
The bastards are demonstrating that there is room in the market. It’s clear that there are a lot more people who want what Tracey has to offer than she might have thought.
The bastards are testing some new ideas that Tracey herself has been considering for a while, but now those ideas are being tested free of charge or risk to Tracey’s business.
Tracey’s knee-jerk temptation is to attack. And the obvious attacking strategy is to meet the competitors head on and offer the same things they do. One of those things revolves around delivery options. Tracey’s products are delivered for a flat fee, by courier, on the day of ordering to a limited number of areas of Sydney. It has always been a core principle of Tracey’s, to keep the whole thing super simple. A flat delivery fee fits that principle. The flat rate means the delivery has to be restricted to certain areas of Sydney, or Tracey can’t maintain her minimum margins.
Same day delivery everywhere
But one of the new upstarts is offering same day delivery everywhere in Sydney and Tracey feels she needs to match the competition — that flexibility.
But I’ve advised her against doing so, for one reason and one reason only:
Buying growth always leads to disaster.
Sure, it would be nice to move into the untapped regions of Sydney, but Tracey would only be able to do so by paying a lot more for her deliveries. She’s costed the various options and her delivery costs to those new areas will increase by about $2 per item. $2 Doesn’t seem like much when the average price per meal delivered is roughly $30. But, the fact is that her current Gross Profit Margin (profit per meal) would reduce by 33%. At the moment, she makes about $6 gross profit per meal. With an increase in courier cost of $2 per meal, she would suddenly only make $4 per meal delivered. Doing that spells disaster, as sure as God made little apples.
Not long ago we updated our breakeven calculations for the business and we worked out that at a certain level of sales, the Gross Margin on each item sold had to be at least $5 to be able to break even. At a Gross Margin of $4 per item, Tracey would need to sell 25% more meals just to break even.
The Red Queen never stops running
It’s what someone recently referred to as The Red Queen Problem.
The Red Queen being one of the Queens in Alice in Wonderland who says:
“My dear, here we must run as fast as we can, just to stay in place. And if you wish to go anywhere you must run twice as fast as that.”
In effect what Tracey would be doing by delivering to new areas at the cost of her minimum Gross Margin is running harder, but standing still. No doubt Tracey would be selling more meals if she offered same day delivery to other areas, but in all likelihood, she’d make less money than she is now, she might even lose money. The profitable areas of her business would be subsidising the unprofitable areas and if there was ever an unsustainable way to grow a business, that’s it.
Growth is irrelevant. I’m not sure who ever made growth such a focus in business, but he (and it’s guaranteed to be a he, btw) should have been strangled at birth. The blind focus on growth that we are told to chase in business is crazy. Successful business owners, business owners that build Great Small Business that are Fun and that stand the test of time are devoted believers at the Church of Gross Margin.
I have no doubt that Tracey’s business will be a Great Small business that stands the test of time. Building Tracey’s business model is much more complicated than it looks and consistently making money in this business is a tough challenge. I’m sure that some of those new bastards are not making money at the moment and that they’ll fall over soon enough. One or two of them might get established and survive, but it’s clear the market is big enough and they’re going to be driving Tracey to innovate and come up with new solutions and new approaches to doing things and that’s healthy.
But buying customers at the expense of Gross Margin, that’s a disaster… I promise you.
As your favourite small business coach, I am supposed to tell you how to start the new year off with a bang. We’re already a few weeks into 2017, but in Australia the year never starts properly until after the Australia Day weekend of 26 January (also known as the Invasion Day weekend,) so I have a bit more time to give you my top 5 things to do in your business in 2017.
Obvious? Maybe, but let me tell you: the answer to that question will have nothing to do with money. (Money is never the Point, it’s a by-product at best). Neither will the answer be a variant on “We deliver a Great product with Great customer service for a Great price” (because everyone else does that too), and nor is the answer: “Because I need to pay the mortgage” (Your customers do not care about your need to pay the mortgage, they really don’t, sadly)
Nobody, but you can tell you what the answer is, but once you answer it in one short powerful statement, in a way that sends a shiver down your spine, 2017 will be a great year.
No human endeavour has ever amounted to anything without a plan. At the same time however it can be said that all plans are out of date the moment they’re created. Planning is guessing, but that doesn’t mean we might as well stop planning. On the contrary, the secret is to always be planning. Planning is a verb that must continuously be carried out. Plan every week, every month and every year. Ideally on one page, no more.
If you are focused on planning with regularly, I guarantee you that 2017 will be the most exciting year you’ve experienced in your small business.
Finger on the Pulse:
In 2017, make it your focus to start to measure the important functions of your business. What gets measured, gets managed is the old saying and that wisdom holds true as much in 2017 as it did a hundred years ago. Think about the 10 or 15 key indicators of the health of your business and how you might get a weekly and monthly single measurement of those to look at. Obviously, a few of those numbers will come directly out of your bookkeeping program, such as your bank balance and gross and net profit and your revenue figures. But there are a bunch of other numbers that will give you powerful insight into how your business is going, as well.
One tip though: You as the entrepreneur should not be involved in obtaining these numbers yourself. You should delegate getting the numbers to others and ensure that those key numbers land on your desk every Friday afternoon for the week just past. Delegating the reporting on the numbers to others in your business is a really important part of the process.
Systems, systems, systems:
I suppose it goes without saying, but systemisation is the secret of any entrepreneur. It’s all about predictability. I’m not suggesting that every small business must go through a process of McDonaldisation, far from it, but we shouldn’t ignore the lessons from McDonalds either. When you send one of your plumbers out to do a job, you want to feel confident that he’ll do the job smoothly, safely and profitably and that he leaves a satisfied customer behind. And when someone in your business answers the phone, you don’t want to have to hold your breath hoping they’ll not annoy the person on the other end of the line because of bad phone manners.
Systemisation is about the opposite of “Managing by keeping your fingers crossed”. Systemisation can be about small things such as answering the telephone with a simple little script as well as big things like a complete safety management systems. Only you can decide the balance between the cost of developing and implementing a system and the cost of not having one. Some things will always have to come down to common sense, but not all of them.
So is Twitter and Instagram and Pinterest and YouTube and Yelp and TripAdvisor and LinkedIn and Google and a whole bunch of others that haven’t even really been though about yet. They will become more and more important and you simply must get on board with them if you still want to have a business a few years from now. People ask their Facebook friends for recommendations to plumbers, restaurants, holiday accommodation and accountants and then they expect to click straight to a Facebook page of that business and see reviews and opening hours and star ratings.
You may still be getting the bulk of your business outside of social media, but if you are, I bet it’s already getting harder and in 5 years I guarantee you’ll be left behind eking out a living in the margin.
20 years ago you effectively couldn’t run a business without an ad in the Yellow pages… These days the same goes for social media, whether you like it or not.
It’s very easy to get caught up in your business, especially when you are working hard to make it work. Learn to have more fun in your business with my start-of-the-year freebie– The 10 Truths for Making Business Fun. Because you created your business to live life on your terms – so do it!