Self-belief in business

Now you can criticize...

It stands to reason that if we have our own business we need to believe in what we are doing. That means that we should believe sincerely in our product or service. If we are honest with ourselves we can be honest with our customers. Then we can sell with that sincerity.

The trouble is that self-doubt can always creep in. We are not all constantly confident. Many of us, although actually very good at what we do, cannot quite believe that we are as able as our peers and colleagues, let alone better than some. We fear we will be found out as imposters. Maybe this is a more common phenomenon in women but this was my problem for many years. I think the explanation for me lies here.

Late in my career and rather accidentally, I landed a job which was technically very difficult, and which really terrified me to start with. However, I not only found that I could do it, but that I was very good at it. That was when it came to me that I was not an imposter, but could give as good as anybody, and better than some too.

I had this revelation, but maybe you just have to realise that the feeling of being an imposter is only in your mind. I still have bad days sometimes, and maybe you do too. Just think of all the good things you have achieved in your career and in your business and build on your confidence. Go get ‘em.

If you build it, will they come?

I have mentioned before that my local village has largely become a collection of cafes and fast-food outlets. Within a couple of hundred yards we have two Indian takeaways, a Chinese takeaway, two pizza places and three cafes. One of the cafes is more upmarket and has an alcohol license, but I suspect they are popular because of their good coffee.

With all this competition I was surprised when I heard that one of the famous coffee shop franchises was opening up in the village. This was on two fronts. Firstly I thought they would struggle against the established probably cheaper establishments, and secondly I supposed that our village was not the kind of place that the typical coffee franchise customer might live.

Of course I was wrong. I think people are prepared to travel and pay more for a guaranteed good quality standard, once word gets around. The new place is doing OK as far as I can tell.

What about the other places serving coffee, other beverages and food? Well, I think they have their regulars, although the one not on the main drag is never packed with customers.  What they have to do is give outstanding quality and service to succeed against a well-known tried-and-tested formula as exhibited by the franchise. That does not mean they have to spend more to do it. Service and quality is about attention to detail. Then word-of-mouth will do the trick in terms of getting customers in.

I would wish all the café owners luck, but it is not about luck. It is about getting things exactly right to succeed.

Selling our services through others

Photoxpress_10909891 calculatorPart of my business is to facilitate services to other businesses which they may provide to their end-client. I am good at selling services to my own clients ( though I say it myself) because I know the value of what my business provides, and I can help my clients and prospects to see that value and buy into it. That will be because they receive great comfort and very likely substantial financial benefit from “buying me”.

Many of my potential clients are small firms of accountants who do not have the tax expertise that businesses like mine can provide. Of course we never steal other people’s clients, but just the same there is a reluctance as well as a lack of ability for the intermediary accountants to sell our services, and that means that their clients do not get the service and expertise they really need.

The blocking factors are:

  • Many accountants do not charge their clients enough for what they do.
  • Their clients expect to be only a low fixed fee whatever services they require each year.
  • Accountants are quite often hopeless at selling, and especially at selling value.
  • They join the race to the bottom in terms of fees for selling generic services such as accounts and tax returns and have no room for manoeuvre on fees.

How do we get round this, and sell more through those other businesses who themselves should be “making a turn” on the fees we charge them?

  • Firstly, we need to convince the intermediary business of the value of what we offer.
  • We should ask to draft any proposal they send to their client, emphasising the value if we honestly think we can deliver the value for that client, or
  • We should ask to speak to the client direct, reassuring the intermediary that we will not steal their business.

Of course this is not just a problem in my profession, but in so many where we need our services to be sold through others.

Do you get frustrated when someone else ends up selling you short to their customer?

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Small business and the baked bean test

HP beansSmalls

Shopping around for products and services, it is human nature to look for good value. Because an offering is cheap does not necessarily mean it is good value. It may be though, depending what you want, and if the seller has devised a particular method of delivery that suits a particular market at a cost which leaves a good profit margin.

I think we all like to buy quality. If we are careful we can sometimes find it at a very decent price. Once upon a time we could rely on Marks and Spencer (a UK department store) for quality underwear at an affordable price, but some years ago they lost their way. I have not checked recently whether they have got back their underwear mojo, but many of us have drifted off to find other suppliers.

Not quite what it says on the tin

Not every product or service can be delivered at what might be perceived at a very low price. Sometimes something can sound cheap, but what it delivers is poor quality even if its generic description is the same. The other day I saw a special offer of four cans of baked beans for £1. It was a brand I knew at what sounded like a very good price; better than a local supermarket’s cheap label beans, which frankly are not very good.

I bought the four cans of beans. They are very poor quality, with fewer beans in the can and watery tomato sauce, not even as good as the supermarket’s basic cans of beans.

Premium brand

Some goods and many services can simply not be delivered to a discerning purchaser cheaply. I deliver quality advice, but the cost of delivery is quite high in terms of purchasing technical information, attending courses, being properly briefed and giving proper attention to a client’s problems as well as meeting the office overheads. My fees to clients take this into account as well as the value to them in being advised by me.

If you buy fillet steak or red mullet, the cost of production and / or delivery in getting it to your fridge and table is high. The cost of production of baked beans is low, but exceptional cheapness may be reflected in the quality.

When we buy in services, we should be careful that what we get really suits us, because the better the value we get from it, the better service or product we can offer ourselves.

Have you been disappointed with a “bargain”?

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Emulating and bettering the best in business

 

My Yashica TL-ELECTRO with original 50mm lens

Cyber wars

There was an interesting take recently on the Apple v Samsung wars, in which accuse the other of violating their intellectual property particularly with regard to mobile or cell phones. Apple had a really big win on home ground in California, being awarded over $1 billion.

It is an interesting suggestion that if the Samsung products are really very similar to Apple’s in consumers’ minds, perhaps prospective purchasers might consider the much less expensive Samsung offerings. After all, if they are gadgets which do the same thing they would be better value for money. Of course Apple wants some Samsung products taken off the market, but maybe the seeds might have been sown in the minds of some consumers?

Apple fans will not be convinced. It is the other market, mainly Android and those who look at functionality first who may be swayed. No one should underestimate Apple’s clever closed marketing, and the fact they have a fan-base so well managed.

Photo days

The whole issue takes me back to when I was a very young lad keen on photography. The new much-desired 35mm camera when I was starting out was the Pentax Spotmatic SP 1000, a Single Lens Reflex (SLR) camera. It had through-the-lens light-metering and the advantage over compact cameras was that you saw through the view-finder exactly the photo you would be taking, courtesy of the mirror which flipped out of the way when you pressed the shutter button. That was really something back then.

In the early seventies I couldn’t afford a Pentax Spotmatic and made do with my Mum’s old camera, with which I had some good results.

Some years later I had enough money to buy an SLR second-hand. The camera I chose was a Yashica TL-Electro. It was cheaper than a second-hand Spotmatic, but actually it is a very good copy with only minor differences to the metering and design. Yashica had taken an excellent camera made by a competitor and made one quite like it. In my opinion it was as good as the Spotmatic, and used the same “Pentax Screw” system of interchangeable lenses.

I still use my TL-Electro today with excellent results, and yes, there is still a second-hand market in suitable lenses. Over the years I have acquired several.

Our unique services

These days we cannot copy a product without getting into serious trouble. Large companies will threaten even if they do not have much of a case, because they have the financial clout. Yet excellent service can be reproduced by anyone. There is no copyright on services, add-ons, making our customers and clients as comfortable as they can be, and making sure we are better than the rest. That means paying attention to other people’s offerings and keeping up with our industry standards and expectations.

Many of us in business are in the same market as very large companies and corporations. Offering the very best service as good as or better than they can will bring customer loyalty, and the additional personal attention will bring us referrals. We can all do it as well or better than the others, and get our noses in front.

We can out-do the others if we make the effort and offer great value and comfort in doing so. After all, as customers ourselves, we know we can’t beat that nice warm feeling, can we?

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Do you really have a business? Part 2

The country pub

Out in the country

Last time I discussed the problems for a catering-type business in town, in part limited by the premises and the high rents. At least if they had proper footfall they could make money with the right sort of products.

Some businesses which provide food or entertainment to the public may be considerably out of town. Life isn’t easy out there without good planning. Of course there are some excellent pubs serving fine food. You know them by their reputation and their marketing (you have to know they are there) and because you have been to sampled their excellent cuisine.

That is the point, though. They have to be really good to survive and to have the added attractions of a good chef. I cannot think of an established out-of-town public house which just serves alcohol plus peanuts and crisps. That model doesn’t work any more. The public is more keen to avoid drinking and driving than in the past, and attitudes and family values have changed. There is a need for places where you can take the kids or leave them with granny and granddad for an hour or so so that you can enjoy a pleasant dinner. Life is different.

Adapt or die

The carnage amongst pubs over the past decade had been appalling. So many have closed down altogether. Many landlords have found themselves unable to move fast enough or have been unable to get finance to make changes to their pub businesses before their dwindling trade left them with nowhere to go.

I try to help businesses that are in trouble and therefore have in recent years looked out for those that have County Court Judgements against them for debts unpaid. They are potential clients although many are bankrupt before you get to them. At one time three or four years ago about a third of all on the monthly lists were pubs and their owners.

The survivors amongst the country pubs are those who have turned themselves into good family restaurants and some are doing very well.

Implementing Plan B

We all have to change our businesses sometimes. If our model isn’t working any more, we have to get a new business plan; a real one and not one just to convince the bank about lending money, which we can hardly count on these days anyway.

Have you reinvented your business?

Photo courtesy of  Twin Peaks

Do you offer a service or a process?

 

Do your figures add up?

Old chestnut

I have been involved in an on-line debate covering the old chestnut of price versus value. This is a very important issue in most service businesses and particularly for smaller businesses., because we all need to think what market we are in and what our business model is. I come from an accounting background, but I see the same issues and problems arising in many different service industries.

However, let us talk about accountants in particular, because it will illustrate the wrong-headed notions persisting in other sectors too.

Most accountants and others in allied areas who are in business for themselves trained in larger practices. Most of the remainder have worked in traditional practices. As many of you will know, the traditional method of billing clients was to charge them by the hour, much as lawyers have tended to do.

Somewhere along the line there has been a shift away from this, although some owners and partners in accountancy do not like change or stepping out of their comfort zone. The rest have generally realised that clients like certainty in their annual bills, so there has been a big move towards fixed fees. Unfortunately at that point further confusion has arisen as to the basis of charge.

Cheap, cheap

I think we should all agree that the basis of charge should reflect what the client receives in the way of service. Some accountancy firms have a model which provides only basic compliance for the clients, which for the uninitiated means that they get their accounts prepared and their tax returns done, but that is pretty much it. The clients have complied with the requirements of the law, and all necessary filings are made. They don’t get much in the way of advice, they don’t get a regular chat with their accountant and they don’t look for anything more. That suits some people and the annual cost is pretty low.

Value

However, many business owners want rather more. They want their hands held through the complexities of their bookkeeping and to understand how their accounts are drawn up. They don’t just want to know how much tax they have to pay and when it is due. They want to know whether there is anything they can do to reduce their tax burden, and whether there are any particular reliefs they might be eligible for if they make certain purchases or invest in energy saving equipment.

Clients who want these extras expect to pay more for the additional value. They still want certainty so they will be prepared to pay a higher fixed fee than some who only want basic compliance. Often they will get back the extra fees they pay in cost or tax reduction by being advised to do things a different way.

Getting lost

Somehow though, some very able accountancy firms get confused and lost in the fees jungle. They hear that Pursuit LLP does company accounts and tax returns for (plucking a figure out of the air) £400. They don’t know Pursuit’s business model, or whether they just offer basic compliance, though that is all you would get for that figure. They hear of another firm who charges £1,500 for accounts and a tax return and they think that disgraceful because they themselves “could do the job for a lot less”, by which they mean that there is theoretically a good profit above their overheads and staff costs at the fee they would charge.

What they don’t know is what the client paying more is actually receiving, and so begins the rush to the bottom; the attempt to match Pursuit’s very low fees and to compete on price without knowing what they are actually competing with.

In reality, they don’t understand what might be involved for a client paying a higher fee. Of course there might be a lot more work. Most likely though the client is getting a lot of attention, has access to the managers, partners or directors of the accounting firm and is receiving not only good tax advice to help manage their liabilities, but long term planning as well.

I have no problem with sensible models for accounting practices who offer basic compliance only. Indeed I have great admiration for those who are successful in the market of processing accounts an a low cost. After all, I like a bargain myself, and if I get food basics at low cost in a supermarket I am bound to be happy. “Pile high and sell cheap” is a proven strategy.

Common sense comparisons

However we have to be sensible in looking at what we get for our money, and when we are selling a service we have to know what we are selling against. There is no comparison between a mass-produced sliced white loaf akin to polystyrene ceiling tiles (remember those?) and the hot sesame-seeded split-tin from the local baker. You wouldn’t expect to pay the same low price for each of those, yet both have their place in the market.

If you provide a service you have to think what your preferred market is, and therefore who is your ideal customer. Then you can design an offering which will suit that type of customer.

I prefer clients who appreciate what I do beyond providing a process, and are willing to pay suitably. Such clients are far more appreciative, far more likely to recommend and refer you, and far more likely to remain loyal to your business than those who look only at price. Loyalty is a two way street of course, which is why we must continue to appreciate them as clients and maintain the value in what they get.

If someone in your sector appears to offer something at a very low price, look at their business model. If you rush to the bottom, your profit will too, and perhaps disappear. If you wish to operate at the bottom end of your market you must cut your costs and cut your customer’s coat according to her or his cloth.

The price of everything

As Oscar Wilde’s Lord Darlington said, “a cynic is a man who knows the price of everything and the value of nothing”. You do not want to be in the market for cynical clients of either sex without the right business model.

I prefer clients who value me as I value them, but we are all different. What market are you in and is it working for you?

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Being cheapskate can cost you dear

Avoid the dabblers

It is a great temptation in business, especially for start-ups, to take the cheapest option when spending money on buying in services. It is very often dangerous to do this because some people just play at business.  Often the really cheap option will be a part-timer who does not depend on the part-time earnings to make a living.

A part-timer might be a dabbler; a student who likes building web pages but only when he is not out having a drink with his friends, or an employed “bookkeeper” who works on sales ledgers beyond her comprehension a couple of evenings a week. These people are unreliable because they don’t depend on the money you pay them, they may not be up to the job and they are easily distracted so will not give your work their best attention.

We all need to remember to see the value in services we buy in, know what we expect and how much added value to our business we will gain.

If you don’t know who to engage ask for recommendations from those who have bought the services you want. If they are not happy with their suppliers they will tell you so you will also find out who not to employ.

One of my clients ended up paying a fortune to have a good bookkeeper repair the mess left behind by the cheap part-timer. A friend had to get someone else to start again with his website when the dabbler disappeared back to Uni.

You can’t beat a great testimonial for your new service provider. Phone a friend if you are not sure.

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Delivering the goods

Delivering satisfaction (and fish and chips)

A lot of people who don’t have a business think that there isn’t a difference between a large one and a small one except in scale. But managing and running a small business is nothing like big business.

I have had difficulties dealing with large businesses such as the telecoms giants. If I didn’t know before, I know now that they don’t much care what an individual customer feels about them and very often they will treat the “small person” with contempt. After all, the fall-out and any losses incurred when an individual customer moves on leaves hardly a scratch when you have a big marketing budget and TV campaign and you can lure more people in with special cheap introductory offers. No need to mention the long and onerous contract and the twelve month notice period for anyone wanting to change.

Those of us running a small business know that our business is personal. We need to make sure that every customer or client is not only happy with our service, but absolutely delighted. That way we keep our customers and we get recommended. If something goes wrong in our process we must fix it immediately because we need all our good customers and they are our best marketing tool.

Telecoms companies and utilities can make all sorts of promises and can afford “wastage” of their customers who leave them because of their failures. We cannot afford to let people down because we would lose them and let ourselves down too. We must not make promises we can’t keep.

Really not a football post

Manchester United vs Chelsea 1-1 (3-0 after pa...

Image via Wikipedia

And I don’t mean a goal post. It is just that sometimes we can use sport to illustrate a point about business.

So to a cliched quote “If you keep on doing what you’ve always done, you’ll keep on getting what you’ve always got.” attributed to W L Bateman. This sentence is used everywhere to entreat business owners to change their practices whether it is their purchasing, their marketing or their office practices or whatever. Of course, if things aren’t being done well and the business is struggling, it is best to turn over a new leaf and get help.

Sometimes, though, using tried and tested methods and having continuity is what brings success, not just now and again but year after year.

No, this is not a football post

Which brings me to football, the variety known better in America as soccer. I will let you in on a secret. Manchester United is not my favourite club. Nevertheless I have to admire their achievements year on year, and their pragmatism in accepting that they cannot win everything every year. Just the same they have a pretty good average.

United have won the Premier League again in 2011. They reached the European Champions’ League final. It is a great achievement (he says grudgingly but admiringly). How have they done it and how do they do it? By sticking with the same manager year on year (yes, Sir Alex Ferguson for nearly a quarter of a century), a manager who is the best at what he does and is single-minded, and doesn’t care what people think of him. Success brings money, and whatever the financial antics of the owners, the football business is self-perpetuating in its success.

United have won the Premier League four out of the last five times. They won the Champions League in 2008 at Chelsea’s expense.

Really, it’s not about football

Oh yes, on the other hand, there is Chelsea. The club has loads of money at its disposal, or rather, the owner does. Chelsea have won the Premier League Title three times in the last six years which is also a great achievement. I have to declare an interest here. I have supported Chelsea since I was a lad, seen them relegated to the old Second Division twice, and then promoted back to the first. I followed them from one end of the country to the other.

Chelsea nearly went out of business in the eighties. They were saved by an astute character called Ken Bates, whose hobby is rescuing football clubs. He made Chelsea a top-rank successful club by most standards, had the vision to employ managers from overseas because they were the best for the job, and Chelsea won the FA Cup and played in Europe.

Mr Bates sold out to a very rich man whose apparent ambition is to own a football club that wins the Champions’ League. Chelsea have actually been a bit unlucky not to have reached the final on one occasion and not to win in the final on another, but that’s another story.

The owner is single-minded on winning the Champions’ League. He has sacked several managers because they didn’t quite make it after two or three years. He is so impatient. This season he sacked the manager’s well-respected assistant, Ray Wilkins, back in November. The club was top of the Premier League at the time.

The team stuttered for six or seven weeks and lost their place at the top. From January, though they had a great league record. I think if they hadn’t sacked Wilkins they would have won the league. The other top clubs including even United have not been at their best this last season.

I am not taking anything away from United. They got the points and Chelsea ultimately didn’t. Carlo Ancelotti, a great and successful football manager was then sacked at the end of the season because Chelsea hadn’t won the Champions League.

So, it’s not about football

This is a difficult post to write for me. Yet United demonstrate along with Sir Alex that if you have a tried and tested formula and you keep doing the right thing in business, whether football business or anything else, you WILL succeed. United didn’t win the Champions League in 2011, beaten by a better side. However, you wouldn’t say that because now Apple has a larger market capitalization than Microsoft that Bill Gates is a failure, would you?

If it is not working, change. If it really does work, don’t let anyone tell you that you are wrong. Sir Alex wouldn’t. What do you think?

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