Small Business – Growth Stage 3b – Meeting Demand

Yes, crazy demand is a problem that you want to have. But when you are in the trenches, there is nothing fun about it (Well it is for me, but I’m a freak). Things are going crazy, you are going crazy – You are simply too busy to think, never mind think strategically.

In this phase, it will seem like everything has gone to crap – Probably because it has.

I would love to be able to write an article that shows you how to meet demand across any industry, but the truth is, there are so many case specific scenarios that this post would be better fit for a hardcover book, than a few page blog post.

What I am going to do for you however, is tell you about a few things that you really need to watch for during this phase. These are all from my own experience and are serious issues regardless if you sell yourself as a service, manufacture a product, create information products, or are a marketer and drop-shipper.

Step up or Step Aside – Leadership needs to come in

This is a problem for lots of people, and there are two main reasons. First, to most, the business is their baby and represents their own blood, sweat, and tears. You have been in from the beginning and the success is directly the result of your effort, and your decisions. The draw of having your hands in the cookie jar and being in charge of everything is just irresistible. It’s hard to step out of that role.

Second, some people are just not good leaders. The skill set that is required to develop something is not the same as the skill set required to lead the troops and keep your head up in the strategic clouds. I believe you can learn to be a good leader, but to be a great leader, it takes both practice and an innate ability.

Whichever the case, someone is going to have to step up and away from the day to day and start to worry about the big picture. The simple truth is that there are just not enough hours in a day to do everything that needs to be done. If you try, you will fail and probably burn out in the process. To make matters worse, it is nearly impossible to wear both the strategic hat and the “doer” hat at the same time. I’ve tried several times and failed miserably in every case.

If you choose to become the “big picture guy” yourself…

Find some bright folks you trust, and put them in charge of that area you used to head up. Early on, their ability to communicate and make you feel comfortable are going to be more important than the actual skills they posses to do the job. Once you are OK with the concept of not being hands-on anymore, you can worry about finding the exact right person for the job.

If you choose to bring in a “big picture guy”…

Frankly, this is where people like me come in. You will want to either hire, or most likely partner with a person who can come in and help you to the next level. The reason I recommend partner is, because at this point, you REALLY want someone worth their salt, and they are not cheap. Players in this range are used to the six-figure income, and are not likely to join you for less than that. Bringing them on as a partner allows you to either pay substantially less as a base salary with a percentage of sales as the remainder, or even bypass salary all together for a flat percentage of sales (how I usually do it). The percentage they demand will be higher, but on the upside, if you don’t make money, they don’t make money.

The key to bringing on a new player at the stage is trust. Start small and shift more and more power over to them as you feel more comfortable. Do not micromanage or tell them how to do their job. Remember you brought them on because your DON’T know how to do it. Let them do their thing and come back to you. They probably won’t do it the same way as you, but their way will probably be better.

I haven’t really pitched myself in about 1000 pages of articles, so I might as well now. Seriously, give me a call. I might be able to help.

Strategy and systems will save your ass, not manpower.

Simply throwing more bodies at a problem is rarely the answer. It might be PART of the answer, but without organized systems in place, the utility of each new player added to the team will decrease the productivity of ALL players by an order or magnitude. Roles will overlap, things will get lost in translation, morale will plummet, and productivity will be a fraction of it’s true potential.

Here’s how you do it.

Have your strategy person, either you or me (hint hint) start evaluating your business model. Are there any things that could be done that will simultaneously increase your profit margin, reduce costs, and reduce the time to sale. If it’s all 3, then that is your low hanging fruit. As that subsides, start to look at the things that might satisfy 1 or 2 of the criteria and start attacking them.

I’m not saying that bring in more people is not a good idea. I usually is. What I AM saying is that blindly throwing more bodies into the works usually makes things worse.

An example from my questionable past

A few years back I partnered with a rockstar investment real estate broker in exactly this stage of the game. Sales were skyrocketing, demand was through the roof, but there was simply not enough hours in a day for him to get it done.

He was a super intelligent guy and a true freak-of-nature salesman, but he was definitely lacking in both the big picture view and leadership role.

After meeting him a few times and tossing some ideas around he agreed to bring me on as a partner. Because throwing me a salary would be too much for him, we agreed that I come on as a limited partner at first with 1/3 of the future net profits going to me. Once we doubled his sales, we would become full 50/50 partners. It was a pretty big leap of faith for him, and I appreciate his trust, but ultimately it wasn’t too much skin off his back since ultimately if I didn’t produce results, I didn’t get paid either.

His niche was selling properties (usually condos) in the $100-150k ballpark to both investors and parents/students of UF. The market was hot enough at the time that if you bought a condo your freshman year and lived in it with a few roommates, the rent and appreciation on the unit would pay your entire tuition for 4 years and still leave you with about $40k left over. It was an easy sell, and he sold LOTS.

The problem was that all real estate sales take about the same amount of time for the broker, regardless if it is a $100k sale or $1M sale. (In truth, usually the bigger ones are easier because buyers at the level are pretty familiar with the game. More legal, but less drama)

I realized right away that this was not a sustainable growth model.

After a bit or research and planning, I created a plan to take on no clients unless the property was over $500,000 and we had a very good chance of getting both sides of the commission. As you can imagine, for a top producer this is a HUGE change. He was ingrained to take any business, anyway he could.

My logic was that because he was so fantastic at converting calls to qualified leads, we set up a referral program to front our tier 2 prospects to other agents in exchange for 25% of the final commission. That allowed us to keep in place turnkey marketing programs targeted to smaller profit centers, and still earn a healthy side income on very little work.

With this strategy in place, we were allowed once again to focus on a new marketing plan to help roll in larger, more profitable clients.

We still continued to get calls every day for smaller clients, and many times, we had the perfect buyer ready to roll within the hour on the sale, but we had agreed to only focus on larger clients, REGARDLESS of how quick or easy we knew the sale would be. For weeks he would look over at me with puppy dog eyes begging to take on this easy client, and I would point to our business strategy on the wall. Eventually he got the idea and stopped whimpering.

As things began to take off, I began to further refine our strategy to squeeze every penny out of our time. We hired one assistant to take first tier phone calls and to set appointments freeing up his time. We also hired another general assistant that would do much of my front end marketing work and to keep track of all the new developments and marketing metrics. We finally brought in another new realtor who had just graduated with a degree in finance to manage many of the showings and to add another level of granularity to incoming prospects before they made it to either Tom or I.

The result:

Year 1 sales: $200k

Year 2 sales: $400k

Year 3 sales: $1.2 Million

It’s important to note that we didn’t bring on any help until year 3. As you can see we were able to DOUBLE sales with no additional help other than me. That was refocusing strategy and tweaking systems. But we did need to bring in help to take it to the next level. As I said, there is a time and a place to throw in more bodies, but it has to be to support the plan, and just not for the sake of more manpower.

Stay tuned. Next Article is going to be about declawing your competition.

Stay cool

JJ

Business Growth – Are You Choosing the Best Way?

One of the best and least expensive approaches to business growth is through your current customer base. It is far easier to sell more to customers who are already buying from you. You don’t have to spend a huge amount on marketing because the relationship is already established.

What you do need to do is to find creative ways to sell them more of what they are already purchasing from you or introduce them to other products or services in your range.

Study your existing customers’ profiles to gain insight into the type of customers you attract and use that information to find more of the same. Look for potentials whose needs are similar and who tend to make purchases in the same way. You should see quick and significant growth to your business with both of the above approaches.

Business growth could come through investigating new markets for your existing products or services. For example, you may manufacture a piece of technology that is sought after by the transport industry.

With research, you may find that it would be equally useful for the aerospace industry, albeit for a slightly different purpose.

Developing new products or services could be the key to business growth. They could be in addition to what you already offer or to replace existing ones that are becoming uncompetitive or obsolete. You should offer these to your existing customers first. In this way you can test and fine-tune your approach before going large-scale.

If your business is small, business growth through diversification is not really for you. It is a high risk approach. It should only be considered if:

o You cannot meet your goals for business growth through the other approaches

o You have the capital to invest and the resources to carry the work through

Small Business Online? Using Affiliate Programs to Make Money Online

Small businesses online are the future of the economy and will most likely play a large part in getting it out of the current recession. With the world going virtual and more of the economy shifting to the internet, each new online small business creates more competition and the possibility of helping the economy get out of the current recession. The shape of the financial world is changing and the ‘nobodies’ of yesteryear are leveling the playing field online.

What exactly is a small business online? Is it the cottage industry of the past or is it the local businesses that go online to create a ‘store front’ on the internet? The answer is neither. An online small business, today, includes the hundreds of thousands of web owners who have blogs, forums, and websites and make money online using their talents, providing their services, and using the various affiliate programs to capture a share of the market.

Online Marketers-? While the traditional small business owner provided only a service; today, a small business owner can market various services and make money online. The service providers have realized the competition online is simply too much. No one company can easily capture a large slice of the market., which is why the service providers work with many affiliate programs simultaneously, providing lucrative percentages to individuals and companies who act as ‘resellers’. This way they are able to capture a large portion of the market without geographical limitations or increasing overheads.

Through becoming an online marketer, any person can become a ‘small business’ owner and create a small business online.

The virtual world provides tens of thousands of opportunities online. Some are scams, some are genuine; and while every article read online has to be taken with a grain of salt, if you read enough and research enough, the best affiliate programs in the business will get your attention. There are names like ClickBank and Commission Junction, which will be repeated over and over again, proving within the realm of fantasy, some reality remains to make money online.

There is no guarantee of success and there are too many variables in the whole scheme of things to allow even the best financial wizards to create predictors of success. Yet, there is so much scope, so much vision, and simply so much opportunity for growth that anyone who does not take advantage lacks the foresight to capitalize.