‘Merger’ Is NOT A Four-Letter Word, Either

•October 4, 2012 • Leave a Comment
Business is hard. Really, really hard. a huge percentage of Americans have the opportunity, at least once, over the courses of their lifetime to go into business for themselves, in one form or another. From direct-marketing sales to global corporate juggernauts, we all have opportunities in this country that others in this world simply do not.

That being said, once the plunge (read – huge risk) is taken, it can be a fight to keep what you’ve poured your heart and soul in to. Many times, businesses fail because they’re extremely adept at doing what they do (think attorneys), but are terrible, horrible, awful business managers (think attorneys). Why? Well, because they didn’t go to school for business management and HR, did they? They went to become attorneys. That’s like asking an HR specialist to practice law. And we’d never ask that of them, would we?

Likewise, most business owners face this ‘many hats’ dilemma. Some excel under the thumb of the challenge, while others curl up in a fetal ball in the corner, close their eyes, and rock themselves, thumb in mouth, until the nice young men in the clean white coats come to take them away (Ha-Ha!) <— (Random ‘Napoleon The 14th Reference, F.Y.I.)

>Ahem<

To my untrained eye, there’s a lot to be said for mergers. If a business can find a symbiotic partner to merge with, it often yields a mess (I am a realist, after all). But – sometimes – it yields something far more powerful. I’ll give you an example:

I run a machine shop. I don’t own it, but I run it. When we were still in our infancy stages, we rented our unused space to a small metal fabrication company. They were started by a fellow and his wife – he an expert in the field, and she a woman who could manage a business. After a few years of controlled growth, they were offered an opportunity to merge with a local machine shop. In the end, they did just that. And now? Now their respective businesses are separated by some real estate, but are thriving under the umbrella of the single business model. Better still, it allowed the expertise of the Fabrication Shop owner to be tapped further by using the capital of the other business to implement a massive powder coating line – one of the biggest in the state. All because the merger brought together two halves of a potential whole. They’re still happily doing business, and growing in a controlled manner to this day.

Granted, this is an exception. Nevertheless, it’s a solid example of how a merger can make something new out of two existing things. Don’t think this applies to you? Think again.

What if you are a local retail store? Let’s take Culture Shock – a local enterprise in my neck of the woods who has a deep commitment to shopping local, and tapping local resources. What if they could, somehow, merge with a coffee shop? One business would symbiotically feed customers to the other. It’s all hypothetical, but you can at least see the thought process behind it.

Likewise, even direct-marketing sales representatives can merge their resources into something more. What if a Pampered Chef representative combined forces with, say, a Tupperware representative (again, I’m winging it here for the sake of example.) They could share bookings, and sell things that appeal to the same audience to a group that they may not otherwise be able to.

I realize that this is all a bit glib but, for me, this page is more about getting YOUR creativity flowing, and forcing you to think outside the box (pardon the cliche). My creativity is already doing just fine, and I wake up looking at the box on the distant horizon, so feel free to ignore my examples.

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From The Day Job E-Mail Files

•September 16, 2012 • Leave a Comment

It’s a niche article I found in my inbox at work today. It’s something not often covered specifically, so I thought I’d throw it out there:

How to Make the Best First Impression in B2B Industrial Sales

Facebook & Blogs: 24-Hour, 365.25-Day, Venues

•September 11, 2012 • Leave a Comment

Many of us have experienced it: We craft what we feel to be a brilliant post in a Blog, Facebook group, or Facebook page, only to see it languish without a single response like a loquacious person on a raft in the middle of the ocean. Conversely, we can post the most inane, random things, and it somehow turns into a monstrous thread that ends in talk about pudding recipes and Weird Uncle Pete’s recent arrest.

Has any of you ever considered why this is? And, if you have, have you ever considered the old adage, “Timing is everything?”

If not, then consider this: Individuals who are on the web, or Facebook, are on when it’s convenient for them to be on. Just because you’re on at 3 A.M. while watching Monkey Polo on ESPN Nine and eating ice cream from the container, doesn’t mean the rest of the world is. Likewise, your core demographic may not be on Sunday mornings, while your heathen-self is at home browsing Weird Uncle Pete‘s latest web shenanigans.

Still, there are ways to combat this. First – and foremost – take a look back at your better-response-producing threads. At what time did they occur? What day was it? Was it a holiday? Parsing out the data in such a manner should begin to reveal some semblance of a pattern.

Further, you can even do the unthinkable: ask for your users’ opinions. Just ask them when they’re on most, and begin compiling the data. If the folks who answer that they’re on in a certain time frame are mostly looky-loo’s, then change gears. You want to find out when the individuals you most wish to reach are around. This will give you the best chances of their reading, commenting, re-posting, or inviting their friends into the fold. This, in turn, will lead to growth and an expanded audience that you actually want to hear you.

Facebook also offers a number of quantification metrics on pages that are extremely helpful in this endeavor as well – so use them!

So do yourself a favor: be careful when you post! Save the ‘best stuff’ for the peak times, and leave the random musings about lint that looks like celebrities for those Sunday mornings when the tumbleweeds and crickets are more prolific.

Sorry – We’re Closed!

•September 8, 2012 • Leave a Comment

Nothing – but NOTHING* – annoys me more than a business that keeps hours that seem ridiculously convenient for the owners, but insanely inconvenient for me.

*(Okay, lots of things to annoy me more, but right NOW, this is what I’m railing on.)

As a business owner, before you decide what your hours of operation are please consider your core customer demographic. If you’re selling yarn to octogenarians, then 9-5 is probably just fine. But, if you’re selling items that appeal to a wider audience, then you should – at the very least – consider expanding your hours. How? I’m glad that you asked!

Many businesses will poll their customers, first and foremost. When is the most convenient time for them to shop? If you were open on weekends, or for longer periods of time, would they shop more often? Are their friends or family NOT shopping there due to constraints imposed by your hours of operation?

Another tactic is when businesses tout new, expanded hours. This allows them a finite period of time to experience first hand what they’re missing. By expanding their hours on a test basis, they can assess how many phone calls, and how much foot traffic, they’re receiving in relation to what they’re already used to. And it may be an eye opener. A word of caution: if you’re going to try this, make SURE that folks know that you are doing so AND give it enough time to conclusively succeed or fail. In the past, I have spoken with business owners who have done just this – only to find them saying something like, “Well, after two weeks, we didn’t see enough traffic.”

This is where the inner me wants to slap them upside the head and scream, “Well, Duh!” Instead, I patiently explain that this probably is not a good benchmark to base such a profoundly important decision upon. And I’ll be the first to admit that I might be wrong. But I don’t believe that I am.

So, as a small business owner, what can you do about this? First – and foremost – understand and recognize that you’re not a super hero. You cannot work sixteen hour days, seven days a week, without compromising on health, family, customer service, quality of work, or a million other things. I once experienced a business concept that stated that underlings, at their peak, should only be expected to perform at 80-90% of your capabilities. Sometimes, it’s better but don’t expect that it will be. Hope for the best, but prepare for the worst.

Consider hiring part time help or, if there’s a family member or friend you trust, consider offering them the work. Trusting someone that you don’t know – especially without supervision – can be a scary thing. I didn’t used to think so, until one of my employees stole almost $7,000 worth of metal from me. Or another one of them stole one of the company’s vehicles. Or the couple who stole money. All these things happened – and they sucked. And a lot of folks out there, no matter how nice they seem, can be prone to moments of weakness. I’ve seen good men do bad things, because no one was there to see them (or so they thought, until they saw the video.) My father always used to say, “Locks keep an honest man honest.”

Still, even with those caveats, here’s the reality: I made more than enough money to cover those losses – and then some – because my company elected to trust some more individuals and offer expanded hours. And you know what? 90% of those guys are gems who would give you the shirt off of their back. So there’s far more good than bad out there.

All in all, at least take a moment to contemplate how this post affects you. Would expanded hours provide more business? More profit? More R.O.I. and a reduced burden rate? If the answer to any of those questions is ‘possibly’, then you need to begin considering a plan of action. The customers are out there. But they can’t shop if you won’t take their money.

Lower Prices Mean… More Profits?

•September 4, 2012 • Leave a Comment

Your competition is ever-changing. Sometimes there’s a new shark in the tank and, at other times, one disappears silently into oblivion after losing the battle in the business world. The world of business, as a collective whole, experiences ebb and flow like this all the time. The truly great companies – the companies who are on top for a good long time – are in such a position for good reason. One of them, often, is the ability to adapt to situations beyond their sphere of control, in an effort to bring them at least somewhat closer to a manageable state.

This is where we begin today’s thought: Lower Prices doesn’t mean lower profits. Sounds simple; perhaps, even silly. My experience? You’d be amazed how many business owners and employees don’t understand the concept or, worse, are unwilling to even hear it. I hope that you’ll be different.

The concept, at its core, looks something like this:

Say that you charge $50.00 per hour for a service. This is the rate at which you make optimum profit, while still providing value and covering expenses. In reality, every business has what is known as a ‘Burden Rate’. Burden Rates are the base numbers for inevitable expenses that your business MUST achieve prior to profit occurring. Included in the burden rate are things like rent, utilities, wages, stock – things you need to have paid to make the business go.

Once the Burden Rate is covered, then profit occurs. When you began your business, you ran all of these numbers, and figured out the balancing point between profit and value to the customer. If you didn’t then I’m totally slapping your knuckles with a ruler, virtually, right now while doing my best shrieking nun impression. The great businesses will be able to realize when it is appropriate to tip this scale to one side or another.

On one hand, we have the volume versus return theory. This states that you can have more business, if you’re willing to be somewhat flexible on pricing (coupons and sales do this all the time). For example:

A customer comes to you and says that they cannot afford $50.00 per hour for your services. A lot of businesses would just walk away at this point. Me? I’d ask what fits their budget model better, before I just dismiss them. Let’s say they compel you to understand that $40.00 per hour is all they can manage. Now you have a decision to make. Specifically, how does the $40.00 per hour stack up against your Burden Rate, and your work in house, at any given moment. If your Burden Rate is $21.00 per hour, then you stand to make $19.00 per hour in profit from this venture. Now, you have to consider whether this is worth your time or not. If you’re low on work, then having $19.00 per hour may be a better choice in the short-term than having a full $29.00. Perhaps you can even give this work to a subordinate employee (who makes a lower ‘wage’ than you), instead of doing it yourself. This is where knowing your burden rate is so crucial, because it allows a level of nimble-ness in your business model that will allow you to continue turning a profit, even during leaner times.

Conversely, and much more difficult to find, is the opposite situation. If a customer needs something ‘rush’ or needs a special service that you don’t normally offer, don’t dismiss this either! ‘Rush’ services and un-offered services should be right in your wheel house. And those services need to carry a premium. I once had a tooling vendor say that a buyer from an aircraft manufacturer called her. He needed a thosand clay poker chips for an upcoming event, and didn’t have the time to find them. Know what she did? She found them, bought them, marked them up, and got them to him. Her company made a profit, and she became that much more essential as a business contact for that guy. Where I work (i.e. – my day job) we do this sort of thing all the time. It’s what keeps us in the fore of our customer’s minds, because we’re not afraid of (just about) anything, and they can go to one shop for all their needs (insane or not).

Rush services should also be assessed on a case-by-case basis. Is the customer willing to pay an extra 15% to get it this week, instead of waiting in line? And, if so, can you deliver on this, without disrupting your normal flow of business?

Services that are ‘associated’ – loosely, or otherwise – with your business can also be considered. At Digital Ninjas Media, we offer services that are, in fact, ‘second-tier’. This means that we don’t do the work ourselves, completely, or partially, but – rather – we sub-source it to a vendor who is better equipped and skilled to do it. Sound like a rip off? A lot of folks think like this. But here’s the cold reality: We’ve taken the time to FIND someone who does what it is you want. We’re taking all the risk of getting it done, to your specifications and in your selected time frame. We also take all the risk in paying for the service, before you pay us. And best of all? You only need to deal with one company – there’s no collaboration or chasing things down. This has value. So, in your business model, I would recommend considering what ‘subcontracting’ you can do, and adding a percentage on to that for your trouble. I usually recommend a minimum of 10%. If you can’t get 10%, it’s probably not worth the hassle. But don’t get greedy either! Be fair, and treat your customer’s money as you would your own! Being a vendor is, at its core, a fiduciary responsibility borne upon your business out of trust from your customers: Never betray that trust.

So, remember: sometimes more business, at a lesser price, is better than none at all. And never dismiss out of hand subcontracting or rush work – they’re an opportunity to make money, not a nuisance to be dismissed!

Who Says You Have To Obey The Law Of Nines?

•September 2, 2012 • Leave a Comment

This week, a friend of mine got me to thinking about pricing strategy. In fact, as I sat down to write this, I found a second reference (once more – from her) that was freshly posted.

When I’m doing real work that isn’t as fun as this (i.e. – my day job), I spend a good portion of the day bidding tens of thousands of dollars of contract machining: Sometimes, more. And, over the years, there are two pricing strategies that I have seen employed that are sort of genius.

The first, is the commonly known ‘law of nines’. The proverbial ‘law of nines’ states that the human brain is more accommodating to a price of $299 than it is to $301. Why? For whatever subconscious reason (and no matter how ridiculous it sounds) our brains tend to ‘lessen’ the damages when faced with an amount that doesn’t break the next base-ten level of pricing. It sounds insane but I’m guessing, if you think about it, you’ve all done just this – and may still do so even to this day.

This is why many retail chains employed this strategy – and still do. Wal-Mart bucked that trend by battling K-Mart with eights in the late eighties and early nineties (when I was still a part of the red vest army at the sign of the big red “K”). They changed tactics some time later, and moved to sixes for a bit, as I recall.

Personally? I used to use the law of nines myself. I would round down on quotations to the next base-ten iteration to a nine. The problem was, most of my competition was doing so as well. After a few years, I got smart, and began asking for customer pricing feedback. And, in some cases, customers supplied copious amounts of it. As I scanned the numbers, I found three differing trains of thought:

The most prominent was the ‘law of nines’. In this way, I made the immediate decision to go with the Wal-Mart method of bumping down to eights. The results were immediate, and lasting, to this day.

The second was just random: individuals who were quoting the jobs that I was, who were literally using whatever number was spat out. This can be good for your bottom line, but seems to confuse or consternate the minds of many buyers. I immediately threw that one out.

The third was a more interesting tactic, that I had never considered a whole lot. I dubbed it the ‘loose change’ theory. Specifically, the individuals quoting would quote not only in dollars, but in random cents as well. On the surface, this seemed… well: stupid. Who cares about .32 cents in this day and age?

Yet, I took a mental step back and thought about it. After a few moments of considering it from all angles, a proverbial light bulb went off and, to this day, I still use this method ONLY on large, assembly-cluster, type quotations. Why? Because – no matter what the cents behind that decimal point – it makes it APPEAR as though you have analyzed the bid down to the penny. You’ve been meticulous, you’ve bid everything perfectly and, in doing so, you have overtly looked out for your client to the very best of your human ability. Personally, I think that’s a load of… well, anyway, suffice it to say that I don’t necessarily buy it. But what it DOES to the human mind, is it plants that very seed – subconscious, or otherwise. And, on that level, it’s a brilliant strategy.

The best advice I can offer, to wrap this all up? Find out everything that you can about how your competition is bidding or pricing, look for patterns that you can exploit, and then undermine that system. It might take dropping to rounded-down fours, but the return on awards won, or sales, should be enough for you to suck up the random loss of a few bucks and shop the value meal drive-through for lunch instead of indulging in a sit down at a four-star dive.

In Three… >Two<… >One<…

•August 25, 2012 • Leave a Comment

Public Access Television programs: We’ve all seen them, usually as we surf around at four AM looking for something that isn’t an infomercial or home shopping to watch. If you haven’t, then… well pretend that you have, all right?

So how did those folks get on your television at four AM, anyway? Well, for starters, your local station needs to offer public access. If not, then you’re excused from this column until next time. If it does, it will be imperative to discuss the restrictions, rules, regulations, and specifics with a station representative, to discover whether or not you have an idea for a program that meets their criteria.

If you pass muster on this front, you’ve only just begun. Now, you have to develop an informative, interesting, and compelling program for the public at large to see. I would also recommend publicizing the bajeebers out of your upcoming endeavor on your website, social media outlets, and your physical store or show space. Maybe even provide reminder cards, or e-mails to your followers. Ideally, you have a few viewers who tell their friends after the first outing is complete and they, in turn, turn in the next time. Which brings up another point: if you’re only interested in doing a one-off, that’s fine, but it won’t be anywhere near as successful as a serial program. Plan accordingly, and well in advance, of any advertising that you do.

Whatever it is, be creative! Most television is simple minded pablum aimed at the lowest common denominator in a flurry of boobs and guns. This is okay, I guess, if this is your nice market. Me? In case you haven’t noticed, I like humor. Laughter, to me, is an equalizing force amongst all races and peoples. Getting a few chuckles, while being informative or interesting – in my opinion – leaves a far more lasting impression than the alternatives.

So, go forth, prepare, educate and dazzle! What have you got to lose?