10 Ways to Build your Business
Chad Rowe
http://chadrowe.com, helping your small business succeed on the internet.
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When you get down to it, running a business is not very scientific, its
really a lot of common sense, its really knowing and doing the basics, and
doing these well. There is really a lot of information you need to know
when you start in business, so I try to cover most of it here. Below are
the ten golden rules to build your business.
10 Golden rules to build your business
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It doesn't matter whether your just starting in business, or you've been in
business for 20 years, I believe that these 10 golden rules, will stand you
in good stead, no matter what kind of business you go into. The
philosophies on business principals. And the first rule is:
1. Prepare a business plan and monitor it regularly.
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Many people are going to say that they don't have time for a business plan,
what I've done to save time is list below some of the excuses that people
normally give, about why not to have a business plan.
Some great reasons not to plan
- Too busy
- Don't know how to
- Tried it before and it doesn't work
- Not necessary
- Survived this long without one - (this one is always a classic). Why do I
need one now?
- Prefer to trust "gut-feelings"
- My accountant does it for me
Survived this long without one. Here is a classic story of this. I had a
person say this once. They said I've been in business for 20 years, and
never had a business plan. I've survived this long without a business plan,
so why do I need one now? So I said, what are you doing differently today
from what you did twenty years ago? And he said, well nothing, I'm basically
doing the same thing, I'm making a living. I said then, really then you've
not had 20 years experience in business. You've had one year's experience,
twenty times, and so many people are guilty of this. We do the same thing
over and over. A business plan is essential.
What are the benefits of having a business plan?
- Less likelihood of failure
It is a scientific proven fact that there is less chance of the business
failing.
- Eliminates 'crisis' management
Most small business operators these days operate under what we call crisis
management. Lurching from one crisis to the next. (Ie. firefighting).
- Allows more time to develop the business
You can work on the business, rather than just in the business.
- Less stress - creates peace of mind
This is one of my favourites. The plan gives you less stress. Recently I
changed my business, and naturally I prepared a business plan. So
occasionally I open up and look at my business plan and see how I am going.
I have a look at it, compare my budgets, compare how I am going compared
against my budgets, compared to my actuals, and I am happy to report that in
most areas I have met my targets, and in some areas exceed them. This gives
me a very good feeling, and enables me to sleep better at night. Instead of
what a lot of people do in small business, is sleep like a baby, but wake up
screaming. How to pay the bills and how to pay the wages, etc.
- Easier to raise capital or expand
- Allows you to prepare for the unexpected
- Adds value to your business
- Allows you to plan for the after business life
A lot of people in business, don't realise that one day that they will have
to be out of the business, and what are they going to do when they get out
of it. They should plan the two together, not just the business, but your
personal life.
One way to start a business plan is think about the way they put a man on
the moon. In 1962 John F Kennedy, made an address to the nation, and said
within 10 years we are going to put a man on the moon. And sure enough, in
1969, Neil Armstrong took that step, and walked on the moon. The
interesting thing about that, is that first of all JFK was not alive to see
it happen, but I think he had already seen it in his mind. The interesting
thing was how they went upon doing it. When he made that statement, man did
not possess the ability to put a man on the moon. But it was interesting
how they went about it. They got all the scientists, engineers, together in
a room, and said ok, imagine the picture; we've just landed a man on the
moon. How did we get here? And then they actually worked backwards, from
the moon, step by step, on how they were going to get to the moon. It is a
true story and a very interesting one, and one we can apply to our business
planning.
So what we should be really looking at is, where do we want our business to
be five years from now? So many people when they start out to do a business
plan, sit down with a piece of paper, pen and a calculator, and start saying
to themselves, where are am I now, and where might I end up five years from
now?
I think it is better to say where I want to be five years from now and work
backwards from that target. And work towards that goal. If you have a
vision of where you'd like to be five years from now, and anchor that with a
thought, about how it might change your lifestyle. Then you work out the
steps it will take you to get from A to B.
You might find when you are writing these steps down, that you may have to
change the order of the steps. Then when we get all those steps down, we
can then chart a course on how we intend to get there. It is just a
different approach to business planning, and I particularly think it is a
good one.
Don't just use your business plan to raise finance. Just to take it along
to the bank to get a loan. Basically your business plan is your blueprint
for the future. You should be constantly referring to the business plan,
and not just have it in the bottom of the filing cabinet, you should go back
to it, look at it regularly, and make any changes on updates that you feel
are necessary. Compare you r actuals to your budgets and make adjustments
and so forth. It is a dynamic document that you are working on all the
time. The document is alive and evolving.
Rule number 2.
Do your homework
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Before you start in business there is a lot of homework to be done. Some
people come to me with a business idea, and they say Chad, I've got this
great idea for a business, no ones doing this, I think I'm going to make a
million dollars, and I think there is a gap in the market. And I often say
to those people, there might be a gap in the market, but is there a market
in the gap? We have a great idea, but does everyone else think it is a
great idea, and more importantly are the customers, and the potential
customers going to think it is a great idea, to buy that product or service?
What we need to do before we start out is to do some market research.
Market research sounds only like what big companies do, sounds like it costs
a lot of money, and that it is expensive, and costs a lot of money. But
market research can be done at a very basic level, in fact there is a tool
you can buy that will help you with your market research, which I think is
the greatest invention known to man for market research and costs about $3,
it's a clipboard. Just run along to your nearest office supplies store and
buy yourselves a clipboard, and get a piece of paper, and start pounding the
streets, start asking people some questions, or get them on the phone, for
the survey. Say to them, I'm thinking of opening a shop in this street,
selling widgets, could you tell me are you a regular user of widgets? Whats
' a widget? A widget is a gadget, gismo, or thing me bob. So someone is
going to open up a shop buying widgets, and you are going to say what kind
of widgets do you buy now? And who/where do you buy them from? So work out
whether there is in fact a need for your product or service, before you
actually start selling it.
I'll give you an example of some very basic market research.
A friend of mine a few years ago was offered to buy a garage. The Oil
Company quoted various traffic figures that were going to go past the road
in front of the garage. My friend was a bit suspicious about the figures
and he sat down one day with a clipboard and counted for himself the actual
number of cars that went up and down the street, and he found it was only
one quarter the number of vehicles that the oil company had quoted.
Consequently he did not purchase this garage, but others did, and
subsequently went broke in the future. So don't forget to do your market
research.
When we talk about marketing, I like to talk about the six p's of marketing.
The six "P's" of Marketing
Product, Price, Place, Prospects, Packaging, Promotion.
These are the six things that will effect your marketing plan. First of all
what is the product or service that you are going to sell? next what is the
price, how much are you going to sell it for? the place, where you are going
to sell it?, the prospects, who are you going to sell it to? the packaging,
how are you going to package the product or service? and finally the
promotion or advertising of the product, these are the six things you have
to look at.
When we talk about advertising, in the 1990's, don't try to sell to anybody,
sell to somebody. What you have to work out is who is your prime prospect
profile? (PPP). Who are the person, or persons most likely to need your
product or service? Are they young people, old people, semi-retired people,
males/females, what are their ages? so you have to identify the main people
who are going to buy the product your are going to sell?
You can get a lot of help in this area, by contacting your government
Statistic's branch. And they have a tremenoudous amount of information on
the people who live in the country of ours. And they get this information,
by every couple of years doing a census. Where you have to fill in a form
with 80-100 questions. All that information is crunched into a computer the
size of a room, and the good news is that it is available to you., at a very
reasonable cost. If you go to your local government statistics branch they
will give you this information. The information can tell you where the
other business are, in the same kind of business that you are going to
start, if you are going to start a particular kind of business, they will
tell you, where the high and low concentrations of these business is. if
you pick out a location, they will tell you the demographics of the people
in that particular area. for instance, what their income range is, what
language they speak in the home, so on and so forth. It is all useful
information. for example you were starting a bookkeeping service, and you
spoke spanish and italian, the information from the statistics department
would tell you where the predominant concentrations of people who spoke
spanish and italian were located, and this would then be a recommendation on
a location to where you can open your business. It is good information.
When we are talking about marketing, you are going to hear people talking
about a lot, called Niche Marketing. And niche marketing simple means
trying to find that little area of the market, that little gap in the market
that is not being catered to now, and catering to that area in the market.
How many people do you know that have brought a product or service and have
been unhappy with the product that they have received? So what that means
that there a lots of businesses out there, selling things, give services,
and not giving very good service. If we can do it, and do it a little bit
better, then maybe we can steel an edge on the market. You don't always
have to be that clever.
When you do get into business, one of the things you have to look into the
marketing side is you must ask yourself what is your USP? What is a USP? A
unique selling prospersition, or a unique selling point. So you need to have
a unique selling propersition. What is it about your business that will
make people buy from you? What is it about your product or service, that
makes it unique from everyone eless? What is it that makes it stand out? And
why should people buy from you instead of someone else? Now I've asked that
question of lots and lots of business people over the years, and a lot of
them say, that we give better service. And some people who have been in
business for many, many years and still don't know, and you ask them the
question, why should I buy from you, they don't know, or they may give you
some kind of answer which is very nebulious which is, we give better
service. Big deal, everyone gives better service. Now, if you can prove
you give better service, then fine. If you can say, we are the only company
in our business, that opens 7 days a week, or give 24 hour call out service,
and you can prove it, that's fine, that's your unique selling propersition.
Just to say that we give better service, is not enough. Just a word of
caution, when you are developing your unique selling propersition, if you
don't have one, I suggest you work hard at finding one. You need to give a
reason to people whey they should buy from you. If they have not a reason
to buy from you, then they simply won't buy. Just a word of caution, there
is a group of restraurants in america called a & w restaurants, and they
introduced a product called the third of a pounder. They saw how successful
mcdonalds were with their quarter pounder hamburger, and a & w restaurants
thought that they would go one better, and launched the 1/3 of a pounder
burger. The 1/3 of a pounder burger was a disaster, it didn't sell. The
reason it didn't sell because 1/3 of a pounder doesn't sound as much as a ź
pounder, and for this reason the burger did not sell.
So when you develop your unique selling propersition (USP) make sure that
its easily understood and people can believe it. It's got to be believable.
Rule no 3
KISS (keep it simple, sweetheart) - work smarter, but don't lose sight of
the basics.
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So many people in business today, make their business complicated. More
complicated than it really needs to be. As I said at the outset, the secret
of running a successful business, is simply knowing the basics, and doing
them well. For instance let me give you some insight into how to improve the
turnover of your business, there are only three ways you can increase the
turnover our your business. There are only three ways we can increase the
sales in our business.
1, we could put our prices up. We could get more customers. We could get the
customers to come more often. These are the three ways.
1. Get More Customers
2. Increase the average purchase from the customers that come.
3. Get Customers to buy more often.
How do we get more customers?
- advertise
- better location
- better exterior appearance
- referrals
- make more sales calls
we could advertise, promote, we could move to a better location if we were
in a retail situation, or a situation that relies on passing trade. We could
perhaps improve our exterior appearance, if we were in a retail situation,
we could have a better display window, a better sign on the side of the
building, we could get referals, we could get people to recommend our
business. And we could make more sales calls if we were in a business, where
we go to the customer.
How can we increase the average purchase price?
- sell highter quality
- better merchandise display
- better point of sale material
- greater range of goods
- on sell other goods
- samplings and tastings
- bonus offers.
We could sell higher quality, if someone comes in to buy the standard model,
we sell them the deluxe model, with all the features and bells and
whistiles. We could have a better merchandise display, and better point of
sale material, do you notice when every you go into a news agent they always
have the newspapers down the back of the store, past all this other stuff,
you go in there to buy a paper and you come out with all this other stuff.
And spend more money on stuff you didn't really go into the store for. We
could have a greater range of products or goods. And we could on-sell other
goods. What happens when you go into mcdonalds and you order a big mac,
what else do they say to you? Would you like fries with that?, or would you
like a drink with that, and if you buy a big mac and drink, they'll ask you
if you'd like an apple pie to go with that. Because they know the value of
adding on the sale.
Here is another classic example of a good business working well. Very close
to my place there is a very big fruit and vegetable barn, for years it has
been there and I havent' gone in there much, the original owners had let the
business run down, and the fruit and vegetagles always looked as like they
were bruised and old.
You would buy stuff from there and half the time you would end up throwing
it out. But the store changed hands about a year ago, and the new owners
have really turned the business around, it is quite remarkable. First of all
they have a much better display and the fruit always looks nice and healthy.
They are very plesant people they are not hard to deal with. But when I was
in there they have come up with a couple of great ideas, on ways to increase
the average purchase price. First of all, when I was buying some fruit and
veges, and when I was going through the checkout the lady said, would you
like a date? And I though for a minute my luck had changed, and she was
putting the hard word on me, and she said would you like to try a date and
she had a packet of dates on the counter, so I hadn't had a date since I was
6 years old and I used to love dates, so I had one of these dates, and I was
eating it, and I said they are really nice, and she said, yeah, they are
only $2 a bag, would you like a packet? Yeah I would, so she reached down
from under the counter and put a bag in my shopping, so when I got home the
wife asked why did you buy a packet of dates for? You went into the shop
for celery and apples and you came out with a packet of dates.
See you've got that add-on sale, just that little extra sale, that
innovative thing, she probably sold enough packets of dates that week to pay
the rent. And another little trick that they use is that if you buy $15
dollars of fruit and veges, they give you some eggs for free. I don't know
how often my wife has been in there and brought $10 of fruit and vegetables,
and thought if I buy another $5 worth, I can get the free eggs. But we have
a fridge worth of eggs. And lots of fruit and veges, it works. Certaintly if
you're up around the $12, mark, it doesn't take much to purchase that little
extra, to get the free eggs. So little things like that are goods ways to
increasing the average purchase price, at a very basic cost.
The third way to increase your sales is to get your customers to buy more
often, how?
- more customer contact
- loyality programs
- educate your customers
- offer a wider range
- special vip offers.
First of all we can have more customer contact, it can be as simple as
sending a regular newsletter, or ringing them and getting on the phone to
them, and saying hey, we have a special on widgets this month. Loyality
programs are another good one, where we have seen the frequent flyers and
fly-buys programs come into force. This can be operated at a very basic low
level. There is a plant shop near to my place, everytime you go in there to
buy some plants they record your purchase in their book., and when you get
up to a certain amount you get your choice of a free plant. So therefore you
would feel more inclined to buy from them. Educate your customers is another
way.
Get your customers to buy the product more often. And try things as special
vip offers. For instance, your customers say, dear customer, I've just got
some new merchandise in the shop, before I put it on the shelves, I'm going
to have a little wine and cheese tasting, between the hours of 5-7pm only
for my regular customers, would you please come along, and for you, you can
purchase these at a special price before they are put out into the store.
It's just a simple little thing, but how many people really do it? Very
rarely, or every. Just simple things like that, that can get the customers
coming back more often, and that is the secret to building a successful
business. Ok, just say we had a business and we had 1,000 customers to make
the math easy, and each one of those customers each had an average purchase
of $100, and they visited the store 10 times a year. That would give you a
$1,000,000 turnover. ($100 x $100 x 10).
That would create one million dollars a year turnover. So think about some
of the things we have been talking about, we might be able to get a 10%
increase in our sales. So instead of a 1000 customers a year, we might be
able to get 1100? Do you think we could get the average purchase price up
from 100 to 110? And do you think we could get the customers to come,
instead of 10 times a year to 11 times a year? If we did some of those
things we talked about?
What would happen, we would turn over actually a third more
A third increase in turnover. So a little bit of attention, in these three
areas, can have a dramatic effect in sales turnover.
Rule no 4
Work as a team and lead by example
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When your running a business and you start to employ people, what I say to
people is don't be an armchair general. Don't try and direct the battle from
behind a desk, get out there and be one of the team yourself. Its not much
good for instance, if you have a team of people working for you, and you
turn around to that team, and say look guys, I'm going down the pub for
lunch, I'll probably be back at 4.00pm, just in case I don't get back would
you lock up, and I'd like you to work very hard this afternoon because its
probably going to be a long lunch, and be an expensive lunch, and we'll
probably need the money. How do you feel as a worker in that business? Do
you feel like getting out there and really towing the line for the boss, you
don't really do you? That's definitely not the way to motivate people, you
need to lead by example yourself, you probably have to be the hardest worker
in the business. That doesn't mean to say that you can't let other people in
your business help you. One of my favourite sayings in business is .
"Don't use your people to build a better business, use your business to
build better people."
Make them part of the team, and share your vision with them. I like to use
the analogy, and think of your team, as a flock of wild geese. Usually at
this stage, people think, I have plenty of geese working for me. Think of
them as a flock of geese. Have you ever noticed that when geese fly, they
fly in a formation of a V. They fly like this, because it cuts down the
wind drag, and they can fly further, as working as a team. In fact, they
have proved scientifically that geese flying in the v formation, can fly
longer and further, than geese flying in the convential way.
They can fly 71% further, than a goose flying just on its own. What happens
is that when the lead goose gets tired, the goose drops out of formation,
and another goose takes over, that's how they fly as far as they fly. If one
of the geese gets sick, and it will fly down to the ground, and two will
follow it, droppping out of formation and nurture it back to health, and
then join another flock, or if it dies, they will leave it there, and move
on, and join another flock.
They are pretty good for dumb geese, for dumb animals. Now that's a great
way to run your business, isn't it. Instead of trying to be the lead goose
all the time, at times drop back into the formation, and let someone else
have a go, and multiskill the other employees in your business, so you are
not always the lead goose all the time, so other people can have a turn at
being the lead goose, so everyone can have a go at it. The reverse analogy
of the goose situation is the buffallo story.
And the buffalo almost became extinct early on in the white settlement of
america, when the buffalo shotter realised at a very early stage, that if
they shot the lead buffalo, the others just stood around while they shot
them by the hundreds. The other buffalos did not know what to do once their
leader was dead. So don't run your business like a buffalo. If you run
your business like a buffalo, and something happens to the buffalo
(yourself) and the lead buffalo is not there, the other buffalos will stand
around wondering what to do next.
Rule no 5
Put the necessary systems in place to take control of your business.
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Say if I gave two people a set of cards. And you had two types of people.
One organised person and one disorganised person. One set was pretty well
organised and you gave this deck of cards to the disorganised person and the
other was very disorganised and you gave this to the organised person, and
you wanted each person to sort the deck of cards, into the two sets of
colours. To put all the black cards and red cards together. Who would sort
out the list first? The disorganised person with the most organised deck of
cards of course. This person even though they are a disorganised kind of
person, would organise the desk faster, than the organsied person., because
the deck of cards was set up for a disorganised person.
Why did the disorganised person, beat the organised person? The deck that
was given to the organised person was not sorted at all, and the deck given
to the disorganised person was pretty well sorted. So what does this
situation demostrate? It demostrates if you have a system in place, even a
disorganised person can operate the system, a lot easier and faster than an
organised person. That's why people like mcdonalds are so successful,
because everything operates to a system. The hamburgers are turned over at
a certain time, the chips are cooked and only left in the tray for 7
minutes, and so on. So if you buy a big mac from one location, or you buy it
from somewhere else, you are guarantted of the same quality. You are
virtually getting the same product. Everything operates to a system, so
almost a chimpanzie could operate the system if they were taught it. And
that's why they are so successful.
Here is another tip, I like to talk about in business, from Tom Watson the
founder of IBM.
"You don't have to be big to THINK big!"
Tom Watson's business started off relatively small, but went on to becoming
one of the biggest companies in the world. He said above, you don't have to
big to THINK big!. And what Tom Watson, thought of three things. Firstly he
though of what would his company be like when it became a big company? And
then he though, how would we act when we became a big company? And the third
thing he said, we started to act that way, right from the word go.
He started to act like a big company from day one. He put the systems in
place to run the company. You can do this in a very small business. You can
be a one man business, but can have a flowchart. Where you have the
president at the top, the vice president, then the staff. You may fill out
all these positions, but as you grow bigger you can fill these positions
with other people. It would be your name in ever box to start off with, but
as you grow you could fill these positions.
But you have a system in place right from the word go, at a very basic
level. Like your phone doesn't ring more than three times, and when the
phone rings, it is answered in a certain way. We get the phone number and
make sure we write it down. We put the systems in place so our business runs
better. So put systems in place and take control of your business.
Rule no 6
Don't build your business on PRICE!, this is the number one small business
death trap
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I can't stress this enough. How many people say that their unique selling
propersition, say that they have the cheapest price. Don't whatever you do
build your business on price. What do you think the danger is of building
your business on price? Some one is going to undercut you. This is the
small business death trap, trying to build their business on price.
If someone comes into the market and they are 1%-2% cheaper than you, all of
a sudden they have all your business. So you can't build a business on
price. It is very dangerous. And you don't want to reach the stage where you
are selling so cheaply that you are not making any money.
Have a look at this example below.
For instance if we were buying products at $10, and sold them for $12.50, we
would make $2.50 every time we sold a product. Look what happens to our
bottom line if we give a 10% discount. How much product have we got to sell
to get the same amount of dollars? Double the amount. Twice as much product.
Imagine what this would do to our bottom line. Even a small reduction in
selling price, can have a dramatic difference to our bottom line. For the
same senario, if we only gave a 5% discount.
Just a 5% discount means we would have to sell 1/3 more product to make the
same gross profit! Imagine what this does to our overheads? If you have to
sell more, you would have higher operating costs, and sellings costs to sell
your product. More staff to handle the extra business, more telephone calls,
more deliveries.
Cutting price is definitely not the answer. I'll give you a classic example
of a price cutter, and this is not a small business, but a relatively large
one. About 5-6 years ago Coles supermarkets (a large supermarket in
Australia) they said they were going to take on the smaller discount stores
on their price schedule, and cut the insides out of their prices. In the
actual fact, coles in that campaign, spent 6million in advertising to say
that they were going to reduce their prices. And they went ahead and did it,
the bottom line was, there was a two to three percent increase in business.
So they spent all that money on advertising, and only got a 2-3% increase in
business. So it was a marketing disaster. Coles should have never gone into
a price war. Coles is a nice place to shop, nice big wide ailes, ample
lighting, music playing, it's a nice place to be, that is their advantage.
You only get what you pay for. Coles were not about cutting price, they were
about customer service.
So rule no 7
Don't focus on satisfactory service - turn your customers into raving fans.
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What we are trying to do in business is turn our customers into raving fans.
Customer service in small business is really your secret weapon. That is how
we beat the big guys. We have something that they don't have, we have an
interest in the customer, its our butt that is on the line.
What we have to do in business, is build the ladder of loyality.
The ladder of loyality starts right down at the bottom on the bottom rung,
with suspects. Everyone, and everbody out there is a suspect. Once we
qualify these people, as having a need for our product and service, they
become a prospect. And once we actually sell something to them, they become
a customer. Unfortunatley for a lot of small business people, that is where
the relationship ends, that should be really where the relationship starts.
That's where we should be building a relationship with that person. What we
want them to do is buy from us again, and then they become a client. And the
very top rung of the ladder is that they become an advocate for our
business, in other words they become an unpaid salesperson for us. What they
are saying if you want to buy something, what ever you do go see harry, if
you want to buy a washing machine, go see mary, or whatever. Because they
look after me like a brother. That's what we really want to build in our
business. It doesn't happen overnight. It takes a lot of hard work, but
believe me that is the secret to building a successful small business.
Why do customers don't come back
- 1% Death
- 3% Moved out of area
- 5% Buy from a friend
- 9% Prefer the competition
- 14% Didn't like the product
- 68% Because they feel the supplier is disinterested.
68% of customers don't come back because they feel that the supplier is
disinterested. Customers don't care how much you know, until they know how
much you care.
People want to think that you are taking a genuine interest in them. They
don't want to think that you are there to make a quick buck, to cash in on
them, they want to know that you are interested in their welfare and
welbeing. And if you do get interested in their welfare and wellbeing it
will pay off.
Try to think about your customers in terms of their lifetime customer value
(LCV). Not just how much we can make out of them, that day, that week. But
how much is that customer going to be worth to us over their lifetime of
relationship together. A supermarket for example would value a families
business to their store over $100,000. That is that if they came back and
purchased more over their lifetime, they would spend over $100,000. Its not
bad a $100,000 dollar customer.
But how many times have you brought something, lets say you may have brought
a can opener, and when you used it the handle fell off, and you went back to
the store to get a refund, and the store said, sorry we don't give refunds,
whatever, they have given you bad service, but them by doing that have
probably written off $100,000 worth of potential business, by not looking
after that customer.
Another example, if we were operating a restaurant, and a couple came in and
brought a meal and spent $50 with us, and if they came back because they
liked our friendly smiling service, and only 19% of people actually go back
to a restaurant because they actually like the food., they like the service,
or like the ambience of the place, they like the view, whatever. If they
came back every week for a year, they would become a $2,640 customer. (52 x
$50). If they did that for every year for the next 20 years they would
become a $52,000 customer. Image the difference in the outlook you would
have with your customers, if evertime a customer walked into the door, you
said, here comes a $52,000 customer. It puts a whole new slant on it, its
really what we are talking about.
There is a saying in customers service, that it costs 5 times more to get a
new customer, than it does to retain an existing one.
And it makes sense when you think about it. Think about all the time and
effort you have to go through, that everytime you make a sale, you have to
go out and find a new customer. What you really want to do is sell more to
the customers you already have got. What a lot of people don't know is that
a customer who buys from you twice are 10 times more likely to buy a third
time!
You can start to see the potential here, can't you. Of customers that have
brought from us once, and they have brought from us again, and they are more
likely to buy from us a third time. That is how we build up our customers.
Once again, our good friends mcdonalds are very good at getting people to
come back. Recently I took my children down to the south coast for a
holiday, and we stopped into mcdonalds for breakfast, and we had to wait 3
minutes to get our hash brown and potatotes. The girl at the check out
said, sorry you had to wait and gave us the voucher. It was a parking
ticket, and it said on this voucher, OPP's sorry you had to wait!, please
accept our apologies, on your next purchase please present this voucher, and
we will give you a cheeseburger absolutely free.
Guess what coming back from the south coast, the kids said, Dad we have to
call into mcdonalds again to get our free cheeseburger, and it cost me $20
to get a free cheeseburger. But mcdonalds realise the value of getting
people to come back. Here is another example of this, I recently when to
buy some new tyres for my car.
And I noticed on the spare wheel he had stuck, a message saying "Dear
Customer, Hi, If you've just exposed your spare wheel, chances are that you
must be needing a puncture repaired, a tyre rotation, or some general tyre
and wheel servicing. Naturally, I'd like to help you with that, so please
present this sticker at your local Bob Jane T-Mart and my T-Mart team will
do it for you for ˝ the normal price.
This is just another way of saying thank you. we appreciate your business.
Regards.
Customer service manager.
You might say that he is cutting the price, but he is only cutting the price
on the labour component. Fixing the tyre is probaly a labour intensive job,
with very few material involved. So its not such a great thing to give away.
But if you go back there and keep going back there, and you need some new
tyres, who are you going to buy these from. Its working on the fact of
getting you to come back to the business, because when people come back to
the business, that is how you build your business.
It makes a lot of sense. In business you will find that the pareto principle
applies to every business.
In fact it applies right through life. Pareto discovered that something
like 20% of switzerlands population created 80% of the wealth for that
country. And 80% of the country only created 20% of the wealth. This is
often what is referred to as the 80/20 rule. What you will find in
business, is that a small percentage of your clients will give you a large
proportion of your business.
American airlines survey of 1979, found that out of 25 million passengers,
65% of their business came from just 3.2% of their client base.
This is when you say the advent of the frequent flyers clubs, and the vip
travel lounges, and all those other inducements. The airlines very quickly
realised that if they got the people that used the service regularly, that
they could create a business around these people. What you have to do in
your business, whatever you do, is build a database of your customers and
potential customers.
If you don't have a computer, you can still build a database. A database,
is simply a list of names, addresses and details of all your customers,
which could be recorded on a card, in a tickler box, whatever, and then you
can contact those customers in the future, with something special to offer
them, and specially record their particular needs, wants and their habits.
Because for example if you own a shoe shop, and you record the size of their
shoes, and say at the end of the month you have a certain number of shoes in
size 10. You can pull out all the size 10 people out of your database, and
write a letter to these people, and say, dear valued client, I just happen
to have 4 pairs of size 10 shoes left in your size, I thought you might be
interested in coming in and having a look. How many times have this ever
happened to you?
Rule no 8.
Make sure everyone in your business is a salesperson.
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There is a old saying in business, that says, that noting happens until
somebody sells something.
And this comment is very true. Nothing is going to happen in your business,
until someone sells something. You can be the best accountant, bookeeper in
the world, but if you don't sell enough of your product or service, you are
not going to have anything to count, and your bookeeping is not going to
matter.
"Your success in business will depend greatly on your ability to promote and
sell your products and services"
Make no mistake about it. I'll give you a little tip, if you've never been
in selling before, don't think of yourself as a salesperson, to tell the
world about your product and services. Think of yourself as an assistant
buyer. If you had a good product, or a good service, and I'm sure you would
not be going into business, if you didn't think you had. It is your duty to
tell as many people as you can about your product or service.
Think of yourself as an assistant buyer. Your going out there to make
people to make the right decision by buying from you. It might make it feel
a bit easier.
Rule no 9
Don't lose your sense of humour!
-----------------------------------
Believe me, I've been in business for over 10 years, and you need to have a
good sense of humour. If you haven't got a sense of humor, maybe you would
be better working for someone else. At sometimes it can get a bit trying and
your sense of humor will be the only thing that will get you through. Let's
face it, none of us are going to get out of this alive. So if your in
business, sometimes it pays to lighten up a little bit, and look on the
brighter side.
Whatever you do don't lose your sense of humor
Rule no 10
Don't be afraid to seek help
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So many people in small business, when they run into trouble, they come
looking for help, but often when it is too late. Often when people come
looking for advise, it is the end of the line, and it is often too late.
The best time to seek help, realistically, is before you need it. And there
is some good advise and help around.
Where you can get help
The Three Wise Men (or women) (or three wise persons).
First of all a good Accountant.
A good accountant is invalualble to your business. I urge you to find a
good accountant. Where do I find a good accountant? A good place to start,
is to ask others in business and ask them who their accountant is, and get
some recommendations. Preferably, try and find somebody who has experience
in your particular industry. A person who has more experience in your
industry is more likely to be able to help you than someone who is not
familiar with you particular industry. My accountant often rings me and
gives me tips and advice on ways to increase my business, with an idea, e.g.
did you read the paper, did you see this, etc. so you want someone that you
just go to once a year, with a shoebox with all you receipts and invoices,
and hand them over and say, could you please sort this out, and I'll see you
next year. They take an interest in your business, and take a personal
interest in you.
You are also going to need a good Bank Manager
You are going to ask, where do I find a good bank manager when I need one?
The secret to having a good bank manager by the way, is the thing is that
bank managers don't like nasty little suprises. Like suddenlty you're
overdrawn $5,000 in your account and you forgot to tell the bank manager.
They have a habit of getting upset when you do things like this. The secret
of getting a good bank manager, is keeping them advised, keeping them
informed about what is happenin in your business. And don't keep them in the
dark. But it also can help, if you name your first born child after the name
of you bank manager, but this is not necessariliy always the case.
Your also need a good Lawyer
In fact during your business life you may find you may need more than one
good lawyer, because during your business life, like when you setup, your
local solicitor is adequate for you needs, signing leases, things like that.
But you then may need specialised solicitors in different areas. For
franchising, I strongly recommend you get in contact with a solicitor, who
specialises in franchising. There are specialised solicitors for specialised
areas.
Ring you local law society for recommendations for lawyers who specialise in
the particular area. Usually they will be abel to help you.
Where else can we get help?
Join Trade Associations, Your local Chamber of Commerce, you local Chamber
of Manaufactures, or your local SWAP group (Salesmen with a purpose).
These are just a networking group of people, and you pay a certain amount of
money to go along and hear speakers, to give you more ideas in business.
Read books, magazines, and newspaper columns and undertake course.
Thank you for going through these 10 steps, and I'd like to leave you with a
little though.
It's a jungle out there, and there are people out there waiting to eat you
alive. So whatever you do when you go into business, don't rush in, take
your time, be careful, try not to get caught, and I'll finish with a little
jungle story. A favourite of mine.
There was two boys walking down a trail in the jungle. And a big bengal
tiger jumped out in front of them, in the middle of the trail. One boy,
immediately dropped to the ground, opened his rucksack, and started to put
on his running shoes. The other fellow said, what are you doing, you know
you can't outrun a bengal tiger? And the kid said, I don't have to, I've
only got to outrun you.
So when you start out in business, just make sure you run a little bit
faster than the other guy, and you'll probably be ok. Good luck with your
business, and thankyou for reading this.
Regards,
Chad Rowe
Business Builder
Helping your small business succeed on the internet
http://chadrowe.com
s...@chadrowe.com
By having an organised system, even a dumb person can use the system, but by
not having an organised system, it can be very difficult.
--
Regards,
---- Chad Rowe ----
ChadRowe.com - Business Builder
http://chadrowe.com
ch...@chadrowe.com