Category Archives: Women in business

Into the gap – five steps to improve your strategic planning and implementation

McKinsey’s published a great article – Managing the strategy journey

Its focus is on the large corporate market. But there are some valuable lessons and gems that can be used by smaller companies.

In terms of successful strategies, they found, rather alarmingly that of the 2000 companies they surveyed only 35% had strategies that passed more than three of what they consider to be the ten tests for the likely success of your strategy. The full article can be read here

I have taken the liberty of using the key topics in their article and translated them for small businesses.

1. Plan to find the gap
Time and again when I talk to owners of small businesses, they don’t have a plan or forecast or budget for the following year/years.

McKinsey’s suggest meeting two to four hours every week/two weeks to match the amount of time you spend on operational issues.
For a smaller company, particularly with smaller numbers of employees, once a month is probably adequate. But book it out and make it a regular and unmovable date.

2. Find the gap
What is your vision for the future? Where do you want to get to?  Why do you want to get there? Is it to exit, to retire and hand it on to the next generation, double in size, have enough to be comfortable, be acquired, acquire other companies, step back from the business and become the chairman?  Whatever you decide here will inform any further planning.

Find the gap

3. Close the gap
Work on strategic initiatives that get you from where you are now to where you want to be.
Do you know your market, who your customers are, what makes you different, what your customers value about you, what opportunities and trends there are that you can tap into?

4. Bridge the gap
Work out how you are going to deliver these strategic initiatives.  This needs to be tied in to your financial and operational planning phases.

Bridge the gap
You should only ever attempt to make two to three big changes at once to stand a chance of succeeding.  Otherwise you will be constantly fighting against day to day issues and there is only so much that you and your staff/fellow directors can do at any one time.  If you attempt to implement the 15-25 they recommend in their article, you will fail.

5. Mind the gap
Measure and review. This may need you to change how you budget and how you do your forecasts.
Identify the measures (KPIs or Key Performance Indicators) that are going to get you to where you want to get to and review against those.  Make sure you have lead measures as well as lag measures.

KPIs Einstein
The lag measure is the historical measure of change e.g. sales conversions.
The lead measure is the measure that predicts the lag measure. In this case the lead measure might be ‘Make more sales calls’. It is the activity that should hopefully result in the end (lag) measure. This article explains it well

Summary

The beauty of having regular meetings and reviews using your KPIs is that you can track trends – are things improving as they are, or is there a downward trajectory requiring some intervention to take place? Many people only find out at year end when their accountants go through the figures that things haven’t quite gone as planned. Don’t put your la-la ears on; far better to track frequently and see dark clouds appearing on the horizon and to take action rather than waiting for the full scale hurricane to hit.

I can't hear you

Smaller organisations have the advantage over the larger ones in that decisions can be made far more rapidly and with much more flexibility and they are less hampered by process. More of a speedboat vs a supertanker.  That’s not to say an appropriate amount of time, research and resource shouldn’t be put into it.  It absolutely should.  And it’s not an excuse for constantly changing the plan. Which is always a temptation.  Give it time for new initiatives to work and try not to get tempted by lots of lovely, shiny new things.  Review anything new against your existing plan at your regular meetings and make sure a proper business case is put together to assess its viability. And if it actually gets you to where you want to get to.  Always check back to your vision and aspirations (and values).  Do the activities help you get you there?  If not, then you should think seriously about whether or not they should be implemented.

If you want help on developing and implementing your strategy, please contact me for a free, no obligation meeting – karen@thechameleonguide.com

http://www.thechameleonguide.com

Eight factors that increase value in your business

For your company to be valuable or even sellable there’s a lot more to consider than just the bottom line such as will your customers continue buying or will a competitor start chipping away at your margins?

It’s important to understand what drives up or undermines your company value. And there’s a way to find out – using the Sellability Score.

‘The Sellability Score was created by a team of researchers led by John Warrillow, author of the international bestseller Built to Sell: Creating A Business That Can Thrive Without You. The book inspired a movement of entrepreneurs who recognize that the ultimate test of a business is not how big it is, but how valuable it can become’ http://www.thesellabilityscore.com/

They identified, through research on over 6,000 businesses, that there are eight factors that you can work on that will increase the value of your business

These eight factors are ways to help you evolve your business to give you freedom of choice – to sell, to be able to work sensible hours for the same or more revenue, or to stand back from it almost completely, or even as simple as to be able to go away for a two week holiday without worrying about whether the business is going to implode without you there.

ducks-in-a-Row

So what are these eight factors? I must emphasise that these aren’t magic wand/quick fix answers in the majority of cases. These are areas that you work on over time building value that way. Beware anyone who says they can wave a magic wand and give you overnight success.

1. Financial performance
This is particularly important if you are looking to sell. You will need to show any potential purchasers that your sales and profit projections for the future are based in sound historical fact. They will have in their minds what return they want on your business and also how risky they think it is. And not having comfort over your projections increases the risk to them and therefore decreases the value of your business and what they are prepared to pay.But it’s also incredibly valuable for you as a business to have budgets and forecasts and measuring performance against your budgeted figures.

Action: Create a budget and measure performance against it.One of my big mantras is – What gets measured gets done. If it’s written down and reviewed, then it’s far more likely you will hit your targets

2. Scalability

This is how scalable your business is or how easy is it for you to grow your business. This may sound an odd statement, but the secret to scaling is to sell less stuff to more people! Too many of us fall into the trap when starting out of trying to offer your services (vast) to everyone. It rarely works.Your ability to scale is dependent on you

– being able to teach others your skill
– having products or services that lead to recurring revenue
– aligning your products to your most valuable customers

Action: Review your products and services against these criteria. If they tick all three boxes focus on them and if they don’t tick the boxes, think about either how you can develop them so they do, or possibly contemplate not offering them.

3. The Switzerland structure
Maintaining neutrality. i.e. you shouldn’t be over dependent on a customer, supplier or employee.
You should not have a customer who makes up more than 15% of your revenue, and you should be able to switch supplier. The overreliance on an employee, could be you by the way!

Action: Review your customers, suppliers and employees to see if you need to take any action to reduce your dependence on them.

4. Valuation see-saw
Another equation – the more cash your business needs, the less value it has. If you are selling – if the person buying your company has to write out two cheques when they buy your business – one to buy the company and another to pay for working capital – it’s going to make you a less attractive purchase.

So this is all about cash management
– Not holding too much stock
– Having tight processes around invoicing and debt collection
– Getting the most favourable terms with your suppliers and so on

Action: Do all of the above!

5. Reliability/Repeatability
This is back to something I alluded to earlier on in Scalability. The more reliable your income streams are, the more value your business has. One off transactions are at the bottom of the scale, where you want to get to is a recurring revenue stream. Mobile phone companies are good at this with their two year contracts, then auto renewal products such as your antivirus on your laptop, other renewable memberships. Or selling one product, but then getting regular income off consumable products – printers and paper, nespresso etc.

Action: Think about any ways in which you can offer your services or products on a recurring basis.

6. The Wow factor
Getting you and your product differentiated. It’s too easy to think you have to offer everything to everyone. How do you get heard on that basis?Dinosaurs

 

 

 

Action: You want to have a niche – identify the thing(s) your most valuable customers value about your products/services and sell more of that to them and to others like them.

7. Customer satisfaction
This almost goes without saying. But what you need to be able to do, is to prove that your customers are happy. It’s not good enough to say that you pride yourself on excellent customer service without providing the facts to prove this.Action: One easy way is to implement the net promoter score system .
Or use online review sites such as Revoo and Trust Pilot amongst others.

8. Hub and SpokeThis is degree to which they business relies on you and it affects the value of your business. If everyone reports to you, or your customers and suppliers will only speak to you, you are at the centre of your business. You are the hub and your company – to be blunt – is worthless company if you are looking to sell.

Action: If you want a profitable business then this may work for you as you keep your overheads down, but if you are looking to sell, or take a step back, or even aim to take a two week holiday, then you will need to look at the structure of your business to see how you can shift the reliance on you to others

If you’d like to know more, let me know.

karen.espley@thechameleonguide.com

http://www.thechameleonguide.com

 

Why selling on price is a bad thing (and why differentiation is a good thing)

Last year Apple revealed their profits had increased by 37% to $18billion.
Is this because they are the cheapest?  Far from it.

The new iPhone 6 is twice the price of other companys’ phones. Xiaomi’s Mi3 costs $320 compared with Apple’s iPhone 6 retailing at $649. That’s not to say that Xiaomi aren’t having great success – they are, but Apple can still sell its product successfully at that price point.

A common argument used by our clients is that they need to compete on cost. They feel they have to cut their prices to win business. At The Chameleon Guide we strongly encourage our clients to resist selling on price.

Here’s a cautionary tale on trying to win business based on cutting prices. A cupcake maker agreed a deal with Groupon (one of the discount voucher sites) and hadn’t done her sums properly. She was tied in to making up to 102,000 cupcakes as part of her offer at a 75% discount off her normal prices (and when she normally only made 100 cakes a month). She had to get in 25 agency staff to help her fulfil the deal, failed to deliver a good result to many and made a loss of £2.50 per box of 12 cupcakes.  That’s 8,500 boxes of cupcakes at £2.50 loss per box, totaling an overall loss of £21,250. She nearly went under.

5 good reasons not to sell on price

  1. It’s an easy thing to do and easy to copy, so your competitors can simply drop their prices to undercut yours
  2. You end up in a price war. Tesco’s profits have suffered from trying to compete with Aldi and Lidl
  3. Unless you have economies of scale allowing you to offer your product at the cheap end, it’s not really a sales strategy because you won’t be the cheapest
  4. You will be perceived as cheap and cheerful or worse. If that’s your strategy, go for it, but there is usually a suspicion that your product is likely to be of poor quality. You may get a sale, but if the product actually is poor quality, people are unlikely to buy from you again.
  5. For smaller companies it’s not a sustainable strategy – it won’t give you a long term competitive advantageGilbert cartoon on price

If you are going to reduce your prices for a one off push for example, make sure you do the sums.

Here are a couple of examples of the impact on profit reducing your prices may have. I’ve adapted the examples from this article

Example one – profit from selling the same number of products at a discounted price

Normal price Discounted price
Selling Price per item £100 £90
Cost per item £80 £80
Numbers sold 50 50
Total revenue £5000 £4,500
Total cost £4,000 £4,000
Profit £1000 £500

In this example, selling the same number of products at a 10% reduction has reduced the profit by half.

But of course you would be expecting there to be an increase in sales which would counteract the loss of profit.

Example two – How many more you need to sell to get the same profit as the non discounted price

Normal price Discounted price Discounted price
Selling Price per item £100 £90 £90
Cost per item £80 £80 £80
Numbers sold 50 60 100
Total revenue £5,000 £5,400 £9,000
Total cost £4,000 £4,800 £8,000
Profit £1,000 £600 £1,000

You would need to double the sales volume with a 10% discount in order to reach the same profit level as if you hadn’t introduced the discount.

This is a reasonably extreme example, because hopefully your costs wouldn’t be this high relative to the selling price. But it illustrates the point nicely.

There are of course times when it’s worth doing this. For example it’s end of line product and you’ve already broken even and you want to get rid of the stock. Or maybe there’s been a drop in the cost for some reason (drop in oil prices reducing transport costs for example) so you would be able to get a good margin still with the discounted price.

So, what does it look like when you don’t sell on price?

If we go back to look at Apple in a bit more detail…

They do not sell on price. They deem their products to be luxury items for which they can charge a premium.

This only works, because they do actually have a superior product. They create desirable products. The design quality is superb, it has an awesome brand, and it has the top Net Promoter Score in its industry across all three of its products. All three scores are in excess of 65 with their competitors trailing by at least 10 points. Given a cross industry average NPS of 15, this is an outstanding figure.

People who buy Apple do so because they buy into the Apple vision hence why each time a new version of a product comes out, there are massive queues to buy the new version, even if the old one is still functioning perfectly well.

Not all of us get the Apple phenomenon – I’m an Android/Windows lover through and through, but I can’t fail to be impressed with Apple. What’s not to be impressed about?

So how do you differentiate your product or service to attract buyers who will pay more for your product and stay loyal to you; buying from you time and again?

It’s about two things:

  • Finding your niche or point of differentiation
    and then
  • Finding the customers who value that niche or differentiation and will pay good money for it

7 differentiators

  1. Customer service
    As covered in a previous blog, many companies believe they offer superior customer service. Reality would say otherwise.
    But 8 out of 10 people said they would pay 25% more for a superior customer service (Source: Drum.com, 2013)
    So, if you can truly offer top customer service, you really will make a big difference and it will give you a sustainable competitive advantage because so few companies are able to deliver consistently high customer service. And it’s difficult to replicate.
  2. Unique product
    This is difficult to achieve unless you truly do have a unique product that no-one else has. But you may for example have the sole distribution UK rights to a product, or a pharmaceutical company brings out  a new wonder drug for a condition that will be on patent for anywhere between eight and 20 years before it can be replicated.
  3. Quality product
    Apple don’t make many things. But what they do make have superb design and work brilliantly. The number of colleagues and friends who tell me I should just give up get and AppleMac/Air/Whatever because ‘they just work’ is too many to be a coincidence.
    They are selling luxury.  But sell it in spades.
    Others such as Rolex not only sell luxury, but also exclusivity. How many of us could afford a minimum price tag of £3k for a bottom of the range Rolex?
    These products are about more than just quality – it’s a statement about the kind of person you are.
    Car sale
  4. Delivery/Reliability
    You deliver. On time, every time. This is of vital importance. A client provides safety products to the construction industry. And one of the key things their clients value is that they know if they place an order, it will be delivered in one piece at the timescale stated. And the clients are informed every step of the way. If a product isn’t available, they will be told, given alternatives and sometimes that even means pointing them in the direction of a competitor. Because it’s about delivering to the client.
  5. Information
    You are a source of knowledge about your product and act as advisers to your clients/customers. They will come to you because they know you will give them best advice, which sometimes means giving them something cheaper than they thought they might need because that’s what will work for them.
  6. Social/environmental
    Your products have a positive impact on the environment or supports social causes.
    Either directly or indirectly. For example you give x% of your profits to worthy causes, or you manufacture your products using recycled materials.
  7. Price
    Is a differentiator – but not for smaller companies (as covered above). This niche is strictly for the big boys who have purchasing power to keep their costs down so they can stack ‘em high and sell ‘em cheap.As a slight tangent – One could argue about the ethics/morals of this. For example, having clothes made offshore by piece workers who get paid subsistence wages and are forced to work in terrible conditions just so we can have cheap clothes. Who can forget the Rana Plaza disaster in Bangladesh in 2013 – when the building collapsed killing over 1,000 people and seriously injured a further 2,500. The added horror is that the employees said they didn’t want to go into the eight storey building because of the cracks that appeared, but were forced to go in or have their wages docked – not just for that day, but for the month. And it’s taking a lot of pressure to get some fashion houses to pay compensation…
  8. Add in your own…

What you need to do is identify from your top customers/clients what it is they value about you. It may be one or more of the above that are just what your customers want and are prepared to pay more for (other than the Price one obviously!). Having identified your magic ingredients and who your top customers are that pay for that recipe, you’re on your way. You now have a product/service offering that is based on value not price and you know what your perfect customers look like so you can go and find more of them.  Beware the – our product is for everyone – you’ll have a weak marketing message and are likely to end up falling between two stools. Far better to be brave, identify who those most valuable customers are and what they like about your product and laser focus on getting those customers.

And you never need to sell on price again.

If you’d like more information on how to identify your sustainable competitive advantage, drop me an email – karen@thechameleonguide.com

http://www.thechameleonguide.com

Five good reasons why self-employed business women shouldn’t undersell themselves

Did you know that from 4th November 2014, women were effectively working for free compared with their male counterparts?

It is 40 years since the Equal Pay Act and yet women working full-time in the UK are still paid on average 15.5% less per hour than men, according to a women’s rights campaign group, the Fawcett Society.

Actress Emma Arterton outside the Houses of Parliament with the original Made in Dagenham ladies whose strike action in 1968 forced the introduction of the Equal Pay Act (picture courtesy of Grazia Magazine)

Actress Emma Arterton outside the Houses of Parliament with the original Made in Dagenham ladies whose strike action in 1968 forced the introduction of the Equal Pay Act
(picture courtesy of Grazia Magazine)

But there has been some good news. Due to lobbying from the likes of Grazia magazine’s ‘Mind the Pay Gap’ campaign and Labour MP, Sarah Champion, proposing that section 78 of the Equal Pay act should be enforced requiring that companies with over 250 employees be forced to publish details of any gender pay gaps.  It won, passing by 258 votes to eight.  It still has to go through its second reading in Parliament in February, but hopefully there shouldn’t be anything standing in the way of it being ratified with such an overwhelming vote in favour.

Will anything change?

I find it somewhat depressing that there is still a gender gap in salaries and that government has to enforce transparency to try and put the spotlight on companies to change their pay policies.  Of course publishing the rates is not the same as then equalising them, but it’s a start. And at least it now gives women the option of voting with their feet and finding companies that do pay fairly.

Let’s hope that there is sufficient support put in place to either help women lobby for the same pay as their equivalent male counterparts without being deemed trouble makers. And I think that’s a big risk.  When I worked for a large insurance company in the 90s, I was the first female manager to be employed at that grade. Which was a shock in itself. I’ve never had the misfortune to work at such a sexist organisation and I could quite easily had a case against them. The sexism was endemic, from the staff who worked in the canteen through the board appointed directors.  One day I was talking to the HR lady who happened to have her screen facing me and I could see the salary figures for me and my fellow male managers. Astoundingly, I was paid over £4,000 less a year. I was staggered.  But I felt could do nothing about it. Neither that nor the terribly sexist way I was treated. Not without sounding like some hairy armpitted, rabidly left wing, soap box thumping lunatic.  I did try – I talked to my director (not about the money though) who blustered a lot, but nothing changed.  Thankfully, I was head hunted and moved on swiftly within a year.

So I fear that it will be difficult to make the changes without further struggle.  But struggle we must.  I firmly believe that you should be paid an equivalent and appropriate salary irrespective of your gender, religion, sexual orientation etc. if you are doing the same job as someone else.

Right, I am going to get off my soap box now!

What does this mean for self-employed business women?

As a self-employed person, running my own business, these rules don’t apply to me, but it got me to thinking about what women who run their own businesses charge for their services compared with men to see if there are any parallels.

And in my limited observation, it seems that there are a large number of women who undercharge for their services.  Here are some examples from my experience:

A website offering PR/Social media services. ‘A’ was offering an advertising slot, plus one hour meeting, regular shout outs on Facebook and Twitter, for £10 a year!!! At the time, other sites were charging £30 a month for a lesser service. Thankfully prices have now gone up to a more realistic level, but her basic package is still £150 a year, which is still quite frankly a bargain considering  how much work she does for them and how much traffic the site now gets.

A coaching company – ‘B’ is offering a monthly telemarketing workshop, monthly accountability emails, a one to one and access to information and other resources for £10 a month for six months. It then goes up to £27 a month. But still, that’s a lot of stuff for not very much money.

I had a paid meeting with ‘C’ with me that took over three hours and she’d also spent probably the best part of another three hours preparing for the meeting.  I knew, from a colleague, what she should have charged (£90), but at the end of the session when I said I need to pay her she suggested £45. That’s £7.50 per hour, barely above the minimum wage for skilled and expert advice. Cleaners charge £10-15 per hour! I insisted on paying her the full £90 and had stern words with her for undervaluing herself.

Whilst in all cases, the charges were almost secondary to a strong altruistic feeling of wanting to support others and this is to be applauded, I strongly believe this insistence on undercharging is bad for a number of reasons:

  1. Expertise
    It undermines your expertise and value and says, my skills are not worth more than this. Subtext could be read as – actually I’m not very good at this which is why I have to charge so little.
    You are good at what you do, so why not charge what your skills, experience and training are truly worth? If you don’t know, do some research or speak to someone who knows. If you are just starting out, it’s fine to undercut your competitors, a little, to counteract your lack of experience. But do not get into a price war, you’ll get business from people who are more interested in saving money/getting something for free or cheap rather than what you are actually selling them. And they are invariably very demanding and don’t believe they are getting value.
  2. Self respect
    It says I don’t really believe in or respect myself enough to charge properly. There’s far too much apologising for stating your charges. ‘I’m afraid it’s going to be £x’. Don’t be afraid – if you don’t believe in your rates, no-one else will. If you want to give your time away free – do it in a restricted manner. Set yourself a limit of either number of complimentary sessions you will do a month, or decide you will work pro bono for one organisation, but no more. Believe, L’Oreal style, that you’re worth it!
  3. Not a long term strategy
    It can’t work long term – you cannot make a living out of some of the rates I have seen women charge even if they are trial offerings. Which is fine if you have a partner and it’s a lifestyle type job, or you can rely on government support to top up the earnings. But if you are looking to grow your business, to get investment, take others on, or even franchise your business, it needs to make money to make it attractive to others. And even if it’s a social enterprise, then surely you want to make good money in order to be able to reinvest it back into the business to maximise the good you do? Remind yourself of why you got into the business in the first place. Even if you don’t have great expectations about what you may earn, I always feel a good rule of thumb is, what would someone being employed to do this work get paid and that should be your minimum standard.
  4. Market rates
    It makes it difficult for others to charge a proper market rate for their skills and forces prices down (not always a good thing!). And if you are grossly undercharging, then it says you’re not even in the same business. Unless you have a real market advantage of being able to sell large volumes at a very low price to make your margins. But unless you are someone like Asda, this is tricky to do and not sustainable. See point 1 above – do your research.
  5. It is counterproductive
    I’m always wary of ‘cheap’ deals. As Deborah Meaden once said on Dragons Den – if it looks too good to be true, it probably is too good to be true. So, the great offer may not generate the business you would hope for, because people don’t always trust cheap – unless you have a proven model.  Maybe as a loss leader, as an introduction to a service, like a trial period, possibly. But still, it should have an appropriate, close to market value.

I’m not suggesting you should price yourself at the top end of the market, or price yourself out of business, but I am asking you to honour yourselves and try to understand what your drivers are that make you feel you need to price your services as you do.

I’d love to hear your feedback – let me know what you think or any tips and hints to help develop a thriving business.