The Economy Is Perking Up. Four Questions To Help You Ride The Economic Wave
by Ron Ameln
Masks are coming off. Offices are opening up. Economic indicators are on the rise. Discretionary spending is up. After a horrendous economic situation over the past year, the economy is roaring back. As a small-business owner, now is the time to take advantage of this economic wave.
The goal for business owners is to not only take advantage of the wave, but also to build a foundation of growth for the future.
Are you ready?
If you can answer the following four questions successfully, you’ll put your business in the best position to ride the economic wave and build future growth.
1. What is Your Future Plan?
Simply put: If you don’t know where you are going, how can you ever get there? What do you want your company to look like in one year, in three years? How many customers? Who are your customers? How will you grow? What’s your vision?
If you don’t have a clear vision, you’ll bounce around from strategy to strategy, hoping for something that sticks.
Ari Weinzweig, owner of Zingerman’s Delicatessen in Ann Arbor, Mich., credits his vision for helping to build his once-small delicatessen into a multi-million-dollar operation.
A vision is a one- to three-year snapshot of what your business will look like. Once you complete the vision, you can work backward to set goals, be accountable and start turning the vision into reality.
“Some people who struggle with writing a vision claim that they cannot predict the future,” says Weinzeig. “Of course you can’t predict the future. But this is not about predicting the future. Why not write the future that you want? Even if you are in high-tech and you maybe don’t know what new things are going to happen, just write, ‘We are on the cutting edge of our industry, and we have seven new innovations we never thought possible.’ Done.”
If you feel like you lack the skill to create an effective vision, then you are not alone. “Most people don’t know where they are going,” Weinzweig says. “They have to make a decision about the future, so they make a pro and con list. Then you balance both sides to have the same amount of pros and cons so you are more paralyzed than before you started. And then they go hire consultants. A vision is just a word picture of what you want.”
Write your vision today, and start building toward those goals. Remember: If you don’t know where you are headed, you’ll never get there. Use the side bar questions to help you get started.
2. Who Are Your Ideal Customers?
When it comes to sales and marketing, businesses need to know their ideal customers and how they make the business profitable.
You can’t sell to everyone. There simply are not enough hours in the day.
“The biggest expense in business is missed opportunity,” says Allen Minster, a partner at More Prospects, a Frontline Advisors company. “The bottom line: Business owners need to make certain they know the profile of their ideal customer to allocate resources to market to them. You can use this knowledge for new account acquisition. If you know who your ideal customer is, then you can look for new customers by identifying the thread going through them.”
Need help finding your most profitable customers? “I define profitability with three elements: margin, volume and emotional cost,” Minster says. “These three elements need to be in balance. That’s how you’ll figure out who your ideal customer is.”
Once you determine your ideal (and most profitable customers), you can utilize your marketing dollars to attract more of them.
Also, don’t ignore your current and past customers. Remember: These customers have already vetted you and trusted you enough to do business with you. When it comes to finding customers, your current and past customers should be your first choice. It’s less expensive to keep and upsell current customers than prospecting for future customers.
Tom Schaff, managing partner of Big League Sales, believes not knowing your most profitable customer can kill your business. “I had a company I gave a ton of business to and left after eight years,” he says. “They never noticed, and I felt like they didn’t care. And I told everyone they didn’t care. Is that the kind of PR and branding you want said about your company? I believe you always build a business from strength. Know who your best, most profitable customer is and make sure they never leave. Give them your house phone, cell phone and every way to get a hold of you. Know their business issues and personal ones. Remember birthdays and anniversaries. Make them family and grow together your whole career.”
So, if recognizing the ideal customer is so important, why do business owners overlook it? “Most business owners think there isn’t enough business, so they are always looking for more clients,” says Schaff. “My clients have helped me think abundantly – understand who values you and serve them the best you can, knowing you don’t have to be right for everyone and thus choosing to only work with those who are right for your business and value you appropriately. It’s like the old saying, ‘You can count the seeds in an apple, but not the apples in the seed.’ Owners who understand that great clients served well that pay well are seeds to orchards full of prospects. Low-margin, low-value clients are hard to service, rarely happy and challenges to growth. Get clear on who values you, why they value you, and double down on the places you can make a difference.”
3. Can you Hire and Retain Key Employees?
The Microsoft Work Trend Index found that 40% of people want to change jobs this year. Another study found that 26% of U.S. workers plan to leave their current job over the next few months.
Needless to say, if you want to build a better business, you need a plan and strategy to keep your employees.
According to Art Snarzyk, owner of consulting firm InnerView Advisors, lowering turnover really starts with better hiring. “Hiring is like fishing,” he says. “If you want to catch catfish, there is certain bait you must throw out that sharks or bass don’t like. So, you need to bait your hook properly.” Snarzyk works with companies throughout the region to build better hiring systems and cultures to avoid turnover.
Setting up an environment that helps new employees fit in and feel comfortable early on is essential, according to Snarzyk.
“When they come on, they should be acclimated to the business and the culture of who you are. If you want the people to gel, this needs to happen. You’re not plugging in a lamp; you are plugging in a human, and one that may change the dynamics of your business.”
Snarzyk advises business owners to have the new employee’s computer ready, email set up, phone extension ready and business cards prepared on that first day. “You want them to feel a part of the company that first day.”
“Many companies have fostered cultures of exile,” says Christine Comaford, author of the New York Times best seller, SmartTribes: How Teams Become Brilliant Together. “No one is purposely making people feel they don’t belong, but they’re also not proactively making them feel they do – and that’s a huge, huge mistake.”
Belonging, along with safety and mattering, is a basic human drive. After food-water-shelter needs have been met, we must feel that we’re safe, that we matter, and that we belong. If not, we can’t seek self-actualization, or as Comaford calls it “being in our Smart State,” meaning we can’t perform, innovate, collaborate or do any of the other things it takes to survive in our global economy.
When employees feel this way, they hide out, procrastinate, or say what the boss wants to hear instead of what she needs to hear. Such behaviors are devastating for business. When they occur chronically, not only will your company be unable to move forward and grow, it may flounder and fail.
“People will never speak up and say they feel they don’t belong,” she says. “It’s just too scary. It’s up to you as the leader to diagnose the problem and take steps to fix it.”
4. What are the Activities/Drivers Moving Your Critical Numbers?
KPIs (Key Performance Indicators), or critical numbers, have become business buzzwords. KPIs are the quantifiable measurements that most clearly define winning in your company. They provide a focal point for the company and its employees.
Every business needs one or more KPIs they can look at to “keep score” as they build their companies. Some common KPIs are revenue per client; client retention rate; profit margin, etc.
When you think of KPIs, keep one simple concept in mind: KPIs provide a view of the past. They are like looking in your rear-view mirror. They showcase where you’ve been. The key to business success, however, is to move those numbers in a positive way in the future.
For example, think about losing weight. If your ideal weight is 180 and you step on the scale at 190, that weight KPI is simply a snapshot of where you’ve been the past few months. It shows you how you’ve eaten in the past few months and your activity levels. It doesn’t, however, help you get to your ideal weight.
What will help you get to that weight? Activities and drivers that you do each and every day will help you reach your goal. One activity might be exercising one hour each day. Another might be eating a 1,300-calorie diet each day. If you really want to reach your goal, the key is how much focus and discipline do you have maintaining your daily activities of exercising and calorie counting.
In our weight loss example, the KPI lets us know where we’ve been, but the drivers/activities will help us actually move that number. While KPIs are important numbers, it’s just as important to chart and track those activities and drivers.
If you can successfully answer these four questions, you’ll be in a great position to ride this economic wave into the future.