And how you can retrain them

A few small changes will lift sales

No doubt you run display ads, you know, the type of thing you might put in a newspaper or in the Yellow Pages.  Sometimes you might put together a flyer to be handed out or dropped in letter or Post Office boxes.

My question to you is "do they work?"  Do they result in enquiries or leads and then to sales.  After all, the whole point of a promotion is to get a sale.  

That's what I'd like you to think about - do your display ads make you money?  Are you happy with the results you get from those ads, whether they are in a newspaper or Yellow Pages?

If they don't, have you thought WHY NOT?

I can think of a number of reasons why they might not be, as a quick glance though Yellow Pages confirms:

• The most valuable bit of real estate in an ad is the headline. At least half the ads I look at have got their company name and logo there. WHY? The buyer only wants to know who you are after he/she has confirmed that you can do something for them. That's what gets their attention.

• There's a dreadful sameness about most ads in tone and content. It's as if no-one dares to be different. But if you are not different how will you stand out from anyone else who supplies the same service.

• People like to know what they are buying - and why they should buy from you. Does your ad give any reason why they should select you? Are you the fastest/cheapest/most reliable/take away the pain (choose 2) supplier?

• Do you squeeze in a testimonial, a quote from a customer confirming the results you deliver?

• Do you have a call for action - ring NOW! When people are looking at ads - they usually do so because they are interested in buying. You are talking to people who already have a desire for what you are offering. Take advantage of this and do what you need to force them to pick up the phone and CALL YOU RIGHT NOW.

• Do you offer something for FREE to encourage them to contact you - something that educates them and demonstrates your expertise. "7 Questions you need to ask before hiring a Plumber".

• Write your ad as if you are talking to one person only, it's a personal conversation. If you use words such as you and yours they will feel you are talking to them.

© Copyright 2010 Adam Gordon, Profits Leak Detective

In a recent blog I used a little bit of doggerel from renowned copywriter Gary Bencivenga's to emphasis that unless your advertising and promotions gives the reason why your prospect should buy NOW and why they should CHOOSE YOU your promotion will be ineffective.

And ineffective promotions are a waste of money and your time.  In short, a profit leak.  

But advertising and promotion are not the only areas in which I come across profit leaks draining business's future.  There are many other such profit leaks.  In this blog I thought I should identify a few more from across a range of industries to see whether they strike a bell with you.

Do you know the profitability for each customer/account, line of business, or business unit by product, customer or deal?  Or do you know only their sales?

Have you benchmarked your business? Do you know how your performance compares to averages in your industry?

Do customers walk out of the door without buying, sales call bear no fruit; lost sales opportunities are a profit leak

Do you have a "sales conversation"? Without a sales conversation you will miss many a sales opportunity.  "Can I help you" is not enough?

Are you charging the right price? Could you charge more without losing sales?  If you increased your price by 5%, how many sales could you afford to lose before the increase cost you money?  You might be surprised at the answer.

Do you leave money on the table by not up-selling or cross selling?

Do you have payment options? Do you have a merchant account that allows you to offer full credit card services?  If your competitors are making payment easier than you, they will be picking up sales at your expense.  

Are there costs directly attributable to your product or service which should be in the price but are being hidden in your overheads?

What processes don't add value from the customer's perspective?  Working from the perspective of the customer, "value" is defined as any action or process that a customer would be willing to pay for.  

Can you reduce the time to process orders, allowing you to process more orders in the available time?

Is there waste in your business - tasks that have to repeated, on-going errors that are not fixed, premium freight costs, scrap, re-work, customer returns, complaint servicing etc.  They all contribute to leaking profits.

Do you have labour or material overruns, or excessive stock levels?   Are you reordering "lost" stock you already have on hand?

Do you accurately allocate income and expenses for each job and track expenditure?

Do you know your real hourly cost of labour? Most businesses don't.

How do you control, and recover non-billable time?

How long is it since you have done a thorough review of your business costs - for supplier related general expense categories such as printed matter, stationary, telecommunications, courier, insurance, cleaning services etc.

Did you find yourself answering "I don't know" to any of these?  Then may be it's time to:

1.    Take action!  Identifying profit leaks is one thing.  Plugging the leak is another.  So make sure corrective and preventative measures are taken.  Implementation is the name of the game.  Many good money-saving ideas are lost simply through a lack of action and the leak continues.

2.    Measure - Do you have regular, accurate reports on key areas of your business, and on your overheads?  If you don't, how do you know whether you have a leak or not?  Without measurement there will be no change.  Measurement is at the core of all improvement.  
If you would like to discuss these further leave your comments below.

© Copyright 2010 Adam Gordon, Profits Leak Detective

Leadership has been in the news lately. In Australia we have had comments on the role played by the political and emergency services leadership (i.e. lack of) during the Black Saturday of 7th February 2009 when so many lives were lost to the bushfires.  In the US questions are being raised regarding President Barack Obama's leadership in the Gulf of Mexico environmental disaster.

It is not for me to comment one way or another on either situation.  However reading the discussions about the leadership roles and responses lead me to think, at a much more mundane level, about your leadership role in your small business.  Coincidently my colleague Andrew Young (Directed Focus) recently carried out a small business survey which found that leadership was a more burning issue than sales, finance or planning.

Assessing leadership in a small business is not easy. Effective leaders provide direction and create a supportive environment.  Leaders have to:

• Set the strategic direction for the business (i.e. - where it is going, what it wants to achieve); that is, get the big issues right;
• Make sure all parts of the business work together.
• Encourage people to achieve the objectives they set.

At the same time, given the nature of a small business you no doubt also have responsibility to "do" some of the operations of your business whether it is on the tools or actually providing the service.

Staying on the tools is a trap many technical trade-based small business owners fall into.  If you are going to have a "business" and not just a job you need to spend time on the direction and management of the business, to provide leadership for your business.

This does not mean that you should not do technical work or be involved in service delivery but ultimately the business must be both directed and managed.

A key decision you need to make is whether, for example, you are going to be a "builder" or to run a "building business".  

Make the former decision and you will do more "doing" than "leading".  You will have a job not a business.  

If you make the latter decision then the leadership you provide becomes important.  You will be judged, and judge yourself, on the results being achieved.  These will include:

• Setting the direction of the business - without leadership, the ship that is your small business will aimlessly circle and eventually run out of power or run aground.
• Driving sales - without increasing sales you will not be able to justify the resources to free yourself up to manage the business;
• Developing a track record of profitability;
• Documenting systems and procedures which enable that profitability to be replicated by others;
• Ensuring that there is management data and information on which to base decisions.

So you are not fighting fires or oil well disasters but even small businesses have 'spot fires' they must deal with.  What is your leadership like?  Are you providing direction, driving sales and helping you people meet your business's objectives?

© Copyright 2010 Adam Gordon, Profits Leak Detective

And it's not FREE!

Just for a change I thought I'd take a different tack with this blog.  Most of you running your own business will have particular skills on which you built your business.  And you no doubt spent years acquiring those skills, years of dedication which didn't give you the opportunity to learn one of the other skills you need in running and managing your business.

That skill is marketing, and particularly the advertising and promotional side of marketing.    Just like every other aspect of running a business it is a skill, demanding its own knowledge and expertise.

No matter how good your product or service is, it won't get the sales it may deserve if it is not properly promoted.  

As copywriting great John Carlton said at a seminar I attended this time last year "The marketing graveyard is crammed with great products that failed because the advertising didn't elicit that all-important desire to buy RIGHT NOW."

People do not want products; they want the benefits they provide --- whether they are tangible benefits like transport or intangible benefits like freedom or fun.  Or as Bob Hacker said "The customer or prospect doesn't give a damn about you, your company or your product. All that matters is, 'What's in it for me?'"

It's advertising and promotion that conveys that message to the customer.   The art of writing those advertisements, sales letters, emails and other promotions is called copywriting.

One of the legendary copywriters, now semi-retired is a bloke called Gary Bencivenga.   He has spent the last 38 years painstakingly collecting and applying every secret he could find to help America's leading direct marketers achieve breakthrough response.

Some time ago I came across this bit of verse that Bencivenga put together that captures one of the key elements you must include in your advertising and promotion.

Take it away Gary!

The Most Persuasive Tool in Advertising

"How can I sell more product?" is the marketer's eternal question.
If you sincerely seek the answer, just follow my suggestion.
When it comes to creating advertising, most advice is for the birds.
But the greatest secret of success can be found in two little words.
No, they're not, as some have written, those standbys NEW and FREE.
Neither are they NOW and SALE, or even YOU or WE.
No, to open minds and wallets and have prospects eagerly buy,
The most persuasive words in advertising are simply, REASON WHY.

Whether you spread your message on TV, the Internet or by letter,
You must explain the REASON WHY your product is much better.
And while you're at it, don't forget that your audience won't believe you
Unless you give the REASON WHY what you claim is true.
To close the sale, these two little words once again point the way.
Just give me another REASON WHY I should act today.

There you have it, clear as day. If you want to sell, here's how:
Give good reasons for these three questions - why you, why true, why now?
This little secret works like magic, for all products, in all seasons.
If you want to sell like a superstar, just boldly state your reasons:
First, the reason yours is best. Second, a reason to believe,
And third, a reason to act right now - give these and you'll receive
More sales than you can imagine, gold and riches heaped on high.
The world showers you with treasure when you give the REASON WHY.

Thanks Gary.

Have a look at your recent promotions, your Yellow Pages advertisement and whatever else you do.  How effective are they?  Have you given your prospect a "reason why" to buy, to believe, and to act right now?  

Try it, just a small step improvement.

© Copyright 2010 Adam Gordon, Profits Leak Detective

Five lessons worth learning

Yes, I know you don't need a sixteen year old lass telling you how to run your business, even someone like Jessica Watson.  

For those of you outside Australia Jessica Watson had a spectacular entrance to Sydney Harbour on Saturday 15th May.  As an eleven year old she announced to her parents that she intended to sail around the world.  As a sixteen year old she did, non-stop, alone and unassisted.

The business lessons, yes there are a number, come from not what she did, but how she did it.

Clear objective - she set a very clear, quite specific objective.  There was nothing woolly about it.  In fact Jessica's objective fitted the SMART rule for objectives very well; Specific, Measurable, Achievable, Relevant, Time-based.

Do you have clearly defined, specific objectives for your business?

Planning - Every point on the trip was carefully planned with meticulous attention to detail.  For example:

• Food for 8 months - with a lot of help and advice from other sailors and a dietitian from the University of the Sunshine Coast;
• The route and weather all the way, down to forecasting the speeds Ella's Pink Lady can do at particular angles to the wind in the weather forecasts along the route
• Planning for emergencies so that she instinctively knew what needed to be done. It clicked into place with a completely cool head after a collision with a tanker before she had even started.

Do you pay meticulous attention to detail in your business?
Do you meticulously plan the year ahead?  

Preparation - Jessica undertook meticulous preparation.  She prepared herself including crewing on ocean going yachts at 14 years and took courses in a wide range of skills that could be needed on such a trip.  Wikipedia provides the following summary:

"As training for her voyage, Watson crewed on a number of vessels, including Oceanswatch's Magic Roundabout on which she acted as skipper during a crossing of the Tasman Sea.  Watson had over 10,000 nm of ocean sailing experience before departing on her round the world trip.
Her qualifications include:

• RYA/ISAF Offshore Safety course (ISAF SR 6.01)
• RYA Diesel Engine course
• RYA Radar course
• YAs Safety and Sea Survival certificate
• OMTC issued Certificates of Competence for Apply First Aid
• IMO compliant Elementary First Aid Table
• Yachtmaster Ocean theory certificates
• Radio operator's license"

I believe she also studied sail making in case she had to do any repairs, which she did.

Do you have all the technical, financial, management and marketing skills in your business you need to meet your objective, either through your own training or through employing the right people?  

Perseverance - Success requires more than skills and ability.  Yes you must have some talent and ability to succeed.  But you must also have grit and determination.  

After the collision with the tanker before Jessica started many said that the trip was too risky for a young girl.  She was undeterred.  In the South Atlantic near the Falkland Islands she suffered four knockdowns of her yacht in a severe storm with 10 metre waves and 70 knot winds.  Nearing home, swells in the Great Australian Bight were up to 12 metres and she had three more knockdowns.  

After analysing students at the US Military Academy, West Point, psychologist Angela Duckworth concluded that sustained, focussed application of talent over time - as opposed to raw talent, intelligence or educational attainment - was a vital determinant of success.*

Times can be tough in a small business.  You need grit, determination and perseverance to get through.

Mentors - Jessica had two mentors who helped her plan the trip and advised on her preparation.  Both had previously sailed around the world.  They were in constant contact with her during the trip, which is allowable under the rules governing such records.

The importance in having a business mentor is increasingly recognised as being important to the success of individuals in business.  It applies to small businesses as much as in large businesses.
Do you have a mentor, someone who has experienced the travails of business's turbulence to whom you can turn for advice and guidance?

Writing on the success of this slip of a girl Dr. Tim Hawkes said "Success in life is rarely available to the child who is allowed to squander significant time on the trivial, the shallow or the soporific."  That could also be said of those who seek to sail small businesses to success.

* Source: The Australian, Monday 17th May 2010

© Copyright 2010 Adam Gordon, Profits Leak Detective