May 21, 2009 | Management, Operations
In all businesses, the canary in the hole is deterioration in the cash position, and it is particularly important for small businesses to be sensitive to changes in their cash position as they have less “fat” to fall back on when things head for the bin.
The largest variable item in most non service industry businesses is inventory. The usual accounting view of inventory is that it is a current asset, as liquid as cash, and there is little incentive to actively manage inventory to the lowest possible level, as there would be if it was seen as a “partial liability”.
How much better to see inventory as a brick tied to the legs of a swimmer, until such time as it is actually sold. A metaphor like this may encourage a lessening of the weight, rather than accommodating a buildup greater than the immediate demand, usually in the name of manufacturing efficiency, that can lead to drowning.
May 21, 2009 | Management
In difficult times, it would be a mistake to either make light of the difficulties you face, or to exaggerate them.
Generally people look for leadership, and honesty is a fundamental component, so tell it like it is, people will understand, and be grateful, even if they do not like the message.
May 20, 2009 | Management, Marketing
Following the previous blog entry, “chief cook & bottle washer” and a phone call from a user prompted by it, I have been thinking about the value of advice, compared to the time it takes to provide it.
Many SME owners are used to hiring extra labor they need on an hourly as needs basis, say $800/week, and that colors their response when a marketing advisor charges $1000 for what appears to be a couple of hours work. (For many, “work” is often related to the number of things done physically, so sitting in a comfy chair, “thinking” hardly rates)
What they miss is the 30 years of experience it took to accumulate the knowledge to be able to sift the alternatives, offer the advice.
This is particularly the case with marketing and strategic advice. People are used to paying lots to accountants, because they recognise the need, and the value, not so with marketing, which is usually more difficult, as there is rarely a clear right answer, just a range of possible courses of action.
A $1000 for 30 years experience applied to a problem seems to be a good deal.
May 19, 2009 | Management
How often have we heard this expression describing the role a small business owner fills?
However, it trivialises the difficulty in remaining on top of the strategy issues and implementation, as well as the tactical demands of a business, putting out the inevitable day to day fires, and just ensuring things get done.
The skills to play all of these roles effectively, and provide the leadership necessary for success are not often found bound up in the same person.
Owners of SME’s are often reluctant to bring in assistance, but the skills necessary are now relatively abundant on a part time basis, and can add considerable value for a relatively small cost.
May 18, 2009 | Management, Sales
Spin Selling, written by Neil Rackham probably 30 years ago is the best sales book I have ever read, it has spawned an industry, along with the follow up books.
However, it is not perfect.
In my experience, most businesses of sufficient size to have a purchasing function have a process that drives the progress of a purchase, particularly new items, or those from an alternative supplier.
No matter how well drilled, how empathetic the questioning, how well they seek and find the points where you offering could add value to a customer, falling foul of the purchasing process is most often the end of the line.
The lesson is no matter how well you do your research, ensure you include the mundane details of the potential customers purchasing processes, identifying all the people, understanding the role they play, and identifying the opportunities and circumstances that may lead to “No” and accommodating them in your process.
May 12, 2009 | Management, Marketing
Category Management is an FMCG term being bandied around so much that is coming to mean nothing in particular, because it is so widely used.
In its genesis, it was an expression used to describe the manner in which retailers managed their limited shelf space and range in such a manner to maximise sales and margins while best meeting their particular customers needs.
However, it has since evolved into another tool in the retailer arsenal to extract “rent” for shelf space from manufacturers, which often has little to do with meeting customers needs. This focus has left suppliers, particularly those to FMCG retailers, building a management and marketing infrastructure that focuses on the demands of the retailers, often to the detriment of their consumers. The rise of housebrands is evidence of the abrogation of FMCG suppliers around the world from the task of innovating to engage consumers, and putting resources into paying retail rent.
In many countries the power of the mass retailers is daunting, but they should not absolutely dictate, after all they are essentially sales orgainsations, not marketing ones, they rely on their suppliers for the bulk of their marketing, and have little interest in developing market and consumer behavioral intelligence .
Focus first on what your consumers need, both today and as their needs evolve, and the rest will follow.
