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In mature markets, there is usually room for two organizations to prosper, one to eke by, and the others eventually fall by the wayside.  That niche market is necessary to identify and then work towards domination no matter what type of body it is with which we are involved.

Community

A community needs to have a widely recognized drawing point to attract people, residents and visitors.  The community must think through a niche where they can be outstanding and noted far and wide for this area of excellence. Examples might be natural phenomena, national parks, educational facilities, visual and/or performing arts, shopping, restaurants, etc. Park Rapids has many things going for it with the lakes and rivers, the beginning of a local college presence, shopping, and restaurants, but where can it dominate? The opportunity seems to be with the arts because of the art museum, many very good local visual artists, and several excellent performing arts companies. Concentration of these activities into an easily accessible location and promoting them widely could bring people into the city from afar. Then services would naturally appear to satisfy the needs of the influx of people and the entire city would prosper.

Company/Organization

No organization can successfully be all things to all people. The Japanese have a saying that there is danger in chasing too many rabbits; you won’t catch any. The company needs to understand what they do really well, the market that it satisfies, and focus their efforts to dominate that niche. They should strive to be one of the two organizations that can be successful in that niche but also work towards being number one. Just identifying the niche will not ensure success; it must be communicated to all employees and everyone work toward the aim of becoming the best in that focused area. Research, development, production, marketing, and service must all make decisions on a daily basis as to what will help achieve that goal.

Individuals

Each individual should do careful career planning to identify the niche where they can be the best; in other words the niche where they can dominate. This niche must satisfy their needs so as to be something they enjoy doing and derive great satisfaction from doing it. Once this goal is determined then education, training, experience, and location can all help prepare the individual to eventually achieving the objective. It is never too late to identify the niche and make plans to achieve it. The need for flexibility and mid-course corrections are a fact of life.

This points out that no matter what you do in life, it is important to know your strengths, where you can be the best, the area where you can dominate, and what will bring you satisfaction. Then focus all your planning and efforts into achieving that goal. Focus! Focus! Focus!

Dr. W. Edwards Deming was fond of saying people deserve to have joy in their work and managers have no right to take that away from them.

Most people will agree that happy employees perform better and make customers happier. Some interesting studies have been done to attempt to discover what makes employees happy in their work. The results are interesting.

One of those studies conducted by Workplace Dynamics and the Minneapolis Star-Tribune lists four factors as most important: Conditions, Direction, Career, and Execution. Notice that pay and benefits are not included. This fits with other studies, which usually list money in the top ten but most often in the second five. Money is not normally a motivator but it can be a demotivator.

Conditions include feeling genuinely appreciated by the company, the job provides a feeling of being a part of something meaningful, and the company follows strong values and ethics.

Appreciation is very key element to happy employees but it has to be genuine because they will see through the sham of mere words. Deming also used to say that dogs like a pat on the back and people do too. Positive reinforcement not only helps to guide employees but also gives them energy and the drive to perform even better.

The feeling of being a part of something meaningful is another strong intrinsic motivator. People want to be proud of their work and take great satisfaction of doing something worthwhile. Strong values and ethics contribute to the personal satisfaction and pride of the employees.

Direction involves believing that the company is going in the right direction and having confidence the leadership is capable of getting it there. Providing the aim of the organization is the responsibility of the leader; painting the picture of what the organization will look like at some point of time in the future in memorable, inspirational, and compelling terms. This vision must be communicated to all employees so that they may make timely decisions that help the company reach that vision. Remember, communication has two equal parts; sending and receiving. In order to ensure that employees completely understand the vision, it should be provided in both oral and written format. The Japanese have a saying that it takes more than one of the senses to communicate. Discussion opportunities should be provided so that understanding and buy-in are achieved.

Career satisfaction is achieved when the employees feel confidence in their future at this company and that they are on the path to achieving their personal vision of what they want to be doing at the height of their careers. Both of these factors should be discussed with supervisors on a regular basis. The leaders need to have a clear understanding of the wants and needs of the employees and the employees need to have a clear understanding of what they should do to advance and stay on the path to achieving their vision of their career.

The execution factor means the employees feel that management is leading the company to top-level performance. They do the best job they can with the processes they are given but rely on management to constantly, relentlessly, forever improve the work processes so the employees can do their job better.

Paying attention to these four key factors will not only result in happier employees but also happier management, customers, and owners. It is a win for everyone.

 Basic Business Cents

Ten Keys to Successful Selling

Looking for clues for why some salespeople are successful and others are not is an interesting study. Some are extroverts but some are introverts, some are glad-handers and some are serious. Some are highly intelligent but some are not.  Some are deep and some are shallow. The only common characteristic I have found over the years is perseverance or tenacity. The really good salespeople get focused on a possible sale and put all their energy into finalizing it. However, the study did reveal some important characteristics that contribute to success in the field of sales.

1. 1.     Do your homework. Study your market, competition, products, services, and your prospects. Anticipate questions, objections, applications, areas of interest and importance, and history. Prepare for the expected and the unexpected.
2. 2.     Maintain a positive image. Your personal grooming and appearance are important. Remember the old saying, “You only have one chance to make a positive first impression.” Be confident but not arrogant. Enthusiasm and self-confidence build trust with the prospect and that is extremely important to closing the sale.
3. 3.     Focus on the decision maker. Start at the top. If the top executive of the prospect firm is not the key decision maker, he/she will refer you to the right person and now you come referred by their boss, which automatically puts you in a more respected position. Spending time with people below the decision maker is probably a waste of time and effort because they cannot say yes and can only ask you for more information, over and over.
4. 4.    Listen. This may be the hardest for salespeople to learn. If you listen carefully enough, the prospect may tell you what he/she wants to hear to close the sale. Many inexperienced salespeople are so enamored with their product/service knowledge that they proudly ramble on and on and bore the prospect.
5. 5.    Sell benefits, not features. We hate to think prospects are selfish people but in truth they care more about what your product/service can do for them as opposed to how you do it. In order to focus on key benefits, you have to have done your homework as identified in step 1 above. This importance of selling benefits can be verified by studying brochures from highly successful organizations and you will note they stress benefits and not their approach. Struggling organizations’ brochures on the other hand will be full of boasting about their features and ignore why they are important to prospects.
6. 6.    Ask for the order. Observe body language and listen for opportunities for trial closings. Don’t oversell! When the prospect says yes, say thank you and move on.

1. 7.    Stay the course. As stated in the first paragraph, this is the one common trait observed in successful salespeople. Don’t give up. Your prospect may just need a little more time to make a decision or waiting to see if you really believe what you are saying.
2. 8.    Follow-up. Repeat sales are the easiest to make. Maintain contact with your customers.
3. 9.    Network. Ask customers of their thoughts as to whom else you should be contacting. Get involved with community, industry, and trade organizations. Your network list is probably the most important asset you might have.  Build, nurture, use, and protect your list.

10. Communicate. Regularly communicate with your key customers and prospects articles of value to them. This also ties back to item 1 about doing your homework. Make use of electronic communications like email, FaceBook Friends, blogs, etc. Keep your name in front of key prospects and customers.

There are few barriers to successful selling that cannot be overcome with following the basic success keys listed above. Embrace them and they will be your invisible friends in your sales activities.

 Basic Business Cents

Ten Keys to Successful Selling

Looking for clues for why some salespeople are successful and others are not is an interesting study. Some are extroverts but some are introverts, some are glad-handers and some are serious. Some are highly intelligent but some are not.  Some are deep and some are shallow. The only common characteristic I have found over the years is perseverance or tenacity. The really good salespeople get focused on a possible sale and put all their energy into finalizing it. However, the study did reveal some important characteristics that contribute to success in the field of sales.

1. 1.     Do your homework. Study your market, competition, products, services, and your prospects. Anticipate questions, objections, applications, areas of interest and importance, and history. Prepare for the expected and the unexpected.
2. 2.     Maintain a positive image. Your personal grooming and appearance are important. Remember the old saying, “You only have one chance to make a positive first impression.” Be confident but not arrogant. Enthusiasm and self-confidence build trust with the prospect and that is extremely important to closing the sale.
3. 3.     Focus on the decision maker. Start at the top. If the top executive of the prospect firm is not the key decision maker, he/she will refer you to the right person and now you come referred by their boss, which automatically puts you in a more respected position. Spending time with people below the decision maker is probably a waste of time and effort because they cannot say yes and can only ask you for more information, over and over.
4. 4.    Listen. This may be the hardest for salespeople to learn. If you listen carefully enough, the prospect may tell you what he/she wants to hear to close the sale. Many inexperienced salespeople are so enamored with their product/service knowledge that they proudly ramble on and on and bore the prospect.
5. 5.    Sell benefits, not features. We hate to think prospects are selfish people but in truth they care more about what your product/service can do for them as opposed to how you do it. In order to focus on key benefits, you have to have done your homework as identified in step 1 above. This importance of selling benefits can be verified by studying brochures from highly successful organizations and you will note they stress benefits and not their approach. Struggling organizations’ brochures on the other hand will be full of boasting about their features and ignore why they are important to prospects.
6. 6.    Ask for the order. Observe body language and listen for opportunities for trial closings. Don’t oversell! When the prospect says yes, say thank you and move on.

1. 7.    Stay the course. As stated in the first paragraph, this is the one common trait observed in successful salespeople. Don’t give up. Your prospect may just need a little more time to make a decision or waiting to see if you really believe what you are saying.
2. 8.    Follow-up. Repeat sales are the easiest to make. Maintain contact with your customers.
3. 9.    Network. Ask customers of their thoughts as to whom else you should be contacting. Get involved with community, industry, and trade organizations. Your network list is probably the most important asset you might have.  Build, nurture, use, and protect your list.

10. Communicate. Regularly communicate with your key customers and prospects articles of value to them. This also ties back to item 1 about doing your homework. Make use of electronic communications like email, FaceBook Friends, blogs, etc. Keep your name in front of key prospects and customers.

There are few barriers to successful selling that cannot be overcome with following the basic success keys listed above. Embrace them and they will be your invisible friends in your sales activities.

 Basic Business Cents

Ten Reasons Why Businesses Fail

There are many reasons why businesses fail but some of the more common ones are listed below. Note, it is not necessary to have several of these shortcomings; any one can be fatal.

• Lack of a vision of the desired future, communicated and understood by all employees. This should be a memorable, inspiring, and compelling statement of the future state of the business. Every decision in the company should be viewed as to whether it helps to achieve the vision.
• Lack of leadership. This does not mean a dictatorship nor does it mean anarchy by sitting back and letting the employees go in all directions. It means being out in front, setting the example for behavior desired. A leader’s role is a heavy responsibility because employees tend to watch and emulate the behavior of the leader.
• Satisfaction with status quo. If leadership is happy with doing things the way they have always been done; the world is passing them by. Technology and trends are constantly changing and business must be learning and changing to keep abreast, or hopefully in front of competition.
• Lack of a good strategic plan. With the aid of the vision of the future state of the organization, a list of actions necessary to reach that vision is needed to guide activity. Follow-up is required on a regular basis to monitor progress on achievement of the strategic actions.
• Lack of focus. Any mature business typically has room for two competitors to make reasonable profits and one more to breakeven and barely exist. Any business should narrow their focus until they find a niche in which they can dominate.
• Too much waste, rework, and redundancy. Experience has shown typical numbers for waste, etc., of 25% in medical facilities, 35% in manufacturing, 60% in service, and up to 90% in government organizations. A continuous, relentless pursuit of reduction of these numbers is critical for survival.
• Attention to reduction of defective product and service and not on the processes and systems that produced those defects. All work is a series of processes and the output is only as good as the processes. Process thinking is a breakthrough on the road to prosperity.
• Lack of financial projections. Managing by looking at the financial numbers of what has happened in the past is like driving a car by looking in the rear view mirror. A running twelve-month projection, by month, of anticipated revenue, expenses, and cumulative cash flow is a tremendous management tool. The cumulative cash flow projection will reveal how much money is required to sustain the operation.
• Lack of understanding of customers’, and those who would be desirable customers’, true needs and wants. They may not truly know what their real needs are, so needs and wants can be two different things.
• Inattention to growth of employees. Businesses have a large investment in their employees and turnover is a huge hit to the bottom line. By continually investing in skills training and broad education, a happier and more productive workforce will result.

There are other reasons, of course, like the economy, acts of nature, loss of a key person, etc. but the above ten are controllable. Avoiding these pitfalls can go a long way to ensuring success, prosperity, and survival of a business.

 Basic Business Cents

Our Way

The last Basic Business Cents article discussed the ancient Chinese Tao Te Ching or translated means Way, which is the essence of understanding of Lao Tzu and very famous in China. It also discussed “The Toyota Way” which is the way of doing business by Toyota Motor Corporation. It has two main points, continuous improvement and respect for people. The question now is, what should be “Our Way”?

Our Way should have three major components: grow the business, grow the customers, and grow the employees.

Growing the business will, of course, have two parts-increasing revenue and cutting expenses. To increase revenue a clear vision of what you want the organization to be at a point in the future, usually about five years out is clearly stated. This vision must be fully understood by all employees so they can all pull together for a common aim. Then a concise strategy must be developed to reach that vision and progress managed to ensure the strategies are achieved in a reasonable timeframe. Approval of major expenditures should be determined on the basis of whether they would help to achieve the vision.

A good financial projection of a running twelve cycle is a valuable tool for management to understand the health of the organization. Tracking actual versus projection and updating monthly helps to avoid getting into trouble and provides a guide for decision-making.

Understand that products and services have lifecycles, which need to be replaced when the cycle starts to trend down. We often fall in love with what we are doing and miss the point that customers no longer care. This means we have to understand the true needs of our customers and those who we wish were customers. This entails going beyond what they are telling us they want and understanding what they really need.

We need to continually study new trends and technology so we do not get left behind. For example, we need to capitalize on electronic marketing techniques. The Park Rapids Area Chamber of Commerce, the Hubbard County Regional Economic Development Commission, and the Minnesota State College all provide training courses locally to help us learn about this rapidly expanding technology.

Growing the customers is the second leg of our growth triangle. It makes sense if they are more prosperous they will purchase more of our products or services. Good organizations make a point of understanding their customers and prospects real needs and, if they sell to other than the ultimate consumers, even to understand their customers’ customers’ needs. Working to improve the entire system from raw material to consumer is in everyone’s best interest. Sam Walton of Wal-Mart was a pioneer in this thinking.

Not only should we be helping customers improve revenue but also helping them increase productivity by continually improving the efficiency and effectiveness of their work processes. They can be invited to participate in training sessions on process improvement, provided with free consulting, sharing useful bits of knowledge, and given application ideas.

Growing our employees is of equal importance to the other two growth areas. Employees are a treasure to be nurtured, grown, and protected. Turnover is a huge expense in many organizations and why do people leave? The reason usually given is for more money but that is rarely the main reason. It is usually to receive more satisfaction from doing work that provides pride in accomplishment. Training and education help them to be able to do more and feel better about it. Job skills training on an ongoing basis is a given but the employees need to also be encouraged to continue their education with financial support. They need to be challenged to solve problems. They need to be taught a standard problem solving method and coached in the application and receive positive reinforcement for their efforts. Mutual trust and respect-up, down, and across the organization, each to the other in equal amounts, defines a great organization. The result will be a loyal workforce working their level best to achieve the vision of the organization.

The three-part activity of growing the business, customers, and employees is the foundation of “Our Way”. Following this guideline will result in a growth organization with continued improvement in satisfaction, loyalty, and pride in work of owners, customers, and employees. It provides a sense of pride of accomplishment for all.

 Basic Business Cents

The Way

In ancient China, the keeper of the Imperial Library, Lao Tzu, was famous for his wisdom. Perceiving the growing corruption of the government, he left for the countryside. On his way, the guard at the city gates asked Lao Tzu to write out the essence of his understanding to benefit future generations. Lao Tzu wrote the Tao Te Ching and was never heard of again. This book, generally translated into meaning, “The Way” has become one of the most influential books in history.

Toyota Motor Corporation created their version as a way of doing business called ‘The Toyota Way”. The two focal points are continuous improvement and respect for people. The principles for a continuous improvement include establishing a long-term vision, working on challenges, continual innovation, and going to the source of the issue or problem. The principles relating to respect for people include ways of building respect and teamwork. This is their guiding way for managing the business and guiding behavior.

Continuous improvement starts with sharing a long-term view with all employees so that everyone is in sync going in the same direction with regards to a vision of the future of the organization, values, and steps needed to attain the vision.  In other words, a strategy shared by all.

Next is a shared understanding that the right process will produce the right results. Processes should be continually challenged for opportunities to improve by eliminating waste. Toyota lists seven types of waste; overproduction, waiting, unnecessary transport or conveyance, incorrect processing, excess inventory, motion, and defects.

The second half of the Toyota Way is to develop the people. They believe in the ability and intention of their people and enlist their aid in achieving their goals. To do this, they supply on-going training in continuous improvement and supply standard methods to be used in problem solving, process improvement, and process innovation. They are taught how to work in teams to solve problems and are judged by team achievements rather than individual efforts. The employees are challenged to recognize and solve problems.

Suppliers are treated in much the same way as employees. Toyota challenges them to do better and help them to achieve it.  They provide the same training employees receive to help suppliers discover and fix problems in the supply chain, along with on-site application consulting. In effect, they become virtual partners with their suppliers to improve the total system from raw material to finished product.

Toyota trusts their people but also expect their managers to have first-hand working knowledge and understanding of the processes in their areas. In this way, consensus-based solutions can be swiftly implemented once decisions are made. Teamwork is built through mutual ownership of problems and solutions.

Anther way of explaining The Toyota Way is continued growth in the business, customers, and employees. They do this with continued challenge, improvement, and innovation of work processes and systems.

What is The Way of your organization, the guiding philosophy of doing business and treating people? Do all of your employees understand it and buy in? Do you?

 Basic Business Cents

Advanced Strategic Improvement Practices

The leaders in performance improvement practices shared their techniques and philosophy at a conference in the Twin Cities last fall. Attendees came from not only as far away as Florida and Manitoba but also from Bemidji and Park Rapids. Speakers represented industries from banking, medicine, food, education, manufacturing, government, and even consulting. Methods used to improve performance are applicable no matter what the industry or type of business.

Professionals in the field of performance improvement sometimes refer to the little q-quality of products or services, and big Q-quality of processes and systems.

Little q is the traditional view of quality of inspecting after the fact the quality of products and services. Inspection is too late; the poor quality detected has already been produced. It is a measure of waste and rework, warranty costs, dissatisfied customers, and rework. Management and employees look at little q as the responsibility of the quality department.

Big Q involves the quality of the performance of the entire organization and is the responsibility of leadership. It is viewed as the continuous improvement and innovation of the processes and systems that produce the products and services. Transformation of big Q does not happen accidentally. It starts and ends with leadership.

This conference was about big Q.

The CEO of a major healthcare facility said the goal in healthcare is to achieve a better outcome for the patients, not money.  Having said that, he also said there is 30-40% waste in healthcare. Lean Thinking Techniques is one of the solutions to eliminating that waste.

A consultant and former General Manager of a manufacturing company who is a supplier to Toyota shared that the Toyota Way is to combine continuous improvement with respect for people. Their management focus is in three areas:  Growing the Business, Satisfying Customers, and Growing People. The latter has two elements, teach and coach a standard problem solving method and challenge and coach people to solve problems.

A state government official discussed the need to learn how to change the culture of the organization. He divided that effort into three parts; rely on data for decision-making, develop a learning organization, and share goals.

Several presenters focused on the need to challenge the status quo, constantly looking for better ways.

The truly encouraging fact from this conference is the recognition of the presenters that a change in the culture of the organization is required if the performance improvement journey is to endure over time. Many organizations in the past have made the mistake of introducing the tools of performance improvement without adequately communicating to all employees the reasons why and the importance of the effort.

A good system of improvement will make sure we are working on the right things, we are addressing the issues with the right tools, and engage all employees with the knowledge of the system. In this way, behavior and culture are changed to ensure continuous improvement and innovation is sustained over time.

 Basic Business Cents

Seeking Advice

Never fail by yourself!

This is a powerful adage that is applicable no matter what type organization or position in which you might find yourself. It is especially true for the small business owners who feel they have no one they can talk to openly.

So what are the options of finding someone who you can talk to honestly and frankly and get good advice?  Family members and employees are always an option but there are downsides, they are likely to tell you what they think you want to hear rather than what you should hear and it might have a negative impact on morale.

Our friendly banker is always an option, especially if you are not in serious financial trouble, which might present a conflict of interest for him or her. Nevertheless, they are a good source of advice.

One excellent source to confide in and get good advice is a Board of Advisors, not to be confused with a Board of Directors. The Advisors provide advice, not direction. Most of the time you are looking for mentoring, not dictating. The Board of Advisors should be made up of people you respect, are knowledgeable, have a track record of success, and are willing to invest some of their time to help you.

And there are consultants. They come in many different stripes and hues. Fees (they prefer to call them investments) range from zero to part ownership of your organization.

Free consulting is available from the Small Business Development Corporation, which can be contacted through your local bank or by calling 218-299-3035. Their consultants offer free advice to small businesses.

Another source of free counseling is SCORE®, a nationwide group of retired or semi-retired executives who donate their time to mentor small business executives. They have a local branch office located in Room 101 of the Hubbard County Courthouse and can be contacted at 218-732-2259 or score@hubbardcountyedc.com.

And of course paid professional consultants are another path to take. For comparison purposes, they can be divided into independent consultants and large consulting companies. They should be capable of finding and solving problems, see through smoke, capable of improving processes and systems, understand good management theory and human nature.

Independent consultants usually charge fees in the range of $500 to $5,000 per day plus expenses. They bring expertise in a niche or narrow area and if that fits your needs, it may be a good experience. It should be looked at as an investment with a payback potential to make it a very good investment. How to measure that payback should be planned for and agreed to in advance. Do not agree to share your savings with the consultant, as that is considered unethical. It will lead to arguments over how to measure. They may not be particularly knowledgeable in your business or industry arena but are knowledgeable in means to improve your organization’s performance. They should be looked at as partners with you on solving problems or improving processes or systems. You know your business and they know improvement techniques, so if you work together you can be successful.

Large consulting companies offer a wide range of knowledge and charge accordingly. They may ask for fees starting at the top range of the independents going up to even asking for shares in the company. Their advantage is their consultants may have niche knowledge but they can go to other consultants in their company to access other knowledge you need. Again, their fees should be looked at as an investment and accomplishments documented carefully to see if the investment pays off.

Either you or your consultant should document accomplishments to-date and recommended actions after each consultant visit. After all, results and action are what is important and is what you are paying for, either monetarily or in time invested.

It may be that some combination of the above is best for you. You are unique, but there is always help available that can pay dividends for you. There is no need for you to walk alone.

 Basic Business Cents

A Community Performance Improvement Plan for Small Business

MONTH TWELVE: REVIEW AND FUTURE PLANNING

The last month of the Community Performance Improvement activity for small businesses coming together for joint training sessions and applications of lessons learned between the training sessions will be reviewed for what worked and what did not work. The results of improvement efforts within their organizations will be presented to the group, discussed, and recommendations made by fellow attendees. Each organization is different and will have different experiences. By sharing, they can learn from each other without revealing company confidential information and gain new insight on what to do going forward.

Attendees from each organization will in turn, share their Performance Profile results with the class and receive feedback to help in the future. Examples of successes and failures will be helpful to the discussion.

Plans for future deployment and continued learning will also be shared.

As stated in the first article of this series (July 6, 2011), the return on investment in this program should be huge. Large organizations have experienced real annual savings/project of $50,000 to $3,600,000. If we scale that down to one tenth of that for small companies participating in this Community Performance Improvement activity, and each participating organization undertakes several projects during the year, we begin to get a feel of the positive impact this program will have on the participating companies.

By sharing the cost of two days of training/month for twelve months, considerable savings can be realized and this can often be covered by a grant. The half-day of individual consulting per month for each participating company is then the responsibility of each of the companies.

The benefits of this program are to share the costs of experienced consultants, processes, and material in a manner that will benefit all at a reasonable investment and pay a large return in the improved performance of the participating organizations. Process improvement and innovation have proven to be very effective and necessary to compete successfully and profitably in today’s challenging business world by large organizations and the Community Performance Improvement plan is an effective method to bring the same proven techniques to small organizations.

The Chief Executive Officer of Midway USA, winner of the 2009 Baldrige Award recipient, stated, “If you want sustainability in an organization, and you want to go from great to really great, you’ve got to have some kind of model…and Baldrige is that model. Our sales are up over 20 per cent per year over the last five years. Our profits are up over 40 per cent for that same time. Customer and employee satisfaction are at an all time high and it’s all because of our efforts in engaging the Baldrige Criteria.”

The Community Performance Improvement Plan makes it possible for you to have a similar experience with your organization.