Marketing is the key to business success, because marketing drives revenues.
No matter how well run your business is, without sales there is no business. So the focus on the marketing plan is critically important. For those who want to know more, read Kotler. He presents marketing in a simple to understand format.
Marketing is best when it is proactive rather than reactive. The purpose is to get ahead of your competitors by creating competitive advantage. This means knowing and understanding your competitors extremely well. Do you know yours? Do you know how they will react to your efforts to gain market share? How can you gain market share without creating a war with your competitors? Therefore we will look at different aspects of marketing over a period of time.
Marketing is such a deep subject that it is impossible to discuss in depth in a weekly blog. Start reading Kotler and Michael Porter. Understand the use of Ansoffs model together with Kotlers synergy rules and the BCG matrix.
Marketing is not difficult and complex, to the extent that it cannot be done by the SME owner. It is simply that it requires full attention in an ongoing manner. It is not something that happens on its own, but requires constant attention and tweaking to meet changing circumstances.
Showing posts with label strategy. Show all posts
Showing posts with label strategy. Show all posts
Sunday, June 14, 2009
Sunday, May 17, 2009
SMEs - Step 7 in the business planning process
The first six(6) steps are in essence, the corporate strategy of the firm. Step seven (7) onwards is the business strategy. This is the nuts and bolts, how it must be done strategy, in order to achieve the broader corporate strategy.
The second part of the business strategy, Step 7, is the setting of objectives. These are the specific items we wish to achieve in the current financial year. Objectives are distinguished by the fact that they have an expected completion date, and a measurable outcome. Ideally when setting objectives, the cost of achieving the objective must be measured against the value it will generate for the business, and if it shows a negative outcome, then it must be removed as an objective. Beware expending resources on objectives that add very little value to the firm.
Objectives must preferably be large, audacious and should generate a noticeably positive effect on the firm.
The second part of the business strategy, Step 7, is the setting of objectives. These are the specific items we wish to achieve in the current financial year. Objectives are distinguished by the fact that they have an expected completion date, and a measurable outcome. Ideally when setting objectives, the cost of achieving the objective must be measured against the value it will generate for the business, and if it shows a negative outcome, then it must be removed as an objective. Beware expending resources on objectives that add very little value to the firm.
Objectives must preferably be large, audacious and should generate a noticeably positive effect on the firm.
Sunday, May 10, 2009
SMEs - Step 4 in the business planning process
Goal setting is normally focused on the 3 year (medium term) horison. (Remember that the timelines vary at times from author to author).
Goals are our medium term intentions, and they are required to provide us with more focus on what must be done in order to achieve our vision and mission in the longer term. These require a lot of thought as they provide the bridging between the business strategy and the corporate strategy.
Goals should not be too many in number, and should bridge the present and the future. They must be well thought out.
Goals are our medium term intentions, and they are required to provide us with more focus on what must be done in order to achieve our vision and mission in the longer term. These require a lot of thought as they provide the bridging between the business strategy and the corporate strategy.
Goals should not be too many in number, and should bridge the present and the future. They must be well thought out.
Friday, June 6, 2008
SMEs - the effects of government interventions
Governments the world over are renowned for intervening in the market in order to achieve whatever their political goals may be. Africa is particularly prone to these behaviours. Whether, as example, it is the blatantly racist policies of the South African government, or the xenophobic nationalist policies of Botswana and many other African countries, the nett result is a negative impact on the market players.
At times the impact is short term and other times long term. In South Africa the racist policies have resulted in SMEs being unable to grow simply because they cannot find suitably qualified staff, and they cannot employ whites with skills as they then face the probability of legal action. As a consequence, approximately 20% of the white population left the country in 2007.
This has also impacted on big business, as our lack of electricity has clearly demonstrated.In Botswana legislation has focused on protecting local citizens against non-citizens. This has lead to highly uncompetitive businesses. They are protected by law and have developed a sense of entitlement. The first thing the citizens rely on is not local market knowledge, but an appeal for even more protection.It is time governments stop this practice. They are not helping, but simply skewing the markets even further, resulting in even greter hardship for their citizens.
Rob Smorfitt
At times the impact is short term and other times long term. In South Africa the racist policies have resulted in SMEs being unable to grow simply because they cannot find suitably qualified staff, and they cannot employ whites with skills as they then face the probability of legal action. As a consequence, approximately 20% of the white population left the country in 2007.
This has also impacted on big business, as our lack of electricity has clearly demonstrated.In Botswana legislation has focused on protecting local citizens against non-citizens. This has lead to highly uncompetitive businesses. They are protected by law and have developed a sense of entitlement. The first thing the citizens rely on is not local market knowledge, but an appeal for even more protection.It is time governments stop this practice. They are not helping, but simply skewing the markets even further, resulting in even greter hardship for their citizens.
Rob Smorfitt
Thursday, June 5, 2008
SMEs - benefits of portfolio entrepreneurship (3/2007)
What is portfolio entrepreneurship? Portfolio entrepreneurship normally follows on from serial entrepreneurship. Ideally this should be something all entrepreneurs do, but seldom is.
A serial entrepreneur is someone who buys and / or starts a business, and then moves on and sells it, and then repeats the process. However, a portfolio entrepreneur, as the next stage, owns multiple businesses at the same time.
A portfolio entrepreneur requires a fair amount of skill to juggle these different requirements on his or her time. It is not a simple process and ideally, to start with, the entrepreneur should ensure that the two businesses are in the same industry, as this will allow the entrepreneur to then gain the necessary skills in managing two businesses simultaneously.
Key success factors here are partners and delegation. Failure to do take partners, and more importantly the delegation of duties, will surely lead to business failure, and quite likely a nervous breakdown. There are always exceptions ot the rule, but ideally you need someone to do the work. At this level you should be focused on strategy and possibly top level sales.
I personally love the sales part, and therefore focus on strategy and sales. Work to your strengths.Give it a try. It is fun and challenging. It is exciting and as you begin to diversify it is incredibly stimulating. Just remember the cash flow consequences or you can lose it all.
Rob Smorfitt
A serial entrepreneur is someone who buys and / or starts a business, and then moves on and sells it, and then repeats the process. However, a portfolio entrepreneur, as the next stage, owns multiple businesses at the same time.
A portfolio entrepreneur requires a fair amount of skill to juggle these different requirements on his or her time. It is not a simple process and ideally, to start with, the entrepreneur should ensure that the two businesses are in the same industry, as this will allow the entrepreneur to then gain the necessary skills in managing two businesses simultaneously.
Key success factors here are partners and delegation. Failure to do take partners, and more importantly the delegation of duties, will surely lead to business failure, and quite likely a nervous breakdown. There are always exceptions ot the rule, but ideally you need someone to do the work. At this level you should be focused on strategy and possibly top level sales.
I personally love the sales part, and therefore focus on strategy and sales. Work to your strengths.Give it a try. It is fun and challenging. It is exciting and as you begin to diversify it is incredibly stimulating. Just remember the cash flow consequences or you can lose it all.
Rob Smorfitt
Wednesday, June 4, 2008
SMEs - growing your business (2/2007)
Growth is something that we often want in business but seldom actively pursue. Why?
The main reason is that growth can create problems in a business. Cash flow problems and capacity problems. So why do it? From a personal perspective it is simply because growth is essential in order to create wealth. From a government point of view growing businesses grow the GDP and employment opportunities.
Growth can be a threat to your business, so plan ahead and ensure you are geared for an enormous growth spurt. Growth in a business is driven through the marketing plan. Growth has to start as a conscious decision to want growth. The question is once you have decided you want growth, how do you get it?
There are a number of choices. Do you want to :
• Sell more of the existing products to the same customers
• Sell new products to the same customers
• Sell the existing products to new customers
• Sell new products to new customers.
These are your options. The more you combine the options the greater the growth. So you need to choose the correct option for you. For those of you who want a more detailed understanding of this look for Ansoff's Model.
Key issues of growth are the impact of growth on cash flow, working capital requirements, staff requirements, skills requirements and infrastructural requirements such as office space, warehouse space, furniture vehicles etc.
Do not be scared off. It simply needs planning. Go for it and grow your wealth!
Rob Smorfitt
The main reason is that growth can create problems in a business. Cash flow problems and capacity problems. So why do it? From a personal perspective it is simply because growth is essential in order to create wealth. From a government point of view growing businesses grow the GDP and employment opportunities.
Growth can be a threat to your business, so plan ahead and ensure you are geared for an enormous growth spurt. Growth in a business is driven through the marketing plan. Growth has to start as a conscious decision to want growth. The question is once you have decided you want growth, how do you get it?
There are a number of choices. Do you want to :
• Sell more of the existing products to the same customers
• Sell new products to the same customers
• Sell the existing products to new customers
• Sell new products to new customers.
These are your options. The more you combine the options the greater the growth. So you need to choose the correct option for you. For those of you who want a more detailed understanding of this look for Ansoff's Model.
Key issues of growth are the impact of growth on cash flow, working capital requirements, staff requirements, skills requirements and infrastructural requirements such as office space, warehouse space, furniture vehicles etc.
Do not be scared off. It simply needs planning. Go for it and grow your wealth!
Rob Smorfitt
SMEs - harvest planning is so critical yet so often ignored (2/2007)
How many entrepreneurs have you met who have to work until the day they die?They do not plan to sell their business, they become emotionally attached to the business, they steal the cash sales to avoid tax. They die old, without wealth and exhausted.
It is simply a case of not thinking ahead. Business ownership must not be seen as a source of salary for you as an entrepreneur, but rather as a means to create wealth. To create wealth you need to convert the value you have created in the business, into cash.
So when you start a business ask the following questions:
1. Who will want to buy this business?
2. Why will they want to buy the business?
3. What do these businesses normally sell for?
Remember that often we initially start a very small business that does not have the capacity to grow big. So we need to keep selling the business and buying/starting a new one that has the capacity to grow even bigger. This way we can grow our wealth.
It is a business, not a family member! Plan for how you will harvest from the business you have created. In many countries the tax on selling a business is classed as a capital gains tax, and is either not levied or levied at a very low tax rate. I have started or bought 30+ businesses over 25 years. A few failed, but the rest have been sold.
Rob Smorfitt
It is simply a case of not thinking ahead. Business ownership must not be seen as a source of salary for you as an entrepreneur, but rather as a means to create wealth. To create wealth you need to convert the value you have created in the business, into cash.
So when you start a business ask the following questions:
1. Who will want to buy this business?
2. Why will they want to buy the business?
3. What do these businesses normally sell for?
Remember that often we initially start a very small business that does not have the capacity to grow big. So we need to keep selling the business and buying/starting a new one that has the capacity to grow even bigger. This way we can grow our wealth.
It is a business, not a family member! Plan for how you will harvest from the business you have created. In many countries the tax on selling a business is classed as a capital gains tax, and is either not levied or levied at a very low tax rate. I have started or bought 30+ businesses over 25 years. A few failed, but the rest have been sold.
Rob Smorfitt
SMEs - harvesting and reinvesting (2/2007)
I spoke to a SME/SMB/SMME business colleague today. He was raving about how going into debt and moving from a supermarket manager to a supermarket owner has been such a wonderful experience. This to the extent that they bought the small shopping centre they were located in, which has appreciated by 400% in 3 years and that other than the property bond, they were debt free.
When I suggested selling his business he was initially horrified. “I do not want to retire and live off the interest. I am not sure there is enough”. I then suggested that he reinvest the money in a number of smaller businesses and properties and build them up again. Alternatively use the capital to buy a bigger business which would provide large capital returns and growth potential.
It took him a while and a lot of discussion to accept the idea, and then only I think because I said that he would be financially better off if he did.I just find it amazing that so many business people see their business as the beginning and the end of their business careers, instead of just the beginning. Each to his own I suppose?!
However, sit down some time and work it out. You will soon see that buying and selling will create more wealth for yourself than retention. This is a generalisation but often does hold true. So check it out for yourself!
Rob Smorfitt
When I suggested selling his business he was initially horrified. “I do not want to retire and live off the interest. I am not sure there is enough”. I then suggested that he reinvest the money in a number of smaller businesses and properties and build them up again. Alternatively use the capital to buy a bigger business which would provide large capital returns and growth potential.
It took him a while and a lot of discussion to accept the idea, and then only I think because I said that he would be financially better off if he did.I just find it amazing that so many business people see their business as the beginning and the end of their business careers, instead of just the beginning. Each to his own I suppose?!
However, sit down some time and work it out. You will soon see that buying and selling will create more wealth for yourself than retention. This is a generalisation but often does hold true. So check it out for yourself!
Rob Smorfitt
Tuesday, June 3, 2008
SMEs - interventions in developing countries
In my literature review doen as part of my research, a pattern developed for developing countries separate to developed countries. Developed countries attempted to use more functional interventions which brought their economy closer to a "perfect" or unbiased economy. Developing countries also used functional interventions, but used selective interventions more often. These selective interventions could be perceived as being necessary to correct previous interventions that have skewed their economy.
However, a disconcerting component of these interventions is that none of the interventions are documented nor researched afterwards to measure actual success, in order to allow for extrapolations and future utilisation of the more successful interventions. Interviewing a senior South African government researcher on business matters, he acknowledged that much the same occurred in South Africa.One has to query whether these developing countries are really serious about improving the lot of the bulk of citizens, or whether their SME interventions, which normally focus on micro business, are not simply a gesture and a sop to the poor, in order to retain votes at what is in effect a low cost.
Very few developing countries appear to invest in selective interventions to assist the existing formal sector SME's, whose growth is most likely to grow the job base.A good example of a country who did it correctly appears to be South Korea, who have invested heavily in the formal sector, and compare them to other countries who were "developing" at the same time. I say appears, as I have not formally researched this viewpoint. Africa in particular needs to wake up and look for positive models elsewhere, even among those countries they like the least, as there are lessons to be learned out there!
However, a disconcerting component of these interventions is that none of the interventions are documented nor researched afterwards to measure actual success, in order to allow for extrapolations and future utilisation of the more successful interventions. Interviewing a senior South African government researcher on business matters, he acknowledged that much the same occurred in South Africa.One has to query whether these developing countries are really serious about improving the lot of the bulk of citizens, or whether their SME interventions, which normally focus on micro business, are not simply a gesture and a sop to the poor, in order to retain votes at what is in effect a low cost.
Very few developing countries appear to invest in selective interventions to assist the existing formal sector SME's, whose growth is most likely to grow the job base.A good example of a country who did it correctly appears to be South Korea, who have invested heavily in the formal sector, and compare them to other countries who were "developing" at the same time. I say appears, as I have not formally researched this viewpoint. Africa in particular needs to wake up and look for positive models elsewhere, even among those countries they like the least, as there are lessons to be learned out there!
SMEs - why can entrepreneurs not do it (1/2007)
SMEs and entrepreneurs!! It always astounds me how entrepreneurs will not discuss their ideas, plans and strategies. Why not?
It appears that many of them feel it is a risk to talk to friends or business acquaintances because they are worried that their ideas mights be stolen. I have never in 25 years seen someone steal an idea. Why not? What entrepreneurs forget is that we are all unique, and therefore we are all independent in our thinking. What is also important is that we all have a passion for our OWN ideas, seldom each other's ideas.
It requires an investment of passion for most entrepreneurs! If we talked a little more about our ideas and problems to our friends and acquaintances, we might in fact be very pleasantly surprised by the outcome.
Even as a consultant, they are nervous to speak to you.However, invariably once they open up, the flood waters break down the reserves and they talk like someone possessed. The find it refreshing, releasing, informative, and a great sounding board. Try talking to someone other than your spouse or partner about your business, and just see what a difference it makes.
Rob Smorfitt
It appears that many of them feel it is a risk to talk to friends or business acquaintances because they are worried that their ideas mights be stolen. I have never in 25 years seen someone steal an idea. Why not? What entrepreneurs forget is that we are all unique, and therefore we are all independent in our thinking. What is also important is that we all have a passion for our OWN ideas, seldom each other's ideas.
It requires an investment of passion for most entrepreneurs! If we talked a little more about our ideas and problems to our friends and acquaintances, we might in fact be very pleasantly surprised by the outcome.
Even as a consultant, they are nervous to speak to you.However, invariably once they open up, the flood waters break down the reserves and they talk like someone possessed. The find it refreshing, releasing, informative, and a great sounding board. Try talking to someone other than your spouse or partner about your business, and just see what a difference it makes.
Rob Smorfitt
SMEs - mixing personal with business goals (1/2007)
SME clients?! I had a meeting with a SME client today, and it was interesting in that it gave me an insight into how entrepreneurs are their own worst enemies at times. The main cause is their passion, which stops them from distinguishing between their personal lives and their business lives at times.
The SME client wants to grow his business and believes that he needs bigger premises to be able to lay his factory out better, and to have a more "acceptable" (upmarket) showroom than he has now. The SME manufactures a product that is a niche market product, aimed at the higher income groups, and in many cases the "old money" income group. The product could possibly be classified as a luxury product.
His wife feels they need to invest in a property, in order to create an income stream to form part of their pension.The natural conclusion they have drawn is to put these two separate issues together, and they now need to buy their own factory. However, to do so will increase their monthly "rental" costs five fold. It took an hour of discussion to get them to consider that they need to view the two decisions in isolation from one another, and that the main goal of the SME business is actually to increase sales, while the personal goal is to create a passive income through a property investment.
They are now going to assess their options for these two very separate and diffferent goals independently of each other.
But the interesting part of the story for me, is how they initially did not see them as separate.
This is a failing of many entrepreneurs and SME owners, and often leads to them making bad decisions in their personal life in order to achieve a business goal. I know I have done the same. Have you?While faith in oneself is paramount to entrepreneurial success, it should never allow decisions to be made which are to the detriment of your family. It is a difficult line to draw and follow, and as financier to our own businesses it is difficult to say no, but we must learn to temper our decisions with a dose of personal and family care! Failure is an ugly thing for the entrepreneur and his family.
Rob Smorfitt
The SME client wants to grow his business and believes that he needs bigger premises to be able to lay his factory out better, and to have a more "acceptable" (upmarket) showroom than he has now. The SME manufactures a product that is a niche market product, aimed at the higher income groups, and in many cases the "old money" income group. The product could possibly be classified as a luxury product.
His wife feels they need to invest in a property, in order to create an income stream to form part of their pension.The natural conclusion they have drawn is to put these two separate issues together, and they now need to buy their own factory. However, to do so will increase their monthly "rental" costs five fold. It took an hour of discussion to get them to consider that they need to view the two decisions in isolation from one another, and that the main goal of the SME business is actually to increase sales, while the personal goal is to create a passive income through a property investment.
They are now going to assess their options for these two very separate and diffferent goals independently of each other.
But the interesting part of the story for me, is how they initially did not see them as separate.
This is a failing of many entrepreneurs and SME owners, and often leads to them making bad decisions in their personal life in order to achieve a business goal. I know I have done the same. Have you?While faith in oneself is paramount to entrepreneurial success, it should never allow decisions to be made which are to the detriment of your family. It is a difficult line to draw and follow, and as financier to our own businesses it is difficult to say no, but we must learn to temper our decisions with a dose of personal and family care! Failure is an ugly thing for the entrepreneur and his family.
Rob Smorfitt
Monday, June 2, 2008
SMEs - the problems with buying IT (12/2006)
One of the key problems for SMEs is buying IT solutions in their business.The problem is caused by the fact that almost every country has a different definition of what an SME is. In the USA it is a business with up to 500 staff while in some countries it is up to 50 staff and in others still as little as 10. Furthermore, statistics show that even in the USA 70% of SMEs are 1 person businesses.
In fact I often see IT adverts in South africa where they are advertising say a switch "with 50 ports - ideal for the SME". It is time the IT industry spent a little money to understand their market better.
As the USA is the largest market, and many manufacturers are based there, everyone uses this as a yardstick.This leads to equipment which is way too big and too expensive for the bulk of the international SME market This is why manufacturers are battling to sell their products and SMEs have no clue as to what to buy.
Most SMEs have no IT skills and are often intimidated from purchasing IT products as a consequence. While the USA is a very big market, the rest of the international market cannot be ignored, and manufacturers need to acknowledge and understand this. Furtermore, in most countries the largest number of SMEs have less than 10 employees. Perhaps they will then market better products in a more attractive way to "small" SMEs. For example a business in a box IT solution. You simply buy a "box" which allows you to grow up to "X" number of workstations, and includes relevant numbers of software licences for wordprocessing, spreadsheets and accounting software. Why not include a VOIP telephone exchange solution as well?!
It is a market with simple needs and low IT skills. It cannot be that hard to corner this market with a true SME solution.
Rob Smorfitt
In fact I often see IT adverts in South africa where they are advertising say a switch "with 50 ports - ideal for the SME". It is time the IT industry spent a little money to understand their market better.
As the USA is the largest market, and many manufacturers are based there, everyone uses this as a yardstick.This leads to equipment which is way too big and too expensive for the bulk of the international SME market This is why manufacturers are battling to sell their products and SMEs have no clue as to what to buy.
Most SMEs have no IT skills and are often intimidated from purchasing IT products as a consequence. While the USA is a very big market, the rest of the international market cannot be ignored, and manufacturers need to acknowledge and understand this. Furtermore, in most countries the largest number of SMEs have less than 10 employees. Perhaps they will then market better products in a more attractive way to "small" SMEs. For example a business in a box IT solution. You simply buy a "box" which allows you to grow up to "X" number of workstations, and includes relevant numbers of software licences for wordprocessing, spreadsheets and accounting software. Why not include a VOIP telephone exchange solution as well?!
It is a market with simple needs and low IT skills. It cannot be that hard to corner this market with a true SME solution.
Rob Smorfitt
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