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 success. Show all posts
Showing posts with label success. Show all posts
Sunday, June 14, 2009
Wednesday, June 4, 2008
SMEs - business planning and the format (2/2007)
There has been some discussion on the topic of whether a business plan is necessary. but the real issue in mond mind is only one of whether to document the business plan or not. However, whether you believe a business plan should be in writing or not, you still need a format to work to.
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
Rob Smorfitt
A wide variety of formats exists but the one I have found covers all the critical success factors in business is as follows. This is the one I use and teach my clients and students when lecturing.
* Business model
* PESTEL analysis
* SWOT analysis
* Marketing plan
* Human resources plan
* Financial plan
* Harvest plan
Business model - How will this business make it's core profit. It helps to keep the business focused on the key areas and not get distracted.
PESTEL analysis is the external environments which we need to understand, in order to know what their impact on our business might be. They must be considered in the local, regional, continental and global context. The acronym applies to the Political, Economic, Social and cultural, Technological, Environmental and Legislative environments.
SWOT analysis is the internal analysis of the entrepreneur's and the businesses Strengths and Weaknesses, and then using them to consider how the environmental issues will impact negatively as a Threat or positively as an Opportunity for the business.
Marketing plan is the plan on how to grow your business. Read Philip Kotler for more assistance on this subject.
Human resources plan looks at what people and skills you will need to achieve your growth, and allows you to plan for how you will get the skills/people.
Financial plan looks at the financial implications of the marketing and human resources plans.
Harvest plan looks at who will want to buy the business in the future, what the buying triggers will be and what you are likely to want to sell for. This then allows you to decide at what point you will sell the business and harvest the wealth you have created.
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 - do business plans (1/2007)
This is a highly debatable topic. There are many business owners who are highly successful, yet they have never had a business plan. Similarly, there are many businesses that have failed because they never had a plan.
There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made. I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was merely a mental plan.
Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.
Rob Smorfitt
There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made. I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was merely a mental plan.
Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.
Rob Smorfitt
SMEs - do business plans! (1/2007)
This is a highly debatable topic.
There are many business owners who are highly successful, yet they have never had a business plan. Similarly, there are many businesses that have failed because they never had a plan.
There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made.
I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was perhaps merely a mental plan. Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.
Rob Smorfittt
There are many business owners who are highly successful, yet they have never had a business plan. Similarly, there are many businesses that have failed because they never had a plan.
There will inevitably be research for both arguments. However, my personal belief is that while there may be many successful businesses who did not have a business plan, I believe that the reality is that we are in fact referring to a WRITTEN business plan when this statement is made.
I think a written business plan may not be crucial, but I am sure that all successful businesses had a plan, albeit that it was perhaps merely a mental plan. Most successful owners I have met had a clear vision of where they were going. That to me is indicative of a plan.
Rob Smorfittt
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
SMEs - tools for understanding trends (1/2007)
SMEs in my experience do themselves a massive disservice. They do not read.I am fortunate in that I am an avid reader, and it makes an immense difference to my businesses. However, I know that I am fortunate.
Whenever I do public appearances, I ask people in the room how many different newspaper or magazines they read a month, and the average is 3 (the same newspaper read every day counts as 1).
I use the Google Alerts tool to send me all the alerts on SME and Trends. Over the year end, trends become a centre of attention, and so I have received many alerts. These alerts covered trends across many industries, from food, to IT to clothing and a whole lot more besides.
Now I am not in all these industries, but I am in some. So for some of my own businesses I gained an insight into the coming trends for 2007. But for my clients who are in the other industries, I gained an insight into the opportunities for their businesses.Today, even if you do not read a lot, using a business tool like Google Alerts makes it easy to know what is going on in your industry. Can you afford not to use a tool like this?I believe not. So get out there, click on the Google link and get yourself up to speed. Use this fantastic opportunity!
Rob Smorfitt
Whenever I do public appearances, I ask people in the room how many different newspaper or magazines they read a month, and the average is 3 (the same newspaper read every day counts as 1).
I use the Google Alerts tool to send me all the alerts on SME and Trends. Over the year end, trends become a centre of attention, and so I have received many alerts. These alerts covered trends across many industries, from food, to IT to clothing and a whole lot more besides.
Now I am not in all these industries, but I am in some. So for some of my own businesses I gained an insight into the coming trends for 2007. But for my clients who are in the other industries, I gained an insight into the opportunities for their businesses.Today, even if you do not read a lot, using a business tool like Google Alerts makes it easy to know what is going on in your industry. Can you afford not to use a tool like this?I believe not. So get out there, click on the Google link and get yourself up to speed. Use this fantastic opportunity!
Rob Smorfitt
Monday, June 2, 2008
SMEs - is cash flow an external problem? (12/2006)
I see that in the UK there is a big problem with SMEs collecting their debtors. Similarly, like SMEs all over the world, their biggest problem is that the SMEs are terrified of putting too much pressure on their clients to pay, as they are scared of losing the client if they do.
However the report stated that quite the opposite was true. Debtors in a bizarre way judge the SME as a partner by how vociferously they collect their debtor outstandings. The more aggressively they do so, the more likely they want to partner with the SME, as they perceive these SMEs to be more likely to succeed.
Practically speaking I can only concur with this. My experience has shown that a no nonsense low tolerance approach to debt collection generally has won me more contracts. The exception to the rule are those businesses who are in fact on a downward trend themselves and who in fact you do not want as a client anyway.It is critical that if possible you utilise a service which checks your debtors out before they get given credit, and if the deals are large enough, insure against their loss.
So get out there, stop the credit to bad payers, find the harshest solution to debt recovery available to you in your country, (maybe start the process to liquidate the debtor), and start to enjoy business.
Business is only fun when you have the cash to run the business. Cash flow problems are extremely debilitating.
Rob Smorfitt
However the report stated that quite the opposite was true. Debtors in a bizarre way judge the SME as a partner by how vociferously they collect their debtor outstandings. The more aggressively they do so, the more likely they want to partner with the SME, as they perceive these SMEs to be more likely to succeed.
Practically speaking I can only concur with this. My experience has shown that a no nonsense low tolerance approach to debt collection generally has won me more contracts. The exception to the rule are those businesses who are in fact on a downward trend themselves and who in fact you do not want as a client anyway.It is critical that if possible you utilise a service which checks your debtors out before they get given credit, and if the deals are large enough, insure against their loss.
So get out there, stop the credit to bad payers, find the harshest solution to debt recovery available to you in your country, (maybe start the process to liquidate the debtor), and start to enjoy business.
Business is only fun when you have the cash to run the business. Cash flow problems are extremely debilitating.
Rob Smorfitt
SMEs - reality check (12/2006)
Why do SMEs battle for everything from finance to survival, to cash flow to staffing? Often, because of their own actions.
As an entrepreneur myself, I too am guilty of the same mistakes that most SMEs make. I like to believe however, that I have learnt from my mistakes.
Most business plans from SME owners are poor to say the least. Why? They read too little, they are terrified to share their knowledge because it might be stolen so they operate in isolation, they are convinced that a discounted price is the secret to their success, they are scared of change, and they have no desire to grow their businesses.
In other words the biggest stumbling block to their success is themselves. To be fair this is not the only reason they battle, but it is a major contributor.However, there is no doubt in my mind that SMEs have more control over there busienss lives than they know or accept.
We will review these and many other issues as time marches on.
Rob Smorfitt
As an entrepreneur myself, I too am guilty of the same mistakes that most SMEs make. I like to believe however, that I have learnt from my mistakes.
Most business plans from SME owners are poor to say the least. Why? They read too little, they are terrified to share their knowledge because it might be stolen so they operate in isolation, they are convinced that a discounted price is the secret to their success, they are scared of change, and they have no desire to grow their businesses.
In other words the biggest stumbling block to their success is themselves. To be fair this is not the only reason they battle, but it is a major contributor.However, there is no doubt in my mind that SMEs have more control over there busienss lives than they know or accept.
We will review these and many other issues as time marches on.
Rob Smorfitt
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