If you had to pick 1 thing – 1 strategy or change that you could implement in your business that would allow you thrive despite tough economic times, what would it be?

Let’s make a list of the top 5 things that I hear most business owners (like you) say when I ask them the same question…

• Spend money on marketing  – attract new customers
• Have a sale
• Ask for referrals or help
• Tighten your belt – cut costs
• Do more networking

Now what do all of these have in common?

They all involve you doing more of the same thing that you have always done.  None of these involve a radical shift in the way that you do business, do they?  None of these involve you taking a step back and re-examining what you do and whether it’s actually working. And none of these involve you changing the way that you communicate what you do to your customers.

And that is precisely why none of them will work to recession proof your business.

So why is that important?

Because consumer sentiment and spending has changed dramatically in the past few years and those changes are being felt across every industry and by both big and small businesses.  Everything you thought you knew about your customer and why she was buying from you has probably changed.  And if you don’t take the time now to re-discover your prospect’s main source of pain – the reason why she needs your product or service – you risk losing more sales and more ground to your competition.

Now some of you are probably sitting there thinking “but MY industry is different.  You may think that you’ve been hit especially hard and that everyone in your niche has lost sales.  But that’s not the case for 99% of you.  Even some of the most competitive and vulnerable industries have companies who have continued to perform well and who have even stole market share.

Just for a moment, I want you to cast your mind back to the first few months after the GFC. A lot of people lost their life savings during the stock market crash and many lost their jobs immediately after that.  It was a horrific few months and few industries felt the wrath of the crash more so than the automotive sector.  If you remember, new car sales dropped by almost 20% in a short period of time and stayed that way for almost a year. That’s a huge drop in an industry that is vital to the health of the national economy.

Now sales of new cars were down 20% for the industry.  Despite the massive drop in sales, 1 manufacturer actually managed to gain market share and outperform all other companies in sales growth.  Do you remember who that was and why?

Only 1 company stopped and took a good hard look at the pain their customers were in at the time. They didn’t do what all the others did – which was spend more money on newspaper ads, lay off salespeople and slash new car prices.

Only 1 company examined the change in the market, correctly diagnosed the pain of their prospects and came up with a solution.  “If you lose your job and can’t make the payments, no problem – we will take it back free of charge”.

Do you remember who that was?  That’s right Hyundai.

With one simple change to their focus and strategy they stole market share from every other manufacturer because they correctly identified the shift in their customer’s pain. They didn’t keep going on with the same old strategy and approach that clearly wasn’t working. Yes, there had been a major downturn and the whole industry was hit hard, but there were still lots of customers who wanted to buy a new car but were afraid to do so because they might lose their jobs.

So how can you apply this to your market right now?  First and foremost, your customers are not thinking about you, your brand and your features and benefits – they are thinking about their own survival and whether or not you can cure their pain. If you are able to correctly diagnose the pain, you will trigger the part of their brain that makes decisions and you will stand apart from your competition. That’s the power of Sales Seduction.

Think about one of your customers right now and her pain?  What do you need to do in order to get more clarity around that?  What questions do you need to ask her about how it is affecting her financially, personally and strategically?  To the extent you can diagnose her pain, get her to acknowledge it and put forward the solution that cures it, she will listen to anything that you have to say.

Take a look around you… businesses are closing their doors everyday – which means more potential customers for the businesses like you that DO survive. And in times like these, it’s going to take more than just doing more of what you have always done to recession proof your business. Uncertain times call for deliberate decisions and proven practices.  In order to recession proof your business you need to shift your thinking around the way you do business and start providing THE solution to the #1 pain or challenge that your customers have.   And if you need some diagnoistic questions and a step-by-step framework to help you do this…I highly recommend that you check out Chapter 8 of Sales Seduction.

Are You Missing The Point? 

It has often been said that “profit is pointless and cash flow is King”.  But do you know why?

It is possible for a business to show a profit for a period of time, yet have negative cash flow.  In fact, businesses that have profit (on paper) go under every single day.  Negative cash flow, if sustained for an extended period of time, will eventually cause the company to run out of money and cease operations.  Therefore, knowing the cash flow position is critical to staying afloat and knowing how to unlock more cash flow is imperative to effectively coach a business owner or senior executive.

Are You Chasing The Wrong Target?

You can have the most brilliant product or service but if the business runs out of cash, it won’t matter. Most businesses make the fatal mistake of thinking that they simply need more customers.  If only they had more customers, they would have more sales and more profit…and they would be more successful.

But is this true?

Can businesses simply advertise their way into more sales and better results?  No.  In fact, advertising and discounting often have a negative impact on the bottom line and cash flow.Simply put – the initial instinct most coaches and business owners have is to focus on increasing sales.  Employing this strategy in a business coaching context – chasing customers and sales – is often the worst thing you can do for the business.

The common assumption is that if you are running a business (or involved in business coaching) where the price you charge for your products is greater than what they cost, everything will be okay: you will be profitable and successful.  Profit is good – don’t get me wrong – but it is simply not enough on its own.  To be sustainable, the business must also have a healthy cash flow.

If you are like most coaches and business owners, you never dreamed that the ability to understand how money flows in and out would be incredibly important. You thought: “That’s for the accountant or finance department to worry about. Sure, they may show me a few reports from time to time, but I don’t see the need to really understand what the numbers mean. If there was a problem, they would tell me, wouldn’t they?”

You probably didn’t realise that all those numbers – the financial DNA of the business – can tell you a lot more than you thought.  They can tell you why the business is not growing or is struggling to meet targets. They can reveal why there is less money in the bank account [again] than there was last month.

The financial numbers ARE the story of the business. Numbers don’t lie. They are one of the few objective indicators of how a business is performing and where the problems are.  Ironically, financials are the most overlooked area of business coaching with the majority of practitioners choosing to specialize in leadership, sales or marketing disciplines.  Unfortunately, without a solid understanding of financials, it is impossible to coach effectively and produce predictable results.

Regardless of any justifications you (or your business coaching clients) use to explain why the business is not performing – the economy, the shortage of ‘good’ staff, competition, supply chain issues etc. – the numbers tell the truth and can lead you to the solution. You just need to learn HOW to use them to your advantage.

You need a bit of Financial Foreplay.

Are You Avoiding The Numbers?

When is the last time you took two hours out of your week to analyze the financial statements of a client or your own business?  Can you honestly say that you know exactly where you (or they) are at and WHY?  Do you sometimes wonder what the numbers are trying to tell you?  Are you guilty of wasting money chasing new leads and sales instead of fixing the business and making it more profitable?

Most business coaches and business owners make the mistake of assuming they can improve the business by examining the Profit and Loss and Balance Sheet on a monthly basis.  Unfortunately, these statements only tell part of the story.  In fact, you cannot measure the cash flow position of a business by looking at the bank balance or examining the financial statements at a specific point in time.

This is because most businesses use what’s called ‘accrual’ accounting. Rather than recording ‘money spent’, they record spending as ‘money spent plus money committed to be spent’. So if stock has been purchased on account, accrual accounting includes the value of that purchase from the point it is made – not from the point when the account is paid. Accrual accounting takes into account the amount of money that has been spent plus committed to be spent in the future. The same thing happens in reverse with earnings – it includes money received plus money expected to be received. When a sale is invoiced with 30 days to pay, the value of that invoice is included in accrual earnings even though the money won’t be received for at least another 30 days.

Therefore, when accountants talk of ‘profit’, then, they usually mean ‘accrued profit’ as opposed to what we would call ‘real or cash profit’. Accrued profit is the expected real profit after ‘spending already committed to’, and ‘earnings expected to be received’, are
taken into account along with real (cash) spending and real (cash) earnings. As a result, the profit showing on an Income (or Profit and Loss) statement is a more complicated and less useful representation of the current financial situation of a business.  Net profit cannot be relied upon in isolation to gauge the financial health of a company.

Stated another way, cash flow must be tracked over a period of time and can be measured by the following calculation:

Net profit (year to date)

+/- changes in inventory

+/- changes in accounts receivable

+/- changes in accounts payable and GST and

+/- changes in fixed assets

=  Cash Flow

Changes in these 4 items on the Balance Sheet have a significant impact on the cash flow and viability of a business. That is why getting inventory levels right, optimizing receivables and payables and investing only in assets that generate a return, is critical when coaching a business of any size.  In fact, a coach can often have more tangible impact and influence on a business by focusing on these 4 areas than on directing effort towards gaining new customers and increasing sales.  And oftentimes, it costs the business very little to implement highly effective strategies in these 4 areas.

In practice, it is vital to have an eye on both real profit (cash flow position) as well as accrued profit. It is a common error to focus solely on accrued profit – an error which has the potential to send a business to the wall prematurely.

Are You Sure It’s Profitable?

Profitable growth should be the goal of any business.  However, you cannot achieve profitable growth without first establishing that the business is in fact profitable.  Attracting more leads or closing more sales may not be enough – the costs and efficiencies in a business change every day and this means that we must constantly monitor and measure results and take appropriate action.  Focusing solely on customers and sales is a bit like spending 100% of your time practicing your tennis serve while neglecting to watch the scoreboard, analyze the strategy of competitors and practice your returns.

Break-even is one of the most simple and powerful calculations that you can use yourself and with your clients each month to measure and enhance profitability.  A company is said to “break-even” for a period (usually a month) when its sales revenue catches up to its costs. Specifically, accountants talk about break-even as the point where ‘fixed costs’ (rent, salaries, etc.) are matched by ‘gross profit margin’ (sales revenue minus COGS).

Therefore, it follows that break-even with profit is the point in the month where the business covers all of the fixed and variable costs and starts making the desired profit target.  Remember, if you and your clients are in business and not running a charity, the goal is profitable growth.  In order to achieve profit, you MUST in fact plan to achieve it.

Calculating break-even (and break-even with profit) each month and knowing specifically which day of the month the business breaks-even, allows management to make informed, strategic decisions about how to achieve growth that is profitable for the bottom line and enhances the cash flow position.

Are You Ready To Get Results?

Knowing where the financial pain is when you are coaching a business allows you to focus your time and resources where they will make the greatest impact on the bottom line.  And if you are truly serious about being a successful business coach, and it is not just a hobby or a way to pass the time, you will find a way to fit a bit of Financial Foreplay into your day so that you can help others to whip their businesses into shape and start taking home more cash! It’s the quickest and most effective way to get your clients working ON not just IN their businesses.

Imagine you are playing an important game of tennis…

It’s the club final and you are the favourite to win. There is a big crowd watching and as the game progresses, everything seems to be going to plan. You’re playing well and you’re winning points. Victory can’t be far away. There is only one problem: there is no scoreboard, and the umpire is keeping the score to herself. So no one except the umpire knows what’s really going on.

Nevertheless, you plough on and, despite being in the dark about the score, you feel positive that eventually the umpire will declare you the winner. You are so confident that you can’t help but relax just a little. You start enjoying the party like atmosphere.

Then a shock! Out of the blue, the umpire declares that it is match-point … to your opponent! You can’t believe it. You go back to the baseline, determined, and set yourself up for this big point. But to no avail. It’s too late to get your mind back into gear and you hit the return wide. The game is over, the final is lost. If only you’d been able to track the score during the game. At least you would have been able to fight back a little bit earlier.

Every day, hundreds of businesses, big and small, operate as though they are playing a game of scoreboard-less tennis. Every month the owner runs on feelings for most of the month – no more than a guess about how well the business is travelling. A day or two after the month ended, you will look to the ‘umpire’ – your accountant – who will give you the ‘score’ – your figures. And most times, his perceptions will have proven inaccurate and it is far too late to do anything about it. When things changed in the business – when your ‘opponent’ started to get on top – you simply would not have seen it coming.

Your financials are to your business what the main scoreboard is at a sporting contest. Can you honestly say that you know where you are and where you are going?

Do you often look at your reports and wonder what they mean?

Do you waste money and time chasing new customers instead of fixing your business and making it profitable?

If you are ready to get serious about your business… it’s time for a little Financial Foreplay.

It’s time you learned:

· Why cash, more than profit, is the key to success in business;

· How to find and unlock the hidden profit and cash that is trapped in your business;

· How to use the numbers in your financial statements to give you information that is useful for you – not just useful for your accountant. For instance, I’ll show you how to calculate a few simple but important ratios, to understand the results and to monitor them on an ongoing basis;

· How to stop making common business mistakes that are preventing you from being as successful as you deserve to be;

· Why too much inventory can strangle your business;

· How to manage debts owed to you and minimize the risk of default;

· How to charge the right price for your goods and services;

· How to decide whether an investment will be a good use of your company’s money or not;

· How to work out when, during each month, you ‘hit the front’ and start being profitable;

· How to set powerful and meaningful targets that will focus the attention of both yourself and your staff on making good decisions and taking positive actions ALL the time;

· A way to measure and track your financial success in a simple and meaningful way; and

· How to eliminate the unproductive habits that have been holding you back.

You will learn all this through the stories of my clients. Powerful stories about real business owners, just like you, with common financial problems. I’ll show you how these business owners found themselves in trouble, how they worked out what was wrong (with a little help from the financial numbers) and how they took action to turn things around.

While only 2 pages in length, the executive summary is by far the most  important component of your business plan or proposal. It is designed to  summarize the key elements, capture attention and most importantly, showcase the  financial highlights.

So, if you only have 2 pages to convey a significant amount of information  and summarize the financial upside, how do you decide what to put in and what to  leave out? Which financial features are critical to emphasize?

Depending on the purpose of your document and the intended audience  (investment, sale, partnership, strategic alliance, joint venture etc.), you  will want to tailor your financial disclosure to suit their needs and  expectations. What would they want/need to see in order to make an informed  decision?

At a minimum, you need to clearly state what financial input is required from  them and what they will get in return – i.e. a share, debt instrument, license,  exclusive right etc. Next, highlight the expected net profit and cash flow over  2-3 years. Also, give a clear indication of return on investment (ROI) AND a  realistic, well defined exit strategy.

In an executive summary, it is important to be succinct and focused. It is  not the time to tell your life story, overpromise with unrealistic projections  or overwhelm with too much detail. You will only get one chance to make a good  first impression and capture the attention of the reader. In fact, many  sophisticated investors have told me they rarely read a business plan or  proposal in its entirety. They make their decision on the strength of the  executive summary and their assessment of the owner/manager (in terms of  character, knowledge, skills and tenacity).

Focus on “what’s in it for them”. Show them clearly how they can benefit and  when the result will be crystallized. Give them enough detail to understand the  industry, opportunity and unique solution you provide. And most importantly,  clearly summarize the key financial metrics of profitability, cash flow and  ROI.

In short, make it EASY for them to invest in YOU.

Article Source: http://EzineArticles.com/6107414

What do you need to do to change the playing field you are on completely?

It’s an unlikely source for great business advice for entrepreneurs.  A story about Billy Beane, the general manager of a major league baseball team at the bottom of the ladder – the Oakland A’s.  Crushed by the big budgets and big name players of teams like the New York Yankees and the Cleveland Indians, Beane is forced to take a risk and do something no team has done before – abandon traditional recruiting methods and employ computer-generated analysis to acquire and trade players.  And in doing so, he changed the face and landscape of the game forever.

The following quotes from the movie were never really meant for you and your business and yet, they reveal some fantastic truths about life and success that will make you a better owner and leader.

1. You’re not solving the problem. You’re not even looking at the problem.

It is very easy for you to be distracted by all the issues and rhetoric swirling around the actual problem.   The more you (or others) have personally invested in the status quo, the more you will be prevented from seeing the real problem for what it is.  Seek advice and perspective from people outside your industry — those inside will be emotionally attached to the way things have always been done and thus, they have become part of the problem.

Your number one objective is to determine what the actual issue is, and solve it.  You don’t have time to get caught up in meetings talking about why it is a problem or re-engineering band-aid fixes that have not cured it in the past.

2. We’ve got to think differently.

Your business really isn’t that different from the Oakland A’s baseball team.  If you’re a start up or a small-mid size business, you’re likely working under some tight (and possibly unfair) resource constraints.  If you want to grow and to challenge competitors that have much deeper pockets, you need to level the playing field or you need to change it completely.  It is impossible to beat anyone if you insist on letting others dictate the terms.   You must start by thinking differently.  What would need to change in order for you to have the advantage?  What can you do differently right now to achieve your objective? How can you adapt or modify your approach to get what you want?

Playing the game on your competitor’s terms is no longer a viable option.  It can only lead to frustration and failure.

3. He passes the eye candy test. He’s got the looks – he’s great at playing the part.

Success often depends on good scouting and recruiting. A common mistake that most of you will make is to recruit team members that you like (and have something in common with during the interview) or who look the part. In order to ensure the survival of your business, need team members that can actually do the job that you need them to do. It doesn’t matter whether the candidate has 15 years of experience at a multi-national or comes highly recommended from so-and-so.  None of that amounts to a hill of beans if they cannot do the job.  If you want to boost your success this year, get the right people on your bus.  If you need a good hitter (someone who can close business) don’t hire a semi-retired catcher who is charming in the interview.

4. Your goal shouldn’t be to buy players, your goal should be to buy wins.

It is important to get the right people on your bus. However, in order to do that, you need to figure out exactly what needs to get done and hire people who can do it.  Don’t get caught up in fancy titles, big salaries, stock options and what looks good to the outside world.  If you want to be successful you must be in the business of plugging gaping holes and buying outcomes.

If you need more customers and sales, hire someone that you know can and is incentivized to close business.  It doesn’t matter what you call him, what matters is that he can produce the result that you need to survive and thrive in your business.

5. Why do you like him? Because he gets on base.

Step 1 – figure out what success looks like for the role you need to fill.  Step 2 – don’t hire anyone without a proven track record of achieving that outcome.  Step 3 – Get rid of (or trade) anyone who can’t fulfil their role or who is polluting the office environment.

6.  Where on the field is the dollar I’m paying for soda?

It is good to be frugal and smart with your money but it never pays to be penny wise and a pound foolish. If you want to grow your business profitably, focus on the items that will have the biggest impact on your bottom line and cash flow first. There’s no point focusing on shaving one or two thousand dollars off your fixed expenses if you’ve got $25,000 tied up in dead or slow moving inventory. To make good decisions and take action that boosts your bottom line, you need to measure and track your financial KPIs regularly.

7. I’m not paying you for the player you used to be, I’m paying you for the player you are right now.

While you might get away with recruiting based on potential, in the end, you can only reward based on results. Time and time again I have seen business owners struggle with the decision to let salespeople, who are not meeting their targets, go. The decision is really a very easy one. Someone has to go. It’s either them or you. You can’t win a baseball game without putting runs on the board and you can’t build a successful enterprise without hitting sales targets consistently.

8.  It’s day one of the first week. You can’t judge just yet.

Patience is a virtue. Don’t pass judgment judge too soon. If someone’s not performing or the team is not quite gelling, take some time to investigate, ask questions and make adjustments. All changes to the team will have a natural breaking-in period.

Too much tolerance can become a vice. Good performers tend to contribute value very quickly – both in terms of their attitude and work ethic. The typical 3 month probation period is more than enough time to make a fair evaluation. When the writing is on the wall, have the confidence to cut your losses and move on.

Despite the Oakland A’s disadvantaged revenue situation, Billy Beane took his team from bottom of the ladder to World Series contender in just a few months. By re-evaluating the strategies that produced wins on the field, they built a winning team with only one-third of the salary budget of the New York Yankees. To do this, they had to do more than just play better a better game of ball. They had to transform the playing field completely.