In 1949, thirteen (out of a highly skilled team of sixteen men) died battling a relatively small blaze that turned deadly in Mann Gulch, Montana. Upon investigating the circumstances of why thirteen of the “smoke jumpers” died while only three lived, Norman Maclean wrote a book entitled “Young Men and Fire”, which is the true story account of that fateful expedition of the “smoke jumpers” – fire fighters who parachute into the back country to fight fires.
Maclean found some startling and interesting facts. Mann Gulch is surrounded by steep canyon walls with the northern slope at a 75% incline. When the wind turned suddenly on the smoke jumpers, they were in a race with the fire up those steep walls. Unexpectedly, the fire started to spread much faster than anticipated.
One of the amazing and notable things that Maclean discovered was that the thirteen who died had carried their tools – heavy poleaxes, saws, shovels and heavy back packs – while attempting to out run the fire up those steep walls. In other words, the thirteen had run as far as they could with all their equipment, even though that equipment was worse than useless in a race with the fire. Their inability to drop their heavy tools and packs ultimately prevented them from being able to outrun the fire. To these seasoned fire fighters, their tools were more than simple objects – they represented who they were, why they were there and what they were trained to do. Dropping their tools would have meant abandoning their knowledge, beliefs, training and experience.
This might not seem like a hard choice to make to you, but because these specialized fire fighters hadn’t been trained for such an unpredictable moment, they had no alternative models or maps for behaviour. In moments of uncertainty and imminent danger, clinging to the old “right” way might seem like a good idea… but more often than not, it is actually deadly.
The three survivors of the blaze were forced to think outside the box and develop alternative methods of escaping the fire. Once they figured out they were no longer “fighting the fire” but were instead “trying to escape from it”, they realized they had to drop all of their useless equipment. One survivor used an innovative technique called the ‘escape fire’ where he took a match and lit a ring around him so that the fire would “jump” over him. When he tried to suggest it to the other men, they continued running up the steep slope because the ‘escape fire’ technique had not been part of their extensive training. Their inability to drop the tools and equipment that weren’t working and seek new methods to escape is what ultimately led to them being engulfed by flames and smoke.
My question to you is this: What are the poleaxes, shovels and backpacks you’re currently running with?
What are the tired, worn out strategies and tools which you are lugging around? What existing beliefs and models of behaviour do you need to drop in order for you to survive and prosper (even thrive in a recession)? What training, attitudes, decisions or experience needs to be abandoned in favour of a new, innovative approach?
It has often been said that “the thinking that got you to here, won’t get you to there”. Never has the simplicity and wisdom of this statement been more poignant, than it is today. Those of you who adopt and learn the critical skills, tools and mind-set necessary to survive and even thrive in a recession (or despite any challenge you face) will be the winners in all this. But, this has always been true. Survivors and successful people triumph because they are flexible and willing to do whatever it takes to get the results they desire. New or changing circumstances always necessitate a new perspective or approach: The alternative, “doing the same thing over and over again” is the definition of insanity and can only lead to suffering, disappointment, frustration and pain.
The events of the past few years have clearly shown that there is fire raging out of control in our global economy – the markets are extremely volatile, banks and corporations are in trouble, credit is tightening, our personal debt is far too high and property values are threatened. Change is upon us and we all must examine what we have chosen to carry on our backs to thrive in a recession. Burying your head in the sand and “doing more of what you have always done” are no longer viable options.
No matter where you are at right now…I have a belief that it is impossible for you not to become even more successful NOW. Take some time today to assess your approach to date – what is working and what is not. Write an action plan and take 3 steps today towards achieving the life that you imagine in your mind. After all, success is not by chance or circumstance, it is by choice! Choose wisely.
When clients ask how to close more sales and free up cash in their business, I like to tell the story of Byron the guns and collectibles dealer. He lives for his business because it gives him the chance to make a living out of doing what he enjoys most: collecting.
He was struggling 12 months ago because he was out of cash and unable to buy new stock. This was a real problem because the strength of his business lay in constantly having new items to show off. New stock encouraged his customers to come back often; no new stock meant they would tend to check out his competitors first.
When I first walked into Byron’s shop, one of the most obvious items was a beautiful old gun, proudly (and securely) displayed in a glass cabinet. I couldn’t help but ask how much it was worth. He explained that it he had bought it for $5,000 dollars, but was looking to sell it for $7,000. Following a hunch that I had hit on his problem straight away, I asked Byron when he had bought the gun. He didn’t remember exactly, he said, but thought it was about five years ago.
I asked Byron how many other, similarly high value items he had in his store. We went for a walk and in the course of showing me around, he pointed out at least a dozen items which he had bought for over $5,000 over the last few years. In each case, he was quick to tell me how much he was intending to sell the item for, and the margin was always 30 to 40%. But the fact was he hadn’t sold these items so they were costing him money and, most importantly, causing him to miss the opportunity of buying new stock.
Byron had spent nearly $100,000 on expensive items over the years. The items were attractive and valuable, but they weren’t particularly rare, so they weren’t appreciating in value significantly. In effect, Byron had put $100,000 on the shelf of his office and left it there for all that time. In other words, while he wasn’t borrowing money from the bank, in effect he was borrowing it from himself. He had missed the opportunity to invest the money somewhere where it would give him a solid return, such as in a term deposit or in blue-chip shares. And he missed the opportunity of using that money to buy smaller, less expensive items that he knew would sell quickly. He needed to do something (and fast) if he wanted to close more sales.
Compounding all of this was the fact that the global financial crisis had caused demand to drop markedly which meant his customers just weren’t coming in or spending as much as they used to.
By making a few simple adjustments, responding to trends in the industry and addressing a need that his customers, Byron was able to turn his business around, close more sales and double his bottom line.
The first thing he did was to free up some cash by actively selling some of his more expensive and slow moving items. He used online auction sites and his own network to find buyers, while keeping his marketing costs low. In some cases he had to sell the items for a little less than he had intended, but the benefit (when he was able to close more sales) was cash in his pocket.
The next thing he did was set up some systems to keep better track of inventory. He started by recording everything and noting the age of all the items (i.e. the length of time he had held it in stock). We agreed that in future, any item that had not sold after 8 months would be reviewed. Byron would investigate the item’s market value and decide whether or not it was increasing in value sufficiently to be worth keeping. If not, he would act to move the item on.
After a few months, Byron was making much smarter purchasing decisions. He was still enjoying ‘collecting’ for his store, but his focus was different. His focus was less on attractive, expensive but not-so-rare items, and more on smaller items he knew he could sell quite quickly. To his pleasant surprise, he increased cash flow by $100,000 in 3 months and found that by using this strategy, he was able to do more shopping rather than less, because he had more cash available to spend.
Lastly, but perhaps most significantly, Byron introduced 2 new complementary strategies which literally transformed his business. To counteract the soft demand for firearms and the relatively fixed, low margins, Byron convinced his customers to purchase 18 months worth of ammunition upfront and he provided storage (if required) onsite. This allowed him to renegotiate terms and pricing with his suppliers, plus generate more cash flow in the short term. Since the margins on bullets was much higher than on the guns themselves, his overall profitability improved. In addition, Byron incorporated training and certification into his standard offering and opened up his target range to paying customers 3 nights a week. This allowed him to create new, highly lucrative income streams and increase the frequency with which his customers came into his business.
While Byron’s story on how to close more sales might seem unique and industry specific, there are many ways to take the overarching philosophy of what he did and utilize it to improve your operating cash position.
How can you identify and start selling silver bullets in your business? Begin by first examining the big picture…
Identify the items in your inventory that are essentially dead stock – i.e. haven’t sold in over 8 months. Determine what the total value of the stock is and devise a plan to convert it quickly into cash using a minimal amount of advertising.
Focus on the gross profit margin of all of your products and services. Are some of these more profitable than others? To improve your overall performance, concentrate on the former, and improve or eliminate the latter. What items or services could you add which would allow you to service a need, improve your relationship with your customers and grow your bottom line?
Negotiate better terms and/or prices with your supplier in order to increase the amount of gross profit you make on each sale. Consider which items you could sell in bulk upfront to your customers and use this new volume to improve your buying leverage or cut out the middle man.
Marketing should not be treated as a fixed and sacred cow in your business. Do not spend another dime on marketing until you ensure that you are maximizing the amount you retain on each sale to cover fixed costs. Also, only spend money chasing customers and sales if you can measure the financial return that you will get. Unless you are a multinational brand, money spent solely on branding is wasted.
Make it easy for your customers to find you and see what you have to offer on the internet. The database of potential shoppers that you have earned the right to speak to, is in fact your greatest asset. What can you do today to add value, enhance their experience and close more sales?
Finally, examine the fixed expenses in your business. Identify whether or not there is a cheaper, faster or superior alternative that doesn’t compromise quality or customer service. Is there a way to shift how and what you do so that fixed expenses can vary (i.e on a pay per use basis) with the level of production and/or sales? And remember, no one has ever grown their business by [exclusively] focusing on cost cutting – so use this tactic as your final step in a comprehensive plan to get your business firing and hitting targets. Your primary goal is to close more sales and increase the amount of gross profit (or contribution margin) that you make from each sale.
Is your business growth starting to plateau or stagnate?
It’s easy to sit back, take the foot off the accelerator and watch the sales roll in, especially if you’ve been satisfied with your recent performance. But keep in mind that if you slack off too much, your competitors will soon catch up and eventually put you out of business.
Take a look around – businesses (and your competitors) are closing their doors due to the drop in consumer spending – which means MORE potential customers for businesses like YOU, that do survive. Today is the best time to take steps to revamp your marketing efforts and respond to the needs and the pain of your target market.
In these tough times, it’s going to take more than “thinking outside the box” and goodwill with existing customers to secure the survival of your business.
I want you to STOP right now and make a list of everything that you (and your competitors) do NOT do to make it easy for your prospects to buy from you. If you want to succeed over the long term, you will take a good hard look at both of these lists and find a way to do whatever it takes, for as long as it takes, to win your customers and keep them.
Granted, this is not an easy task. Most businesses will continue to do what they have always done – guess or assume what they think their customers need. However, no matter how challenging it is to ask the hard questions and re-engineer your strategy, I guarantee it will be a whole lot less painful and stressful than going under.
I had a married couple come to me once for advice and coaching – both the business they were in and their relationship were at the breaking point. The husband turned and said to me “I don’t understand it. I do everything humanly possible for my wife and she doesn’t appreciate me and I don’t think I can possibly do anything more to satisfy my customers – they are never happy and always want more. What can I possibly do?”
My answer to this age old dilemma applies to him, his marriage, and to you in your business right now. “Sounds like you are doing a lot. Too bad it’s everything BUT the very thing that your partner and customers need most.”
While this may sound harsh, I think you will agree that it is absolutely true. It does you no good to work harder doing everything…instead of focusing on the 1 thing that you customers actually need. Wouldn’t it be easier for you to work smarter, not harder, if you knew with absolute certainty what that 1 thing is?
How can you take the lesson from my client and apply it to your own business right now?
How could you go about figuring out what that 1 thing is?
I want you to do something really radical today and start asking both your prospects and existing customers what they need. You need to find out:
• What is the biggest challenge your prospects are facing in their business?
• When your customer thinks of the product or service you provide, what is THE most painful or difficult issue associated with acquiring it?
• What is the most important criteria to your purchaser when evaluating a company like you?
• What are some things that he/she thinks about or considers from a financial perspective when selecting that product/service or a vendor?
• What is the key strategic driver for you customer’s decision?
It doesn’t really matter what you have done up to this point or how hard you are working. There is no prize for volume or quantity. What counts is quality and relevance.
Are you giving your customers what they want and are you willing to do whatever it takes to help them cure the pain that they are in?
More of the “same old same old” is not going to differentiate you from the pack, build trust, win customers and grow your business. Take some time today to really think about what you offer and how it could be improved to meet the primary need of your customers. If all of your customers were to leave today, what would you need to change in order to win them back and survive?
At the end of the day, price is never the determining factor. Once you uncover the true cost of the problem they are facing, price becomes irrelevant. Your customers will always be willing to pay a fair price for a product/service that cures their pain – not to mention the peace of mind that comes with excellent service. Take stock of what the competition is NOT willing to do and what your customers wnat most from you.
Do something unique – listen and be willing to do whatever it takes to deliver what they want (and need). Anything less, is simply a waste of your time and money on everything that doesn’t really matter.
Article Source: http://EzineArticles.com/6586203
Here is an excerpt from a guest post that I recently contributed for IsUtility® is a turnkey Houston Computer Services and Consulting solution that brings accountability back to the IT services industry. You can view it at Houston Cloud Computing or read it now directly below…
I am a big fan and user of cloud computing services/providers – of the hundreds that I have tried over the years, only a small percentage of them turned out to be shams or charlatans. Spotting a good or bad provider is a lot easier than you think and I want to share with you a few valuable tips that I have learned which can SAVE you a lot of time, heartache and money.
Beware of “hard sell” websites
Look for websites that DO NOT rely heavily on affiliate marketing and video to promote their wares. This hard-sell, “so-and-so uses us” approach is a sure sign that it is not a reputable company. Pages and pages of sales copy, clichés, crazy low price act-now offers, and “look wait, there’s more” hype says to me that the company is not legitimate.
If a brand is promoting their service heavily through a group of authors and speakers that I know have a tendency to get caught up in high pressure sales and affiliate marketing schemes, I can almost guarantee that the service will not live up to what you have been promised. There is nothing wrong with using affiliate marketing – however, some people do not care what they promote as long as they make a dollar off of it. Beware of marketers who send an email to you every week promoting someone else’s product. I don’t know about you but when I sign up to receive communications from someone it is because I want to learn from their knowledge – not receive an endless list of offers to buy their friend’s latest workshop or book.
Look for sites that follow best practices in layout
There are many cloud sites that are presented well and offer great service. They stand out. I look to these as a guide when evaluating potential new cloud providers. The more time that has gone into clean design and ease of use (navigation), the more confidence you will have in their underlying service.
Security next
Look for safety – assurances that your data is kept safe from hackers. I expect to see seals, guarantees etc. in plain view.
All proof is not created equal
Anyone can claim that their website is “the BEST provider in the world of X” but it’s another thing to back it up with proof. Client testimonials are the most powerful form of proof. I look for real results from real people. “Debbie for Texas said…” doesn’t cut it in my world. Unfortunately, you cannot simply rely on someone’s homepage claim which says how many customers they have – many companies fudge the truth to suit their own purpose and there is little recourse to protect the consumer from false claims.
Do your homework
One of the most valuable tools at your hands for research is Google. When in doubt, I check what others are saying about this service. Charlatans cannot hide forever. You’d be surprised how much is out there on companies who are not good operators. In fact, last year I took on a monthly subscription service with Traffic Geyser who claimed to be able to syndicate my articles and videos to over 100 sites each month. What they neglected to tell me was that over 50% of my attempts to syndicate would ultimately get rejected and that I would have to spend hours to manually chase up all the bounce backs. The ROI on my investment was appalling and their customer service was the worst I have ever experienced online. Bottom line, their software doesn’t work properly and it is just easier to use something cheap or free like Tube mogul.
Conduct a customer service test
Send a note to customer service and see what you get back. Their willingness to answer your questions completely, promptness and attention to detail will tell you a lot about who you are dealing with before you hand over your hard earned money. Also, make sure it is easy to unsubscribe from the service. Cloud services that make it difficult for you to get help or quit, are not to be trusted.
Also remember to verify the claims and credentials of the person running the business – what qualifies him/her to provide this service? Who is behind this company? Is it a one man band? Can you trust them? Do the look like they know what they are doing? Sometimes watching 1-2 videos of them on youtube can give you a very clear perspective on whether or not they are the real deal.
Selecting a vendor online is no different than doing your due diligence off line. Luckily, many cloud services are reasonably priced and you are less likely to get locked into a long term contract with a charlatan. However, the exposure (financial, personal and strategic) is much greater than the actual cost of the service, and therefore, you need to be much more vigilant before you hand over your credit card number.
That’s The Good News, Now Do You Want To Hear The Bad News?
If you do a quick search on the internet, you will uncover hundreds of experts, coaches, accountants, journalists and government organizations that quote the statistic “8 out of 10 business fail in the first year”. However, the fact that the statistic is widely touted doesn’t necessarily mean that it’s true or backed up by empirical evidence.
So what is the truth? I searched the internet and couldn’t find confirmation of any study that was done to back-up this statistic (that 8 out of 10 businesses fail) by a reputable or well-known bureau. What I did in fact find was some evidence to the contrary. According to credit reference checking agency Veda Advantage, only a small percentage of new businesses close in their first 12-months of business.
What is the exact amount, you ask? Would you believe, less than two percent?
However, they assert another 32 percent close their doors between their second and fifth year of operations, while 21 percent wind up between the sixth and ninth.
So, that is the good news. However, as you can probably guess, it’s not ALL good news.
Just because a start-up doesn’t go under in the first 12 months, doesn’t mean that the owner is running a successful enterprise. I wonder if anyone has bothered to measure how many of the businesses who survived:
- Paid the owner a wage that was at least equivalent to what he/she could have earned elsewhere as an employee?
- Generated a profit and positive cash flow? and
- Had enough working capital to service their debt, pay taxes and suppliers etc. as they came due?
The first few years of business are incredibly risky. In working with hundreds of business owners, we have found that the large majority opt to forgo their salary or inject more equity to prevent them from going under prematurely. What this means is that, while they may not have “technically” gone under, these fledgling enterprises are far from commercially viable and successful.
Statistics can be both helpful and misleading at the same time. It is easy to assert figures but more difficult to substantiate their veracity or explain the implications thereof.
The author of an article or press release will often use statistics to capture your attention and motivate action. That’s why people use statistics – numbers are persuasive and have an aura of authority. A statistic like – 8 out of 10 businesses fail – gets attention, doesn’t it? Whether this data is accurate or not, is only half the story. As a business owner or manager, we must look deeper to find the insights that we can take away and use to improve our results.
Personally, I don’t care what percentage goes under. No matter how long you’ve been operating, if you’re not getting paid a salary, producing profit and generating positive cash flow, you’re not running a successful company. Closing your doors is only half the story. The doors may very well be wide open, but technically, no one is there.