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The
people you hang with.
I
was walking around the local marina enjoying some quiet time looking
at the boats when I struck up a conversation with someone doing
the same thing. As we walked along the marina pontoons we talked
about the innovative ways that people had modified their boats to
deal with the problems they face at sea. We both stopped when we
saw a traditional, wooden sailing sloop.
My
new friend, a Canadian in his fifties, commented that he had nearly
purchased a similar boat 10 years before. I asked the obvious question;
‘why had he decided not to buy the boat’? His reply
was simple; ‘It’s the people you hang with’. He
then continued with a long story about what his friends believed
he was capable of doing. Apparently his friends believed that he
was not capable of restoring such a classic boat. They didn’t
think he had the skills or the interest in wooden boats. As we walked,
this fellow told me some of his life story. He had owned and run
various businesses and had financial success with some; others had
failed. He had also spent large sums of money on architect-designed
houses, which he had enjoyed the comforts of. He had also returned
profits from them when he had sold them.
One
thing was repeated over and over in the stories. The people around
him had always been involved in his decision-making. Not in a formal
way but when his friends and family seemed happy with his idea,
he would proceed. This is no surprise as everyone does this to some
extent. We wait for approval from many different people in our own
lives before proceeding with our decisions. In business, you need
to be sure that the people who guide you are truly helping. It is
a worthwhile activity to identify and review your informal advisors.
The people you are hanging with may not understand your business.
Many successful businesses formalise this structure and form a board
of directors. The directors usually have different skills so good
advice can be provided on areas such as marketing or financial management.
Formalising a board might sound a little over the top for your business
but how important is it to you that your business is successful.
Many
small business people rely on a network of family and friends who
have valuable business experience in many areas. They don’t
sit around in stuffy, formal board meetings but, over a few drinks
or a barbeque, they talk in depth about ideas for changes and improvements
of their business. With the strength of a team of experienced people
behind them, the decisions made lead to long-term benefits for their
businesses.
My
Canadian friend is still looking at boats and regretting the decision
he had reached years before when he missed the opportunity to own
a classic yacht for his retirement. He has now changed ‘the
people he hangs with’ and is again looking for a suitable
boat to enjoy.
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact me.
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Have
you ever looked at your business profits and thought that for the
turn over and the amount of work being done that the bottom line
should be much bigger. If your product is competitively priced then
the problem must be that it is costing too much to produce the product.
I have found that by looking at the parable of the toast factory
that many business people have been able to identify the problems
in their business, fix the problems and put processes in place to
prevent the problems reoccurring.
Imagine
that you set up a small business making toast, a small company with
two staff, one sales person to take the orders and one toast technician
to make toast and handle distribution. As the business grows the
staff get busy. The operator taking orders is doing well but the
toast technician has been busy with distribution and some of the
toast has burnt. This slows things down and he doesn’t have
time to make more, so he scrapes the black off the toast and sends
it on to the customer. While he was handling the toast scraping,
more toast has burnt.
Soon,
the sales person is kept busy with customer complaints about the
burnt toast. The phones are ringing with orders but are not getting
answered because the sales person is busy with the complaints about
burnt toast. A second sales person is now required to deal with
all the phone calls from customers placing orders and other customers
complaining about burnt toast. The majority of complaints are about
toast that has been burned and scraped but is still black. The toast
technician is still busy with distribution so the toast is still
getting burnt. The next step, a professional toast scraper is employed.
You
can probably see where this story is heading. Well, it only gets
worse!
As
it is now taking longer to get the orders out the door with all
this toast scraping going on, the customers are now complaining
about late delivery. The solution put forward is to employ an express
deliver person to speed up the delivery of the always-late orders.
At this point the owner is reviewing the bottom line and announces
that the company needs more sales. An advertising campaign begins
and the phones start ringing. The new customers place their orders,
have their toast burnt, scraped, delivered, phone and complain about
the burnt toast, have the order remade for free and express delivered.
This can only get worse, and more comical, the larger the company
gets.
The
solution, once you can see the problem, is simple.
Don’t
burn the toast !!
As
obvious as this common problem appears in this simple story, many
companies have varying degrees of this problem and don’t even
know they have a problem. I ask you this. Have you reviewed and
flowcharted all your processes? Have you implemented a system to
prevent problems from reoccurring? Are you burning the toast at
your business? Can you smell smoke?
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact me.
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We
have all heard comments in business along the lines of; ‘It’s
the law of the jungle’, ‘the strong beat the weak’
or ‘the big eat the small’. I gather that now it might
be ‘the fast eat the slow’.
These
comments are used to draw parallels between how evolutionary change
leads to the survival or extinction of a species, and how the structure
of a business will determine if it will thrive or fail. It is useful
to look at Darwin’s Theory Of Evolution, ‘The survival
of the fittest’. This shortened version of the theory does
not prompt thinking about the most important aspect of the theory,
fittest for what? Darwin’s theory is, “variations within
species occur randomly and that the survival or extinction of each
organism is determined by that organism’s ability to adapt
to its environment”.
So,
what does this have to with your business?
Like
an organism, your business is a complex entity and it will have
small differences from all others businesses in your industry. Even
franchise businesses differ from site to site. The difference is
a result of the local environment. However, unlike Darwin’s
organisms, the differences should not be random, but deliberately
implemented as a way to adapt to the current business environment.
It
is important to identify the key elements of the environment that
influence your business. The features of the environment that have
most influence could be the other companies in the market place,
Government legislation, Technology, Social changes, World events,
Suppliers or a number of other things. One outstanding feature of
the modern business environment is continual change. As the environment
is constantly changing it is important to monitor and react to the
changes.
With
the interest of business being survival and not extinction, the
thing to review is your company’s ability to adapt to the
changing environment. Any business that cannot adapt to suit the
changing environment will soon fail. The business that can adapt
quickly and skilfully to the changing environment will not only
survive, it will seize the opportunities to gain market share from
its competitors.
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact me.
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Good
systems are essential to business success. Systems control processes
and help to ensure a predictable outcome. A business with effective
systems can be franchised, sold or have a change of management with
only minimal change in the quality of service to its customers.
Systems that provide effective control mean that reactive issues
only require minimal day-to-day input from management. This can
free management time to focus on pro-active improvement activities.
The issues that systems deal with are the routine tasks that require
regular action. If not handled consistently and correctly these
issues can cause major problems. The things that can be predicted
to go wrong are called assignable cause problems. These are the
issues that you can assign to a specific cause. The other types
of problem are usually called chance problems. Chance problems are
unpredictable and fall outside the control of a system. This can
get a little confusing so lets look at something to help explain
the difference.
The
car you drive has many systems to handle all the functions that
are expected from a car. If we look at the braking system we can
see the difference between assignable causes problems and chance
problems. Obviously your car has brakes to enable it to stop and
not run into things. Running into things will damage your car. Therefore,
hitting things would be an assignable cause of damage so; a braking
system is fitted to your car. However, the braking system does not
always stop us running into things. Thirty years ago most cars were
fitted with a drum brake system, these brakes got hot with excessive
use and would fail to work; therefore, over heating is an assignable
cause problem. To fix this problem, disc brakes where fitted to
most cars. Disc brakes can have a problem of skidding when applied
very hard; brake lock up is an assignable cause of many accidents.
The car manufactures changed the system to anti lock braking.
So,
when you can assign a cause to a repetitive problem, you modify
the system to handle the problem. Other problems, like a combination
of circumstances, such as blowing a tire while braking or an unpredictable
happening like driver error are chance problems. Most braking systems
will not handle these chance problems.
So,
how do you apply this to your business systems?
When a problem occurs you need to establish if it is an assignable
cause problem. Be honest with yourself, it’s easy to say that
it’s a chance problem and do nothing about it, if the problem
keeps occurring it is more than likely an assignable cause problem.
You need to identify the cause and modify you systems to deal with
it. The more assignable cause problems your systems handle, the
more time you will have to expand your business and improving your
bottom line.
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact me.
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Achieving
long term goals
Long-term goal setting is a necessity for business. The problem
lies in making solid plans beyond about two years. Business managers
need to consider what they want from their business in the distant
future; if a goal is not set, ongoing decisions will have no direction.
One of the things that stop goal setting is people being conditioned
to believe that action is more productive than planning and thinking.
Many businesses don’t value time taken to think as it cannot
be directly invoiced or charged out. Time taken to think about long-term
direction however, is an essential element of success. Long-term
goals will be different for every business but the process to get
there is very similar.
So,
what is the process to achieve YOUR long term business goal?
It
is very similar to getting to where you want to go in a sailing
boat. You look at the chart and decide where you want to go.
When you sail, the wind always seems to blows from the direction
you want to go in. If you choose to sail in the direction that the
wind takes you will not reach your planned destination. The only
way to get to your destination is to tack into the wind. Tacking
means sailing as close to the wind as you can, you sail toward one
side of your destination and then you change course and sail to
the other. You get a little closer to your destination with each
tack. On a long trip you look at the chart and nominate ports along
the way that will serve as places that you can reach as you tack
into the wind. These serve as stopovers were you prepare your boat
for the next leg of the journey. Changing wind directions are common.
If you do many tacks and stay as close to the straight-line path
as you can, you always benefit from a wind shift. It is useful to
learn how to read the weather and predict the wind shifts.
So, how do you apply this to your business?
• Start by identifying your long-term goal, and do the things
that take you a little closer to that destination.
• Constantly prepare your business for the next step towards
your long-term goal with appropriate technology and staff skills.
• Make business decisions that keep your business heading
on the path toward your long-term goal.
• And, take time to watch the changes around you and take
advantage of these changes as they happen.
By
having a long-term goal for your business, you will be able to confidently
make decisions that lead to achieving the goal. You will be able
to position your business to be ready to take advantage of opportunities
knowing that the next deal you do is more valuable than just a deal,
it is a tack towards your long-term goal.
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact me.
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The
quality bandwagon has visited most businesses at some time in the
passed decades. My experience has been that most companies have
approached the concept as a burden forced on them and not as a valuable
way of identifying the weak links that threaten their business stability
and profit. This has been evidenced by the popularity of employing
a consultant to write a QA manual and then claiming to have a quality
system.
Tolstoy’s
opening sentence in the novel ‘Anna Karenina’ is ‘Happy
families are all alike, every unhappy family is unhappy in its own
way.’ Tolstoy’s point is, that for a marriage to be
happy there must be unity of view on many different elements such
as; religion, sexual attraction, financial management, child discipline,
in-laws and many other issues. If any one of these issues cannot
be agreed on then the union can fail even if all the other ingredients
needed for happiness are there.
Anna
Karenina is about people and the interaction of lives. Your interest
is your businesses and how it interacts with others such as suppliers
or customers. So, lets make a few changes to Tolstoy’s sentence
and start the thinking process. ‘Successful businesses are
all alike, every unsuccessful business is unsuccessful in its own
way.’ This is a more inspiring way to look at quality than
any introduction to quality I have found in any book or quality
standard.
It
is human nature to look for single factor explanations of success
or failure. One organisation I have recently helped has a long history
of only seeing one major thing at a time going wrong and then focusing
all their resources on that one problem. They are so used to doing
this that they are ready for the next ‘magic bullet’
solution to be offered. Every time they fix one issue the next problem
rises up and another ‘magic bullet’ is put forward.
This company had never been able to see the next problem coming.
For
a complex entity such as a business, success actually involves avoiding
a multitude of possible causes of failure. By applying this ‘Anna
Karenina’ thinking, the quality standards become a list of
elements that must be addressed to prevent the business from becoming
unsuccessful. In this frame of mind it is possible to review the
issues that are important to your business and address them before
Murphy’s law takes control and all the things that can go
wrong, do go wrong, at the worst possible time.
I’m
Bruce Givney and this has been Business with Bruce. If there is
a topic you want featured in this segment please contact.
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We meet
thousands of people in our modern day lives. This is not how
the human race evolved though, thousands of years ago people
only interacted within their small group or tribe. Our brains
evolved to be able to cope with a small number of people and
not the modern requirement. Quite simply, we don’t have
enough channels in our brain to cope with the number of people
we have to deal with.
As a coping
mechanism, modern humans have learned a trick that we do so
easily we don’t even know we are doing it. When we first
meet someone we catalogue that person in our brain. To do
this we tag them with an attribute that is outstanding to
us. You have categories for all types of people; kind, mean,
attractive, ignorant, smart, funny, hard working and so on.
When you first meet someone and they are helpful you will
catalogue them as ‘helpful’. This causes an odd
phenomenon though when you see the person again and the circumstances
they are in have changed. When you see this same person arguing
violently with someone, what you see is this helpful person
forced to defend himself in an argument. What if the first
time you saw the person was in the argument, you might catalogue
them as aggressive. How will you see this same person now
if they help you; most likely you will see an aggressive person,
trying pathetically, to be helpful. It takes a long time to
change the category you first put the person in.
We also
perceive that other attributes are linked to this key attribute,
the friendly person will be thought to be helpful or the smart
person might be perceived as hardworking. The term ‘Fundamental
Attribution Error’ is used to describe the problems
of this human trait of cataloguing people by a perceived fixed
attribute. The whole thing becomes a problem when we have
to make a long-term decision about someone and we only really
have first impressions to work with. This could be at a job
interview where a person presents well but does this mean
they will work independently?
People
have the same issues when dealing with businesses. The customers’
perception of what attributes your business has is gained
from the first contact by advertising, a meeting with company
representatives or visiting your premises. The first impression
is very important; as it will take the customers a long time
to change the perceptions they gain when they catalogue your
business in this first contact. Problems can start when a
company believes that to advertise successfully you needed
to offer a bargain. The customers’ perception, from
the attributes advertised, is that they will find low priced
products. When customers respond to advertisements like this
and find that the advertised special has conditions attached
and that nothing else in the store is cheap, they become confused.
They soon work out that there are no bargains to be found
and walk out the door. It is hard to sell quality and value
to a customer when they have a perception of your company
as ‘cheap’ and they have linked other expected
attributes to this key attribute.
Every
business should devote time to ensuring the continuity of
image from advertising through to the sale. Staff need to
be resourced and trained to deal with the customers reactions
to the environment you have created with your advertising
and your store, it’s to late after the customer has
the wrong impression. If the customers expect cheap and all
they see when they come to do business is quality, they will
not buy unless you sell them ‘cheap’. Do you have
continuity in the messages you give the public about your
business or are you confusing your customers enough to send
them out the door?
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
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When working
with sales people to increase the number of successful lead
conversions I have found one of the most common issues is
very easy to fix. The problem of poor closing is often identified
as the problem faced by the team. Now, the sale close, that
is when you get the customer to sign up and buy the product,
is usually not where the problem really starts. It is the
point in the sales process when you realise that the sale
has failed, but from my experience I know that the sale is
usually lost long before the sales person asks the final question,
“Are you going to give it a try”.
I went
into a real estate agent looking to buy a house. I knew what
features the house had to have and, I was ready to buy. I
briefly told the agent my parameters and was expecting to
be offered a number of listings in the area to look at. This
however is not what happened. The agent asked me if I was
interested in buying acreage. I said that I had not considered
acreage, as I didn’t want to put the time into maintaining
it. He then proceeded to tell me all the virtues of owning
acreage. He kept on about how good acreage was and finished
his talk with the statement, “that’s why I like
selling acreage”. The next part of his sales technique
was to show me a well-presented folder with photos of some
of the acreage properties he had listed. The photos were not
standard size photos either; they were nice wide angle photos
so I could get the feel of the acreage. From there he proceed
to show me on a map where these properties were as he continued
to talk about some of the features that the properties had.
Some had creeks running through them but also had high ground
to build on. Others were complete with beautiful houses and
horse stables. It was all quite fascinating really. He then
hit me with the magic question, “Why don’t we
go and have a look at a couple, which ones do you like”.
Well, my answer was ‘no thanks’; nothing he had
shown me was to my liking. As I left, shaking my head I looked
in the display window and saw half a dozen houses that looked
like what I had in mind. They were all on small blocks of
land.
Not listening
is one of the most common faults I find in any negotiation.
Sales people that have been skilled up to know the features
of their product are sure they have the best product for their
customer, the issue is that they need to ask questions early
in the sales process to find out what the customers needs
are. The days of selling a customer an unsuitable product
are long gone. ‘The Tin Men’ was a good movie
but really, anyone still trying to sell that way has got no
chance in this modern age.
Ask some
questions to find out what the customers unmet needs are.
The trick is to always wait for an answer, the silence can
feel very awkward but it feels the same for the customer too,
they will answer. Once you understand what it is that your
customers want you will be able to use your product knowledge
to explain how the product benefits will fill the customers
need. And as for the sales close, just ask. You don’t
need any tricky ‘Tin Men’ sales closes if you
have matched your product benefits to meet customers needs.
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
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The way
you communicate with you staff can mean the difference between
having the business success that comes from a supportive team
or the dismal failure of an uncoordinated rabble. How many
times do you think about the words you use when you are talking
to your staff. When working with the same people day to day
some people have a tendency to fall into a pattern of speech
that is detrimental to their business. These patterns can
be very hard to detect when you are using them, or hearing
them everyday.
I am sure
we all can remember being at school and, in some subject you
had a teacher that you liked and, strangely enough, you received
excellent marks in that same subject. The work also seemed
very easy to do. Can you remember having a teacher that you
hated and, worse still, failed that subject miserably? Like
most things in this world, it is usually the little things
in the environment that make all the difference. If, as a
student, you get something right at the beginning of semester
you will be praised. People respond very well to praise and
they work much better. The work seems easy and soon they find
they are getting more praise. Things go well from there, the
student remembers the teacher as kind, because they used praise,
and the student gets good marks for the subject because they
have applied themself. This is a successful learning cycle.
What happens
if the student gets things wrong at the beginning of semester?
We would all hope that the teacher would spend some time to
get the student back on the right track. Then, when things
are going well the student should then be praised and the
success cycle has started. What if the teacher does not get
enough time to get the student on the right track? The student
does not get praised, even worse, as the semester goes on
the teacher becomes frustrated because the student cant get
it right, the teacher can see that the student is not applying
themselves and they blame the student. The reprimand for not
studying is the final straw for the student and it is then
hard to rescue the situation. The student now hates the teacher
and failure is the result.
When I
walk into a work place I hear the way things are said because,
as I am new in there, I am trying to learn as much as I can
in the shortest possible time. By taking the time to listen,
without getting involved, I have observed the relationships
between people in work places. I have seen staff members working
for their supervisor and also staff members that spend more
time under mining their supervisor than they do working.
Now, without
finding out all the details about the staff, and all the history,
one thing is always very obvious. The supervisors praise the
staff members that work well and reprimand the staff members
that undermine the management. The two cycles are operating
side by side in many workplaces, the success cycle and the
failure cycle. Businesses that have good induction processes
have more success cycles than failure cycles. By showing the
staff the correct procedures early, they get things right
at the beginning and the success cycle is started. Stopping
the reprimands and starting to praise can break the failure
cycle. A good policy is to look for something to praise your
staff members for everyday.
Do you
provide your staff with a functional induction? Do you praise
all of your staff? Have you stopped to listen to what you
have been saying?
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
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Offering
back up service for your products can be a powerful marketing
tool for your business. When buying a big-ticket item it is
reassuring to know that there is reliable back up service
available to help in case you have a problem. Providing back
up service can make the difference needed to secure the sale.
In the
past few of years I have had to send a few different products
back to the supplying companies for back up service. The products
that I am talking about have included cars, computers and
marine electrical equipment. One of the marine companies let
me down to such a degree that I ended up fixing the product
myself. Apart from some bad service situations like this,
the norm for many modern businesses is to provide good back
up service when you experience a problem however, many of
these businesses still have other issues to come to terms
with. One company I was dealing with decided that their best
option was to replace all of the electrical components with
the ones from the latest model unit, they never told me what
they had done and, well, all the controls were different.
It took ages to work out how to make all the features work.
It was only when talking to a representative from the company
and I explained what this device was doing that he then realized
that they had given me a full model upgrade. He supplied the
book on how to work the later model unit I was able to use
the equipment again. It is hard to complain about getting
a free model upgrade except for when you don’t even
know that you got it and you cant use it because the business
didn’t communicate how to make it work. They had done
a very good job of fixing the product but they had a real
aversion to communication. I like to know what has been fixed
and with many businesses, I am only able to talk to a sales
person who does not even know the technical jargon to communicate
what has been repaired.
Sure,
having back up service makes a difference when we are making
a decision to purchase but why stop the benefits to your company
there. Providing a full report of what has been fixed may
go unread or it might simply be beyond the technical expertise
of most end uses but, have a look at who the people are that
will read, and understand such a report. The term maven is
a Yiddish word that, roughly translated means, “know
it all”. Mavens are key players in the modern marketing
world. When buying a big-ticket item like a car, or expensive
electrical equipment the chances are, you will ask for independent
advice from a friend or associate that you believe knows something
about the type of product you are going to purchase. When
you tell them what you are looking to buy they will, as a
minimum tell you, which are the good brands to buy, and which
brands to stay away from. Often they will tell you who are
the reputable dealers in town. Some mavens will even go with
you to help make the purchase.
Well,
when selling big-ticket items, it is good to incorporate techniques
that promote word of mouth advertising. Successful word of
mouth advertising involves reaching the mavens so they will
lead the customers that are looking for quality, to your establishment
and to the products being promoted. I have seen many new customers
walk in with the same advisor, a maven, that had shown other
customers what to buy only weeks before. When customers who
are not experts ask for a specific product I know that someone,
some maven, has advised them what to buy.
Take the
time to feed the mavens; they are good for your business,
good for your customers and they are a valuable ally. Your
service department has loads of technical information to feed
to the mavens; it is only a case of setting up a system to
start the process.
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
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Most companies
keep records of the jobs they do, but the thing that always
surprises me is that many of these businesses don’t
use the gathered information to their advantage. The usual
problem is that the information is hard to locate and when
it is located it is in a format that is simply too hard to
read.
I don’t
get a lot of time to watch the cricket these days but the
networks broadcasting the game have come up with some very
natty ways of showing what the state of play is. With a quick
look I can see the current run rate, the required run rate
and what to expect from the batsmen at the crease. They also
provide some excellent statistics so you have a good idea
about the strengths of a particular bowler or fielder. In
a one-day game you can have a fair idea, after a few overs
into the second innings, if the game is going to be a walk
over or a close match. The use of graphs to compare the two
teams performance is very handy and, when a target has been
set you can soon see if the second team to bat is heading
for victory or hoping for rain. The teams also use these statistics
so they can make decisions about field placement and batting
order. As they see how the game is progressing they can make
informed decisions to affect the outcome of the game.
Cricket
is only a game but with all the statistics you can see at
a glance just how the game is going. Many businesses don’t
find out how an entire month of trading has gone until the
books are balanced at the end of the month and it is far to
late to take action to capitalise on strengths and opportunities
or compensate for weaknesses and threats. Many businesses
can tell you which months are busy and which are expected
to be quiet. Many of these same businesses can not tell what
sales areas are expected to be the strongest in the good months
or what problems they are likely to be up against, that will
effected profits, in the poor months.
As I have
said, cricket is only a game, it will not affect the spectators’
lives a lot if we win or loose a match. Business on the other
hand has some required outcomes that need to be achieved or
there will be more people lining up at social security.
So, how
is it that the TV broadcasters able to supply user-friendly
statistics and graphs to show the state of play?
Simple!
It is because they have realised that it is their job to be
able to supply the information in a way that everyone can
understand. When all the viewers can follow the game with
a full understanding of events they can make their own judgements
and decisions about the game and they feel involved. Now I
ask you, is this what you would like at your business? To
have all of your staff knowing how the company is trading
and becoming involved and applying themselves to the best
of their ability. Making decisions on the floor to stop problems
before they happen. Being prepared for what is coming because
they can now see, at a glance, the history of previous, similar
jobs. The list of advantages is huge but the problem is not
that business managers don’t see the advantages. The
problem is that usually, nobody has started the process of
making the information easily available. The process is something
that is prudent and takes time before you get the rewards.
You only get back what you feed in and it takes extra effort
to feed it in. Whose job is it at your business to get all
the staff working, as best as they can, for your business?
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
me.
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It is
a sad time when a business is suffering financially and the
owner or manager can only see only one way to save the company.
I’m talking about putting off staff. Cutting costs is
something that may well save a company in the short term but,
more times than not, it is the start of the downward spiral.
Without your staff, especially the experienced people, it
is very hard to regrow your business to a point were it is
truly profitable.
Think
of your business as being like a kitchen sink. At the top
you have the tap that runs water in. At the bottom you have
the drain hole that lets water out. The water running in from
the tap represents the sales and money coming in. The water
running out through the drain hole represents your costs.
If the tap is turned on far enough, and the drain hole is
not too big you will end up with the water level slowly rising
in the sink. This water that builds up in the sink represents
your business profit.
Are you
with me so far?
Now, using
this simple analogy it is easy to see the probable outcomes
of the decisions you make as a manager. When the tap is turned
on but the sink is dead empty as all the water just runs straight
down the plug hole as fast as it enters, you probably have
no choice but to put the plug in to save costs immediately.
With most businesses the biggest ongoing cost is staffing,
so when your sink constantly runs dry you don’t have
much choice. Without ongoing profits to spend on extra resources
to increase the sales coming in, the choices have been taken
away from you. You either cut costs or borrow money; both
of these options are not good signs for the future of your
business.
The thing
is, as a manager, you should keep a close eye on the water
level in you sink. If you see that week after week the level
of water is slowly dropping you still have several choices
open to you if you act while there is still enough water left
in the sink. You can use the profits available to resource
a course of action to change the current situation and get
the water level rising again.
You can
take action in two directions. Firstly, you can turn the tap
on more. This might involve gaining new customers by advertising
and promotion, introducing telemarketing or contacting existing
customers and offering them new product lines or any number
of other techniques to boost sales. But remember, if you are
using more resources to increase sales then your cost are
increasing, this is making the drain hole bigger. You have
to plan to turn the tap on far enough to have more water flowing
in than the extra amount you are letting out through the drain
hole in added sales expenses. This brings us to the second
course of action, reducing the size of the drain hole. While
you still have water in your sink you don’t need to
start down sizing, look at every cost you have and see if
there is a more cost effective way of doing the job or if
the are suppliers offering better deals. The process of reviewing
all cost should occur frequently, but many businesses don’t
even review their major ongoing cost until the water level
in the sink is too low.
Do you
have a system to ensure regular reviews are conducted to see
what is going down your business sink? Can you hear a drip,
drip, dripping sound at your business?
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
me.
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A correct
diagnosis of the cause of problems is crucial to successful
business operations. Because thinking time is hard to charge
out, many business people have become conditioned to the idea
that immediate action is more important than spending sufficient
time to think things through. This can lead to a knee jerk
reaction when trying to fix problems with insufficient time
devoted to finding the true cause of the problem.
There
are many similarities between diagnosing mechanical problems
and diagnosing business problems. In both fields, if a logical
sequence is followed with a full understanding of all the
systems, the cause of the problem can be traced and fixed
with minimal costs and minimal disruption. But, I am sure
we have all seen what can happen when you take your car to
a mechanic and the diagnosis is wrong. A common call from
the poor mechanic is that the fault is the “Black Box”.
This mysterious component is usually easy to replace and is
often the first thing on the list of parts to change when
things are going wrong and the mechanic cannot find any other
obvious cause of the problem. The point is that the customer
will probably be charged for the “Black Box” even
when it was not the problem. When the so called “Black
Box” was not the cause of the problem the mechanic has
to keep looking for the real cause and in doing so may replace
several other components.
In business
I have found that many companies have their own version of
the “Black Box”; this can be a computer, supplier,
or maybe a staff member. When the poor diagnosis is made the
computer, supplier or staff member is removed and replaced.
The issue is that when the diagnosis is wrong, the company
endures costs that it didn’t need to incur. In the case
where it is a staff member that gets the blame the costs are
huge and the remaining staff members become uneasy when they
see that it was not the person’s fault and how easily
they were blamed. And all this time the original problem continues
to cost the company money until the real cause is found and
fixed.
So what
is the best way to avoid poor problem diagnoses?
Car manufacturers
document and flow chart all the systems in the cars they produce
so the mechanic has a way to check what should be happening
against what is happening with your car so they can pin point
the fault. If you don’t have all your business processes
documented and flowcharted it will be too late when things
start to go wrong. It may seem hard to justify the time and
cost to document your business processes but the costs of
not being able to accurately diagnose your problems are much
higher. When things go wrong and you are not prepared there
will be little time for thinking. You don’t want to
get caught in the trap of reacting without enough thought
and blaming something or someone for something that they could
not possibly cause.
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
me.
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Technology
has been driving change for many years and this has caused
a shift in the way we need to look at how to make business
improvements.
Henry
Ford founded his empire by improving the efficiency of the
manufacturing processes. The ability to improve technology
to provide goods at an affordable cost has been the foundation
stone of most successful corporations over the last century.
The problem with trying to continue this trend is that the
biggest improvements have already been made. Goods are being
manufactured so cost effectively today that it is hard to
make a noticeable improvement. If your business has implemented
up to date technology improvements then the chances of further
increasing your bottom line by trying to improve production
efficiency are minimal. The big improvements in the last decades
have come from improving the effectiveness of delivering customer
satisfaction.
Many companies
still look for technological improvements as the answer because,
among other reasons, it appears obvious, it is very tangible.
The thinking works along these lines; if a new machine cuts
down process time then it must be making an improvement to
both the efficiency and effectiveness of customer satisfaction.
Here is where this thinking fails. A new machine may cut a
few seconds or even minutes off the production time. However,
we have all experienced ordering a customised product and
being told that it will take two weeks, or maybe six weeks
before we can collect our product. If the fancy new machine
reduces one stage of production by five minutes we will still
be waiting the same two weeks to pick up our product. Most
of the so-called production time is taken up with waiting
between processes. Your product is put through the first machine
and it only takes a few seconds, and then it will wait in
a que for a day or two before it is put through the second
machine and so on. The time taken in the machines might be
5 or 10 minutes in total but it still takes two weeks to get
your product. The standard was about 6 week only a few decades
ago; this large improvement was the result of technology.
Today, you could half the machine time and your customers
will get no significant benefit. But, if you half the waiting
time your customers will be very impressed.
Services
are the same, when I travel by aeroplane I spend more time
waiting in the terminal than I do in the air. If the airline
companies used faster planes I might reach my destination
five or ten minutes earlier. But what if the airline company
instigated a secure coach service from the city to the airport,
where your bags are checked in, security checks are carried
out and your boarding pass issued all on the coach? If I could
step off the coach and straight onto the waiting plane my
overall travel time would be cut down by nearly an hour. As
things work at the moment, my travel time starts when I catch
a taxi in the city to the airport. This taxi time would become
productive and the real time saved would make the airline
with this service very attractive to business people and others.
SO!
Change
your business improvement focus from process efficiency to
effective customer satisfaction; the things that give your
customers what they want. The big bonus for your business
is that most of these changes are relatively inexpensive to
implement and your customers will gratefully appreciate the
improvements in service.
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
me.
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Many times
I have seen people tamper with a business only to end up doing
more harm than good. Tampering is not restricted to owners
or manages; I have seen the results of consultants recommending
changes that have ended up costing the business significant
profits and customers.
So, what
is tampering?
To help
understand I will recount an event from when I was involved
in the automotive field.
A phone
call was received at the workshop one day from a fellow who
said that his V8 engine was making a knocking noise. It was
suggested that he bring it to the workshop so we could try
to find out what the noise was. About 20 minutes later the
fellow was at the workshop. I was not ready for what happened
next. The man presented two large buckets full of engine parts
and then added that the rest of the engine was just outside
the door. His next words were pure gold; “So, what do
you think the noise is?” Well, the mechanics had expected
to walk out to a car, start up the engine and listen to the
noise before commencing a logical diagnostic procedure; a
process to gather evidence to establish the precise cause
of the knocking noise. One of the mechanics working there
was watching the proceedings and could see the funny side
of the situation. He walked over and gave one bucket a shake
and said, “Did the noise sound like that”. He
then picked up the other bucket and gave it a shake and said,
“Or did it sound more like that.” The customer
did not get the Joke.
In an
attempt to help this poor fellow they asked him questions
about the noise to see if they could get enough clues so they
could identify what had gone wrong in the engine. They asked
if the noise was at crankshaft speed or camshaft speed, he
stared blankly back. The man still did not know what was going
on.
He did
not understand that without the engine running a full diagnosis
could not be performed, the job of fixing the noise had changed
from a potential minor repair to a full overhaul. This fellow
had tampered with everything. If he had a full understanding
of all the systems in the engine and what they do, he would
have diagnosed the problem before he put a spanner anywhere
near the engine.
Tampering
is simply interfering with things that you don’t fully
understand. Once you have started making changes, it can be
very difficult to diagnose what the real problem was.
When change
is needed in a business, a combination of people with specialist
skills to support the people that run the business day-to-day
provides the best results. Being supported by an experienced
business coach and learning more about your own business not
only gives the best immediate results but also provides long
term payback through self education.
I’m
Bruce Givney and this has been Business with Bruce. If there
is a topic you want featured in this segment please contact
me.
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There are times
when I see some obvious things going totally wrong at local business
outlets. Without getting into areas like promotional strategies
or control systems there are often some very simple, fundamental,
common sense ways to make a huge improvement to many businesses,
big and small.
People will
respond to the environment you put them in so take some time to
think about the environment your customers and staff are in. In
your home you keep the environment clean and reasonably organised.
I don’t know if you have ever thought about the way people
organise a kitchen but it is the same in most houses. Look in the
top draw and you will find the cutlery, in the draw below that you
will find the cooking utensils, the cleaning gear is in the cupboard
under the sink and so on. It is just logical common sense; every
one can find the most used things they look for in almost any kitchen.
There are other things that we like to have done around the home
in a certain way. We like our homes to look good from the outside,
it creates a good first impression and it makes us feel good to
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