On Internet Business

UK businesses face employment and finance hurdles

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

This month has revealed the CBI’s newest analysis of the UK labour market, which claims to expose long-established structural problems which can inhibit business success and won’t be solved simply by overcoming the recession. The current unemployment figures 2.46 million will continue to rise through the year, according to the CBI, with a high of 2.6 million. The unemployment rate will then begin to fall, slowly through 2012. The bad news is that within that national position there are regions of long-term, entrenched unemployment and an overall skills shortage in certain key business skills.

The report suggests that these divisions in skill and supply, or from the social perspective, in quality and quantity of opportunity, will actually deepen as the recession fades. A key factor for those planning reform and growth is that the businesses sectors with greatest employment growth between 2004 and 2007 were also the ones with the steepest employment decline after 2008, which suggests a boom and bust phenomenon that could happen again unless some form of structural improvement is made.

NESTA sees trouble ahead

And in March a National Endowment for Science, Technology and the Arts (NESTA) report found that high-growth businesses in the UK had been more resilient than their slower-growing counterparts since 2008, meaning they have been a key driver of recovery. High-growth businesses are defined as those designed to achieve high growth and rapid profit increases (usually around 50% growth per annum) often meeting these targets with innovative product development and promotional strategies and with a pool of investors providing working capital and active oversight.

By this definition a mere 6% of UK businesses are classed as high-growth, but they created over half of all new jobs since 2007 by outperforming other forms of business enterprise, by having robust systems and products, and—through the injection of investor capital—avoiding the cash-flow problems that lead slower businesses into insolvency.  However, the drop in risk capital funding in the UK since 2008 is starting to hit these businesses too, because traditional lending structures view them as higher credit risks, often because they haven’t been around long enough to have the kind of track record that commercial financing houses see as conferring stability.

Better education a solution

Both reports focus on the need to build a skilled and creative workforce to support business growth and on improving links between businesses and educators to meet the skills gaps that have been identified.

Hiring notice by srqpix

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Family Business – the future of SMEs?

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

PricewaterhouseCoopers have just published a report that suggests over 20% of family businesses in the SME category are expecting to have new owners in the next five years – but only 7% of them expect the business to pass from one family member to another. More than 1600 small businesses in 35 countries took part in the survey.

Family businesses fail to plan and plan to fail

Future-shock can be a real issue for SMEs and demonstrates a lack of strategic planning. But by breaking down the terms we use when describing an SME, there’s a chance for small businesses to lever more finance, plan for the future and even move from small to medium by redefining what ‘family’ is.

First the bad news: many SMEs still don’t understand, or plan for, their exposure to
Capital Gains and Inheritance tax. This can cause conflict at the crux point of deciding the future direction of a small business, or add to pain and grief at a time when an SME loses its founder to death or illness. There’s also an inherent problem of managing the balance between family and firm when employing relatives in a small enterprise because if they don’t perform well, it’s difficult (but not impossible) to work within the formal business structures when evaluating their performance and working with them to improve their output.

Family firms can outperform others

On the other hand there are plus points. You can get great people to work for you, often for less or no money, because family members are willing to support and invest in a family firm – and if you bring your home-grown talent with you, you’ve got less competition out there!

On the other hand, you need to work harder to get finance because funders look much more closely at family firms, seeking exactly the kind of weakness in future planning, strategy and talent development mentioned above. One way to address this is to take your business to an international level as soon as possible – showing that you can work across national boundaries is a great way to demonstrate that you aren’t a ‘cottage industry’.

Redefine family to boost business success

Think about how you define family – what about offering a loyalty bonus to staff who’ve been with you for a period of time? If you leverage them into an equity share, involve them in ‘family’ events, make sure their birthdays and family events are as important to the company as your own: you’ve started to build an extended family where intimate confidence in and knowledge of the lives of your team can extend past blood relationships to build the kind of partnership that ensure you keep your best people and establish a small empire through talent, not kinship. That’s attractive to any funder and if those ‘family’ members decide to leave, and you can support them in establishing a subsidiary or complementary organisation, you’re on your way to hot-housing a cluster of business excellence that supports the growth of your SME without cutting into your market share.

Market stall child by Ivan Mlinaric

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Mission Creep – a business problem?

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Coined in 1993, during the UN Peacekeeping Mission as part of the international response to the Somali civil war, the term mission creep has entered daily life. Bosnia, Afghanistan, Iraq, Libya – all demonstrate examples of mission creep, which is often defined as the expansion of a project or mission beyond its original goals, often after initial successes and leading success breeding more ambitious activity until a final, often catastrophic, failure occurs.

And that could be a definition of many businesses that fail, or wobble on the edge of failure, right now. It’s easy to slide into unexpected areas of operation because they are popular with customers or even with staff, and popularity can be a driver of growth: but it shouldn’t be the only one.

Many non-profit organisations have learned to control ‘mission creep’ with mission statements, and for new businesses, or older ones that are struggling to grasp and commit to their key activities, a mission statement can be the secret weapon that keeps them on target.

Simply put, a mission statement is applied when there is a doubt test. When you wonder whether to zoom off in a new or parallel direction because a client suggests it or a competitor leaves a gap in the market, comparing the new idea to the mission statement keeps on course.

What is a business mission statement?

A mission statement is a focused, attainable, simple statement. Being the biggest Murg provider in the world is a fantastic ambition and it sounds simple but it’s not focused, and may not be attainable. Being one of the top ten Murg providers in Europe, with a skilled workforce and well-funded research programme to provide new Murg add-ons for future customers is focused, attainable and simple.

How to write a mission statement

Think of it like a laser. It’s a narrowly focused weapon that cuts through the rubbish to reveal the core of things. To get it right, make sure it:

1.    Solves unmet needs
2.    Leverages key skills within your organisation
3.    Energises and inspires your employees
4.    Anticipates change
5.    Is memorable.

Somali Mission courtesy of expertinfantry

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Making customer service work

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Social Media

A recent article in Inc suggests an unusual approach for any business that has an intensive service profile: hotel and retail and personal services, travel and holiday industries and every form of catering to name but a few. The problem it seeks to address is the issue that if you’re giving great customer experiences to those in front of you, customers further back in the queue may be losing patience and eventually, you lose their business.

So what’s the answer? According to a study entitled ‘The Quality-Speed Conundrum: Trade-offs in Customer-Intensive Services’, published in Management Science, it’s simply to find the right balance between service and speed, and while that includes a complex algorithm or two, the bottom line is that you end up deciding how many people you can serve superlatively and limiting your service to that number.

This means that you set the price for the customer number that’s optimum and stick to that price/number ratio without reducing service by adding more customers. But how many of us can honestly do that?

Alternative approaches include outsourcing or crowd-sourcing non-customer facing processes so that you can concentrate on driving a customer service ethic from the top.

This means establishing an expectation understanding with your customers – where possible before they actually become customers – and setting up systems that check you meet those expectations more or less all the time.

•    Begin by deciding what you can do, what you can’t do, and what you do that nobody else can do. Should existing customers be addressed by name whenever they call? Do you want a random audit of customer satisfaction every month? What about mystery shopping? How will you handle complaints and suggestions for improvements? What will you do to reward loyalty?
•    Make sure your staff, but more importantly, your customers, know how and when they can access this customer service. There’s no point offering superlative service if it doesn’t work for the times when your customers can access it.
•    Ensure consistency in response – don’t agree you will call customers back by phone within 24 hours but allow a week to pass before responding to emails.
•    Be honest about failure – things will go wrong, and telling your customers (where possible, in advance) that you know there’s a problem, and what you’re doing to rectify it, goes a long way to turning a negative customer experience into a good one. If there’s a postal strike planned, make sure your website, facebook page, twitter feed and phone staff all know the details of your alternative delivery system. If bad weather or some other uncontrollable force knocks out your service team, be ready with a fall-back system like an outsourcing centre, and be clear to your regular customers that this is a fall-back and they may not get the consistent familiar service they expect from your organisation.
•    Offer alternatives – if you can’t do what people want, suggest somebody else who can. It sounds risky but it’s better to hand over a relatively happy customer than lose a disgruntled one: often they come back if you’ve done the decent thing.

Poor customer service image courtesy of Matthew Wilkes

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Networking – what it give the entrepreneur

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Every business leader knows they need to network, even if they don’t do it. But what are the personal benefits to an entrepreneur from networking at events and gatherings, and why should he or she focus on this aspect of business life.

Reinvigoration

Being a self-starter is great, but sometimes an injection of outside influence can really boost a business, and entrepreneurs get tired and develop tunnel vision, just like anybody else. You don’t always need to hire a guru or bring in a consultant to reinvigorate your business – you can just soak up the atmosphere, ideas and experience of other entrepreneurs and take all their energy, enthusiasm and top tips back to your team.

Simplification

At conferences and seminars you get business thinking distilled down to nuggets. Not all nuggets fit all businesses, but you can usually find one or two simple ideas that would work for your business and that have somehow passed you by until now. Because the ideas are presented simply and swiftly, they lock into receptive business brains easily.

Identification

When somebody else tells you that your customer service is slipping you might get defensive, but when you hear somebody else talking about how their customer service slipped, and what they did to put it back, you tend to get identification. Learning about other businesses and their learning curves can highlight areas where your own business is under-performing without seeming as threatening as being ‘told’ you have a problem.

Rebellion

Entrepreneurs nearly always got into business because they thought they could do better than the status quo but it’s easy to lose sight of that rebellious streak – meeting others like you can remind you that you’re a rebel, not a suit, and that your business is a crusade, not a day job.

Networking machine by Richard-G

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How negativity can lead to business success

Posted by Michael under Business Growth, customer service, Entrepreneur Resources, Leadership, Social Media

There used to be a deeply offensive joke that did the rounds in working men’s clubs accompanying a cartoon of a man in a smart suit with a speech balloon saying,  ‘The doctor says I’m impotent, so I’m going to dress impo’tent’. The addition of the missing letter gives the joke some sense: impotent or important?

One of the biggest stumbling blocks to new businesses is the way that issues come up and hit the executive team in the face. If there’s no team, just a solo entrepreneur, it’s his or her face that gets slapped with each new ‘important’ demand. A customer complaint needs handling with tact. A new contact has to be massaged into becoming a client or supplier. A competitor moves into the company’s space, challenging market share (or withdraws from a joint arena, offering the opportunity for business expansion) and a decision has to be made. Something trending on Twitter or Facebook seems likely to bring attention to the company, but somebody has to oversee the engagement process …

Some of these are important, some make you impotent. Focusing on the wrong ones is like stepping into a hamster wheel: the faster you move the faster you have to move, but you’re getting nowhere.

Negate the problem

Negativity means refusing to put time and energy into non-productive areas. Each business is different, and every set of priorities will vary, depending on the maturity of the business and the management style and ethos of the decision-makers, but decisions still need to be made. A maturing business be ready to say ‘No, our Founder or CEO isn’t going to deal with customer complaints, but we are going to invest in a customer service workshop to ensure all managers are ready to resolve complaints effectively’ while a new business might decide the boss’s time is best spent on face-to-face customer relations, so his or her energy will need to be removed entirely from social media. The key thing is that the decisions are made because one of the characteristics of a business that outgrows its success is ‘Founder Failure’ – where the entrepreneur’s inability to be equally focused on every aspect of the organisation leads to decline in the areas where he or she is trying, and failing, to maintain personal input.

It’s difficult for determined, committed, smart people to accept that some things are just distractions from their primary role. It’s tough to give up the personal touch, but business evolution requires certain kinds of negativity. Hiring a speech-writer allows a CEO to focus on business-building: a few personal touches added to a professionally written script are usually all that’s needed. Professional ‘ghosts’ manage social media for small companies, engaging with the public and transferring genuine complaints or concerns to the management team – it saves hours of trawling through tweets and Facebook comments and still gives the organisation a personal face.

Let go of the past

How often do you really need to be up to date with finance? Daily, weekly, monthly? Scheduling a one-to-one meeting with your finance manager (or just time to focus on your accounts for the really small business) is better than trying to stay on top of the money every minute of the business day. If you can’t relinquish that level of control you are building a bottleneck into business growth.

Did you start out as a techie with people skills and are you still trying to meddle with the techie side of business? If you’re the boss, it’s your job to delegate while remaining in touch with developments: trying to ‘do’ rather than delegate is one of the main reasons that new businesses don’t grow. Use your background to hire the best, not to be the best, and keep your energy for what the best techs can’t always do: building relationships, spotting opportunities and planning strategies.

Business to do wall courtesy of juhansonin

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Developing and implementing business strategy

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

Following on from the last post, a business needs to have a strategy upon which management styles and decision processes are based, or there’s not a lot of point having a business. Amazingly though, a certain percentage of people begin their business careers with a rough idea what they want to achieve and then adjust their behaviour, investment and decisions as they go along. They may well have written a business plan but the day to day process of ‘running’ a business takes over and they lose sight of the need to work to it, or adjust it according to outside factors.

But strategy is both simple and vital. One of the easiest ways to think about strategy is to work out what you can do differently to your competitors and then work back from that to what you need to do to achieve that difference. This is simply a route to defining the ways you can achieve competitive advantage.

Defining business strategy

Competitive advantage isn’t something the average entrepreneur can define alone – it requires a deep understanding of what current and potential customers want and will pay for.

It also necessitates a broad overview of the market to allow your company to decide where to begin: there may be markets you need to develop, customers you need to win over from rivals, products you need to refine and others you need to abandon – all these are strategic decisions that can only be made when both breadth and depth inform the choices that are made.

Using simple tools like SWOT analysis or hiring a facilitator to help your executive team brainstorm can add the next level of value to strategy by bringing some blue sky thinking to the process, but it’s important not to get into scenario building until you have facts to put under your future projections or it’s easy to end up with unimplementable strategies.

Implementing business strategy

There’s not a lot of point having a strategy unless it informs daily business decisions at all levels of the company. Many people use the SMART toolkit to ensure that strategic directions can be executed effectively and having proper adjustment mechanisms such as customer feedback, internal analysis and training and development structures that support the strategic direction of the business.  Clarity about how these internal systems work is important but even more so is the ability to regularly assess progress towards the strategic aim to adjust the strategy if outside forces impact it.

Battleship strategy image courtesy of john-morgan

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Management style and decision-making for business success

Posted by Michael under Business Growth, Entrepreneur Resources, Leadership

The business world is changing fast, and management styles have to keep up or they, and the businesses they are being used in, die.

One of the biggest failure areas  in business is that people think their management style and their decision-making process are the same thing, but they’re not. It’s typical of paternalistic managers (those who treat their staff like a family of which they are the stern but loving parent) that they are also indecisive. Why? Because the paternalistic personality also tends to worry about ‘favouring’ one child over another, which in business equates to giving too much credence and resources to one department or development at the cost of another. This can lead to paralysis in decision-making or procrastination until more evidence is available and that’s nothing like the usually expected decision model of strong unswayable leadership from a benevolent but often old-fashioned decision-maker.

Another management style that often has a different decision-making model is laissez-faire, which is the hands-off approach used in many creative industries – but it’s increasingly common for laissez-faire to go along with autocratic decision-making. Sir Alan Sugar’s style in The Apprentice, is a textbook example: tasks are allocated and then teams are left to get on with it, but his decision-making about the outcomes of those tasks is totally dictatorial with no right of appeal and very little cognizance of the input of others.

Defining styles in a crisis

There are loads of books, consultants and other strategies you can use to define your management style and your decision-making process but the definition isn’t useful unless you have some reason to change or hone your management skills. When a company as a whole is starting to slip, it’s common to focus outwards: more sales, better returns, quicker turnarounds, not inwards on management style, but this can lead to the disengagement of staff who become less interested in the company’s success and more interested in preserving what they have (seniority, resources) for as long as possible.

So what’s the answer?

Looking at participation is crucial. You don’t have to change a paternal or autocratic decision-making process (if it works) as long as the management style keeps employees engaged (which means involved, not happy – staff in paternalistic organisations are often happy right up to the moment they’re made redundant!) but you do have to ensure that the decisions reflect management priorities and that both are aligned to wider targets such as viability, increasing market share and getting and retaining the best team members.

Change will only come when two things happen – there’s a recognition at all levels of the need to move to more effective decision-making and when there’s an agreement on both short and long term changes. Short term changes are necessary to show employees that top management is ready to move forward but long term changes are vital to drive business success and alter culture. Short termism can be purely cosmetic but for managers who are autocratic is often much more difficult to accept as it requires surface changes to be evident before their objective self-awareness has adjusted to the need to do something differently.

What helps change management style and decision-making?

Clarity about the past, alignment with the present need and focus on the necessary changes, step by step are the keys to creating a new culture in which changes in the individual and alterations to group structure can both happen.

Team-building whiteboard courtesy of Robert Higgins

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Recession, Business and Thinking

Posted by Michael under Business Growth, Leadership

The deep recession that has been choking growth in many countries has been both swift and unpredictable in nature. Is there any way of planning for the unplannable? Yes, says Harvard Business Review, amongst others.

There’s plenty of uncertainty around, but the challenges aren’t so much about predictability as about thinking. If businesses get into the habit of being reactive and fighting fires, they lose the priceless asset of strategic assessment of the business world and their place in it.

As an example, when businesses experience a blip in good times, they often just accommodate it – a loss in performance or sales could just be viewed as something to ‘get over’. But when recession has taken a business to its leanest, there’s rarely any padding to accommodate a blip, and that can tip an enterprise, especially an SME into panic reactions.

When demand changes

Recession can cause a drop in demand, as the retail sales index has demonstrated this week. Panic thinking could blind a business to its opportunities, such as the chance to acquire smaller rivals who are struggling even more or the scope offered by looking at alternative markets into which to expand.

Price plunges

Dizzying price drops have been a feature of the current recession, as have soaring price escalations, especially around petroleum based products and raw materials.  Businesses need to make time to observe their purchasing costs, the downtime between purchase and resale and whether it can be reduced, and areas of inefficiency in processing product or service which could be improved. It’s said that Dell computers had to halve its prices in the USA after 9/11 but still managed to make a little profit … time spent ensuring that competition in price is backed by strong processes can make a small profit into the margin of safety that saves a business.

Employee Focus

Companies need to take care of their employees in crisis times, because stress can damage individuals and bottom lines. Loyalty doesn’t just pay dividends, it can be valuable when you have to shed staff, as those who’ve been treated well are less likely to take hostile positions or organise protests. But the focus needs to be carefully balanced – too little attention can lead to an organisation losing its top talent and retaining the more mundane members of the workforce, while too much attention creates division and empire building. While strategy focuses on employees, the employees themselves should be focused on clients, otherwise a business becomes navel-gazing not outward-looking.

Chess courtesy of muffet

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Why is sales such a dirty word in the UK?

Posted by Michael under Business Growth, Leadership

A recent thread in the IoD forum raised the question of ‘sales’ which is often a word that causes British businesses to shuffle their feet. Why is ‘sales’ a dirty word in the UK, when it’s not in other parts of the world, and what can we do to address the problem?

First, the historical perspective – the UK has not always been bad at selling its goods, or itself. The empire builders of the Victorian era had many faults but self-doubt was rarely one of them, and the UK in the Swinging Sixties, from London to Liverpool was an exporter of fashion, music and luxury goods as well as a powerhouse of technological innovation – so what’s changed?

What are the problems we experience?

A whole range of issues were raised during the discussion:

1.    ‘traditional British reserve’
2.    the fact the UK education system does not recognise sales as a skill set, teach it or support it with academic training or research
3.    the negative way that people in the UK respond to the word ‘sales,
4.    the low value given to sales training and problem solving selling which results in poor sales people giving inappropriate ‘hard sells’
5.    UK salespeople being one-dimensional and difficult to deal with, also that they are rewarded in the short term and differently to their colleagues so it’s in their interest to ‘sell and run’ to make targets because somebody else in the company has to deal with any shortfall in expectations or performance in the long term.
6.    The problem is seen by some as an urban myth – they find no problem generating leads and sales and think it’s just a story told by bad salespeople to excuse their performance

What can be done to correct these problems?

The solutions were commonsensical and innovative at the same time – it seems that many businesses are clear about what needs to happen, but government and academe aren’t necessarily listening.

•    More focus on lifetime relationships and solving problems, not hard sell and run
•    Teach salespeople to map the decision-making process so that the customer gets the right information in the right order at the right time to allow them to develop trust. It’s not the same process of every customer at every time and understanding it helps serve customer interests and business profits.
•    Look at other cultures – in America, if you have a good business proposition you don’t hesitate to reach out to new clients or new partners and you’ll generally be given a hearing if it seems you are offering something of value. By contrast many British businesses seem to rely on familiarity and loyalty rather than expansion.
•    Find ways to get sales on the UK curriculum at all levels, as a career, as a research topic and as a philosophy in business schools.

Happy/unhappy salesman courtesy of petesimon

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