One explanation for the saying 'an elephant never forgets' revolves around their early days in training (for shows and zoos); the trainer will leave a baby elephant tied to a small stake for a period of time, after which even when fully grown they will never try to escape, having learned early on that they cannot pull the stake out of the ground.
Children, on the other hand are highly selective in their memory and will cheerfully pull on the sweet cupboard door time and time again until they find it open. They will also question ad nausiem any decision of which they don't approve; what are the chances of this conversation?:
'Mum, can I have an ice cream?'
'no, you've just had one'
'Oh, OK, you're right, it will spoil my tea'
More likely it will drone on for a few minutes with about 50% chance of the mother caving in and buying an ice cream.
Even in later childhood/early adulthood we retain this ability to persevere - some 50% will 'learn' to smoke - it is a tough learning curve which will involve coughing, retching and possibly even vomiting, but most will persevere in order to be part of the smoking crew - the same applies to our early experiments with alcohol.
So why, then do most of us go on to become elephants and take on board every single barrier as a finishing point? Take a read through most salesmen's notes on calls and they will be littered with finite comments such as 'customer not interested, do not call'; 'no requirements'; or even 'very rude, do not do business with this person'.
When did we stop asking for the ice cream and become staked to the ground? In the vast majority of cases those comments relate to a moment in time, when a prospective customer was otherwise engaged, perhaps having a bad day, or simply not interested at that moment in time.
By creating this negativity the salesman (perhaps you or me!) has not only lost theirself a potential opportunity, but has put off other people from picking up on the opportunity.
Note to all of us: Remember the child - Even of no means no, it only means it today.
Tuesday 13 September 2011
Friday 9 September 2011
What is your time worth?
Some time ago there was a TV ad featuring BT and Gordon Ramsey (neither of which top my favourites list); which spelled out with fantastic accuracy the small-business dilemma. You might recall; it showed Gordon lying on the floor opening the back of his computer with a carving knife.
So, hands up - which small-business owners are guilty of doing something similar to this?
In the ad, there is a great compounding of errors which includes ruining an essential business tool (the carving knife) and ruining another essential business tool (the computer) as well as the absurdity of the kitchen running out of control whilst Gordon messes up the computer.
It's OTT, but it is also very real.
Most small-business owners, asked to put a value on their time, will come up with a reasonable figure - say £2 - 500 a day - yet most of us will happily spend half a day doing what a professional could do in an hour - without collateral risk.
To an extent this approach is encouraged in business literature; Duncan Bannatytne, for example states that the first thing he did was learn accounting 'to save paying for an accountant'. Thinking this through, why do you pay an accountant - there are basically 3 reasons:
1. As bookkeeper. So Duncan values his time less highly than the cost of a bookkeeper? Unless you genuinely enjoy pumping in figures whist Songs of Praise is on telly (and some people do), then this cannot constitute good use of time.
2. As auditor. This is not optional and has to be undertaken by an unrelated party so is not relevant.
3. As advisor/consultant. The results from this should be quantifiable, so there is a clear business rationale to employ or not employ the services of an accountant.
Additionally, amateur accounting, like opening a computer with a carving knife, can produce misleading - or just plain wrong - results, which in turn can lead to bad business decisions.
Don't get me wrong; it is an excellent idea for a business owner to understand accounts - they aren't just for Companies House and the Tax Man - management information (MI) is invaluable for business; learning accountancy will help you to understand and interpret the information which is provided.
But to save money on accountants - sorry worst reason ever.
So, hands up - which small-business owners are guilty of doing something similar to this?
In the ad, there is a great compounding of errors which includes ruining an essential business tool (the carving knife) and ruining another essential business tool (the computer) as well as the absurdity of the kitchen running out of control whilst Gordon messes up the computer.
It's OTT, but it is also very real.
Most small-business owners, asked to put a value on their time, will come up with a reasonable figure - say £2 - 500 a day - yet most of us will happily spend half a day doing what a professional could do in an hour - without collateral risk.
To an extent this approach is encouraged in business literature; Duncan Bannatytne, for example states that the first thing he did was learn accounting 'to save paying for an accountant'. Thinking this through, why do you pay an accountant - there are basically 3 reasons:
1. As bookkeeper. So Duncan values his time less highly than the cost of a bookkeeper? Unless you genuinely enjoy pumping in figures whist Songs of Praise is on telly (and some people do), then this cannot constitute good use of time.
2. As auditor. This is not optional and has to be undertaken by an unrelated party so is not relevant.
3. As advisor/consultant. The results from this should be quantifiable, so there is a clear business rationale to employ or not employ the services of an accountant.
Additionally, amateur accounting, like opening a computer with a carving knife, can produce misleading - or just plain wrong - results, which in turn can lead to bad business decisions.
Don't get me wrong; it is an excellent idea for a business owner to understand accounts - they aren't just for Companies House and the Tax Man - management information (MI) is invaluable for business; learning accountancy will help you to understand and interpret the information which is provided.
But to save money on accountants - sorry worst reason ever.
Wednesday 7 September 2011
Embarrassing moments
'In a customer-facing role, you will be presented with limitless opportunity to make a complete and utter fool of your self''
An early piece of advice from a sales training course way back in the early '80s. Having seen and taken a few of these opportunities, I would also add that for some unfathomable reason they always seem to occur in the same place meaning that, whilst most of your customers will view you with varying degrees of respect, a small handful will see you as at best incompetent and at worst a menace to society.
In my days of dealing with the motor trade the ultimate no-no was to drive through a showroom window (I have met a handful of people who actually did this); mindful of this caution, I put my own spin on things and actually walked through a plate-glass door (well, my knee was the only thing that actually went through). The noise and impact were spectacular - if not entirely conducive to good business relations.
When managing sales teams I used this information to try and coax out other embarrassing moments - partly for fun, partly to make people appreciate that they are not alone in looking foolish. Unfortunately only half of the people ever played the game, with the remainder split between dressing up a great result as an embarrassing act (the equivalent of listing being too determined as a weakness), or simply not acknowledging ever having embarrassed themselves; really? Never!? What a dull life...
An early piece of advice from a sales training course way back in the early '80s. Having seen and taken a few of these opportunities, I would also add that for some unfathomable reason they always seem to occur in the same place meaning that, whilst most of your customers will view you with varying degrees of respect, a small handful will see you as at best incompetent and at worst a menace to society.
In my days of dealing with the motor trade the ultimate no-no was to drive through a showroom window (I have met a handful of people who actually did this); mindful of this caution, I put my own spin on things and actually walked through a plate-glass door (well, my knee was the only thing that actually went through). The noise and impact were spectacular - if not entirely conducive to good business relations.
When managing sales teams I used this information to try and coax out other embarrassing moments - partly for fun, partly to make people appreciate that they are not alone in looking foolish. Unfortunately only half of the people ever played the game, with the remainder split between dressing up a great result as an embarrassing act (the equivalent of listing being too determined as a weakness), or simply not acknowledging ever having embarrassed themselves; really? Never!? What a dull life...
Friday 2 September 2011
The business plan - a business essential
OK, so again, far too big a topic for a light-hearted business ramble but of course, your business plan is effectively the centrepiece of your business so I am obliged to mention it.
In my thousand or so years in the finance business I have seen all sorts of business plans from ranging from true 'fag-packets' to several hundreds of glossy pages, neatly bound and , presumably costing several thousands of pounds to create. So, which do I prefer? Well, if pushed, I would probably err in favour of the fag packet on the basis that its creators probably know what they're doing.
The issues, of course are far bigger than that; it might be that 100 pages are actually necessary to present your case, or that your fag packet plan is intended for a major VC - who clearly won't be impressed; to an extent your plan does need to be geared to a specific audience,though I would not agree with the assertion that you need 2 plans, one for yourself and one for investors.
Primarily, you plan must be for yourself (inward facing) - and for this to work it must be realistic, achievable, sensibly ambitious and mindful of variables, risks and pitfalls.
Second; the plan is for investors, funders, clients (possibly), potential key staff etc (outward facing). For this to work it must be realistic, achievable, sensibly........ - you get my point. Despite what you may think, lenders and investors aren't stupid and they will question your assumptions far harder than you will. - which can of course provide useful input for you.
Incidentally, we used to play a little game with business plans called 'spot the fact' - in one 100+ page plan we identified just 3 quantifiable facts the remainder was just bullsh!t and pretty pictures (in another case I received a 2-page plan which, to this day, I've no idea what the business was supposed to do).
So here is my recipe for a simple, adaptable plan:
Executive summary: Think of it as your 3 minute pitch; a brief overview of what, who, where, why, how. (remember your audience - whoever they are - will have a shorter attention span than you - this is your chance to engage them).
Body of the plan: Puts more flesh on the bones but needn't go into excessive detail so, for example 'our Chief Executive has 15 years experience in petrochemicals and has licensed 2 applications' will probably suffice at this point. Similarly 'Year 2 we aim to achieve £3 million turnover and net profit of £50,000' the breakdown comes later.
My personal advice on headings is always to use those that make sense and are relevant to you; unfortunately I was once tripped up on this by a certain bank, who insisted that every section of the plan was completed. Very silly indeed...
Appendices: This is the section where you can adapt and customise your content to your target audience; for example if you are pitching your new paint technology to Ford, it might well be appropriate to include a 100-page technical overview, whereas if you are pitching for bank funding, a letter from Ford expressing interest will be more appropriate.
Some appendix staples are cashflow/p & l projections, director/key person CVs, balance sheets, and SWOT analysis.
SWOT analysis: By far the most abused yet potentially valuable part of your plan! In the vast majority of cases, we see lots of strengths and opportunities, with a few threats and weaknesses, which are shrugged off. The bad news is that your business model can fall over and if you haven't found the fall-over point, you haven't tested it sufficiently. The good news is that even Microsoft's business can fall over - but it seems OK at the moment. To put that into context, every new car model is tested to destruction - this testing makes the product better, not worse.
So, in a nutshell:
If you want your plan to be read, it has to be readable.
Bullshit might baffle brains, but a baffled brain is unlikely to buy.
You can target your plan without re-writing it.
If your plan is infallible, it is definitely wrong.
In my thousand or so years in the finance business I have seen all sorts of business plans from ranging from true 'fag-packets' to several hundreds of glossy pages, neatly bound and , presumably costing several thousands of pounds to create. So, which do I prefer? Well, if pushed, I would probably err in favour of the fag packet on the basis that its creators probably know what they're doing.
The issues, of course are far bigger than that; it might be that 100 pages are actually necessary to present your case, or that your fag packet plan is intended for a major VC - who clearly won't be impressed; to an extent your plan does need to be geared to a specific audience,though I would not agree with the assertion that you need 2 plans, one for yourself and one for investors.
Primarily, you plan must be for yourself (inward facing) - and for this to work it must be realistic, achievable, sensibly ambitious and mindful of variables, risks and pitfalls.
Second; the plan is for investors, funders, clients (possibly), potential key staff etc (outward facing). For this to work it must be realistic, achievable, sensibly........ - you get my point. Despite what you may think, lenders and investors aren't stupid and they will question your assumptions far harder than you will. - which can of course provide useful input for you.
Incidentally, we used to play a little game with business plans called 'spot the fact' - in one 100+ page plan we identified just 3 quantifiable facts the remainder was just bullsh!t and pretty pictures (in another case I received a 2-page plan which, to this day, I've no idea what the business was supposed to do).
So here is my recipe for a simple, adaptable plan:
Executive summary: Think of it as your 3 minute pitch; a brief overview of what, who, where, why, how. (remember your audience - whoever they are - will have a shorter attention span than you - this is your chance to engage them).
Body of the plan: Puts more flesh on the bones but needn't go into excessive detail so, for example 'our Chief Executive has 15 years experience in petrochemicals and has licensed 2 applications' will probably suffice at this point. Similarly 'Year 2 we aim to achieve £3 million turnover and net profit of £50,000' the breakdown comes later.
My personal advice on headings is always to use those that make sense and are relevant to you; unfortunately I was once tripped up on this by a certain bank, who insisted that every section of the plan was completed. Very silly indeed...
Appendices: This is the section where you can adapt and customise your content to your target audience; for example if you are pitching your new paint technology to Ford, it might well be appropriate to include a 100-page technical overview, whereas if you are pitching for bank funding, a letter from Ford expressing interest will be more appropriate.
Some appendix staples are cashflow/p & l projections, director/key person CVs, balance sheets, and SWOT analysis.
SWOT analysis: By far the most abused yet potentially valuable part of your plan! In the vast majority of cases, we see lots of strengths and opportunities, with a few threats and weaknesses, which are shrugged off. The bad news is that your business model can fall over and if you haven't found the fall-over point, you haven't tested it sufficiently. The good news is that even Microsoft's business can fall over - but it seems OK at the moment. To put that into context, every new car model is tested to destruction - this testing makes the product better, not worse.
So, in a nutshell:
If you want your plan to be read, it has to be readable.
Bullshit might baffle brains, but a baffled brain is unlikely to buy.
You can target your plan without re-writing it.
If your plan is infallible, it is definitely wrong.
Thursday 1 September 2011
Where to get advice
Always an interesting debate starter this one; where do you go for advice, how much do you pay and how do you implement it?
I have previously mentioned that there are good, legitimate sources of free advice available to all - the best known being Business Link. Whilst competent and reliable, these sources are by definition somewhat generic and lacking in imagination.
In the course of research I hung around a number of business forums and I have to confess that my opinion is that the advice given is marginal - sometimes outright wrong; try a simple test - ask a question on a topic you really understand and evaluate the responses - it is reasonable to assume that the quality of response will apply to other topics.
Don't get me wrong, there are many people on these forums with genuine specialisms, many more who are entirely well meaning if slightly misguided, then there is the vocal minority who, frankly have little better to do than make crass observations and sweeping generalisations. As the person seeking advice for a business, your biggest challenge will be to work out which is which (and to wade through the crap to get to the quality). If you want to go the forum route, my recommendation would definitely go to LinkedIn, though you might want to take the effort to narrow your fields to avoid getting global input on a local matter.
If you are willing and able to pay, there are any number of specialist consultancies giving advice and support either in specific fields or to specific sectors of industry. It can be difficult to define specialisms, particularly as many of them want to spread their net as far as possible and therefore are somewhat vague about their areas of expertise. The point here is that we all know that no-one is an expert is everything; if your accountant starts selling you advice on marketing - run away!
To plug myself a bit here, I am very specific in my target area - I work with people who are thinking of starting a business through to shortly after opening the doors. Once you have been running for, say, 12 months you will be able to evaluate any weaknesses and focus your attentions on them with guidance specific to that field, be it accountancy/cashflow, marketing, PR, HR or whatever (or work around the weakness as a temporary measure) - there is no point paying a generalist to do a specialist job, so that is where I leave.
There is, of course one well known, universal source of advice that I have failed to mention - yes - the Bloke in the Pub; His advice is technically free and is dispensed with reckless abandon. Reference points are always available - typically 'I know a bloke who' or 'a mate of my brother's' - obviously you will never meet these people. The best thing about Bloke in the Pub's advice, is that you always get to do exactly what you like, you always save loads of money and you normally undermine the people you detest - such as the tax man.
I say technically free; there might of course be a small cost - over and above the pints you buy him - such as tax penalties, loss of customers or your business or, possibly a brief spell at Her Majesty's pleasure; still, he's a lot more fun than a consultant and he tells you what you want to hear.
I have previously mentioned that there are good, legitimate sources of free advice available to all - the best known being Business Link. Whilst competent and reliable, these sources are by definition somewhat generic and lacking in imagination.
In the course of research I hung around a number of business forums and I have to confess that my opinion is that the advice given is marginal - sometimes outright wrong; try a simple test - ask a question on a topic you really understand and evaluate the responses - it is reasonable to assume that the quality of response will apply to other topics.
Don't get me wrong, there are many people on these forums with genuine specialisms, many more who are entirely well meaning if slightly misguided, then there is the vocal minority who, frankly have little better to do than make crass observations and sweeping generalisations. As the person seeking advice for a business, your biggest challenge will be to work out which is which (and to wade through the crap to get to the quality). If you want to go the forum route, my recommendation would definitely go to LinkedIn, though you might want to take the effort to narrow your fields to avoid getting global input on a local matter.
If you are willing and able to pay, there are any number of specialist consultancies giving advice and support either in specific fields or to specific sectors of industry. It can be difficult to define specialisms, particularly as many of them want to spread their net as far as possible and therefore are somewhat vague about their areas of expertise. The point here is that we all know that no-one is an expert is everything; if your accountant starts selling you advice on marketing - run away!
To plug myself a bit here, I am very specific in my target area - I work with people who are thinking of starting a business through to shortly after opening the doors. Once you have been running for, say, 12 months you will be able to evaluate any weaknesses and focus your attentions on them with guidance specific to that field, be it accountancy/cashflow, marketing, PR, HR or whatever (or work around the weakness as a temporary measure) - there is no point paying a generalist to do a specialist job, so that is where I leave.
There is, of course one well known, universal source of advice that I have failed to mention - yes - the Bloke in the Pub; His advice is technically free and is dispensed with reckless abandon. Reference points are always available - typically 'I know a bloke who' or 'a mate of my brother's' - obviously you will never meet these people. The best thing about Bloke in the Pub's advice, is that you always get to do exactly what you like, you always save loads of money and you normally undermine the people you detest - such as the tax man.
I say technically free; there might of course be a small cost - over and above the pints you buy him - such as tax penalties, loss of customers or your business or, possibly a brief spell at Her Majesty's pleasure; still, he's a lot more fun than a consultant and he tells you what you want to hear.
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