OSB Webinar Series Audio Transcription Webinar: Strengthen Your Business Date: 28 February 2011 Facilitator: The Creative Collective - CONFIDENTIAL INFORMATION – [Slide 1 – Strengthen Your Business] Okay, I'm just going to do that intro just one more time, if you don't mind. My name's Yvette Adams and I'm from the Creative Collective and I'm very excited to welcome you online to Strengthening Your Business. We're going to talk to you about the Department of Employment, Economic Development and Innovation, otherwise knows as “DEEDI.” [Slide 2 – Agenda]] I'm just clicking across and I can see that there's a slight lag, so there you go, and you can now see the agenda. This is what we've got in store for you tonight. I'm just going to spend a few minutes introducing myself in case some of you are new. Now, Todd, I can see you've got your hand up, so if you've got a question, can I encourage you to expand the chat menu and to just text me a little questionnaire and I'll see if I can answer it to you privately, as we go. Or my colleague, Jag, who's also on the line tonight, will be able to help you out. Now, throughout this Webinar, as with the other Webinars in this series, if you've been on one before, we do refer to a workbook. Now when you registered for the Webinar, you should have been alerted to the downloading of the Webinar, or workbook, I should say. And that's really comprehensive. I will refer to it. If you haven't had a chance to look at it, I do encourage you to go back to it after the Webinar – there's lots of valuable resources, reference material, and lots and lots of exercises to work through. So if you want to really get clear on how to strengthen your business, that's a way that you could do that. Then we'll review different items from the Webinar, and finally, I will allow you to ask some questions as well. So – if everybody's happy with that, raise your hand, and we will proceed onto the next phase. Everyone's happy with that plan, that layout? Now, quite like school, I do ask you to interact, making sure you're not going to sleep on me. It is the end of another working day, it is a Monday, and so I better make sure. Let's move on. [Slide 3 – Introduction – Yvette Adams] In just a moment, you'll see a photo; here I am, of me, Yvette Adams, that's what I look like. So I am a multi-award-winning business owner and I have started four businesses from scratch. So I hope, through my experiences in business, tonight I'll be able to share some of that knowledge and experience with you and how you can take your business, whether it be a new one, an established one, or a fast- growing one, onto even dizzier heights. Right now, as I said, I am the director of The Creative Collective. We're basically a creative agency, based on the beautiful Sunshine Coast in Queensland– what that means is we build websites, we do graphic design, we do print. We do lots of marketing and PR. But we do lots of sort of business consultancy and marketing strategies too. And a lot of the content I'll be covering tonight is very much focused on those strategies. We are experienced working with start-ups right through to very large companies. So, in short, the knowledge I'm able to share, no matter what level of business you are – no matter what size, whether you're a sole operator or a really large company, I hope I can help you out with some stuff. Now, I am also the mother of two. My two are now age four and seven. I like mentioning that at the start because many people out there are parents juggling businesses. Are any of you also parents, who have to fit business around your duties as a parent? I know how difficult that can be at times. You get pretty creative about when you fit in business time sometimes. Only one of you. That‟s unusual. But look, out of all the things I do, I really do love training and assisting others, so I'm absolutely delighted to be part of this series of Webinars. And I get a real kick out of helping business owners such as yourself – and I look forward to hearing your feedback later tonight. [Slide 4 – IDENTIFY – Your Elevator Pitch] Now, the first part of tonight's presentation, I really want you to think about what's called your “elevator pitch.” Now, for some people – this is a concept that they've very much heard before. They've got one and they are very okay with it. To other people it's a brand new concept. And basically what an elevator pitch is – and actually could you raise your hands now if you've got one – you're pretty sure what it is and you've got one. You're pretty happy with your elevator pitch. It's basically, to clarify, a 30-second way of summing up what you do in business. And every successful business owner should be able to clearly articulate, in 30 seconds. The idea being that if you jumped in an elevator, or a lift as we call them here in Australia, if somebody asks you what do you do, you can clearly and effectively communicate to them and hey, maybe even snag a new customer or make a sale. So hands up if you think you have got an elevator pitch out there. It's a pretty important thing. Wow, none of you, really? Christine does, yay! One of you does, excellent. Well, now that Christine has kindly volunteered herself – she's going to hate me for this – Christine, I wonder if I might be able to meet you so you can share your elevator pitch and we can hear what you've got to say. Christine, can you hear me okay? [Christine] Yes, I can. Have you got your sound on, Christine; no sound problems tonight? [Christine] Yeah, can you hear me now? I'm not getting – anything from you right now. [Christine] Can you hear me? Okay, Jag said he can hear you, I'm not sure why I can't. [Christine] You still can't hear me now? I'm just upping my volume. I can't hear anything at all, actually, at the moment. [They work this out] Raise your hand if you can hear Christine Ingles speaking. Jag could. Okay. … Perhaps my headset is – It‟s gone a bit silly. These lights already in. [Christine] Can you hear me now? I can now, Christine. [Explanation] [Christine] Okay, so you can still hear me? Okay, I've got to back up now, just a moment. I'm just going to install it – Okay, Christine, are you with me? [Christine] Yeah. I can hear you fine. Okay. Sorry about that, everyone. I'm glad I've got you now. Christine, would you mind sharing your 30-second elevator pitch with me? [Christine] Okay – I'm sure I can come up with something. Go for it. [Christine] Hi, I'm Christine. I'm from Impact Asphalt. We're a new business on the Sunshine Coast, and we do asphalt driveways and asphalt pathways and decorative brick edging – yeah, we're servicing the Hinterland Areas and acreage driveways and residential driveways and we also cover a lot of work with the – a lot of civil contractors on the coast. So, yeah, we find asphalt is a more economical product to use than concrete, especially in long driveways but, yeah, if you're needing an asphalt driveways or an asphalt work or areas done and we can come out and assess the area and give you a quote. Wow, Christine, I'm really impressed. That's really, really good. I really liked – [Christine] It was 30-seconds. Probably a little bit longer getting towards the end of it, but I liked how you said you were – [Christine] Well, there you go, I was pushing it out, so I knew it was going to be too long. Yeah, you've definitely practiced that before. What I liked about what you said is that you named your company and where you are. Because sometimes in the heat of moment, we kind of forget those things. You said where you serviced. You said what you offered. You also gave, I guess, a point of difference – like why would I use asphalt over something else, and that made it particularly stronger. Some of those details – you said the rest as beautifully as you did – you forget just one thing, it's strong, so, well done. Who else thought that was a really good elevator speech that made clear on who Christine is and what she offers. Hands up everyone. Yeah, Todd knows exactly what you offer, and what a great opportunity for an ad. Thanks for volunteering, we'll meet you again, and we'll move on. But that's an elevator pitch, people, and I strongly encourage you to get one for your business. [Slide 5 – What does your customer want?] Okay. Now, to strengthen your business, you also need to think about what the customer wants, because too often in business we get so caught up in paperwork and working in the business rather than on it, we sometimes forget about our customers, and really, at the end of the day, we wouldn't have a business if it weren't for the customer. So get to know your customer, get to understand your customer, and anticipate change rather than reacting to it. Too often in business, we get what we call “complacent.” We think, Oh well, I – you know, I'm great at asphalt, as Christine would say, I'm cost-effective, why would anyone else look anywhere else? But let's say some whiz-bang new product for servicing for driveways. It isn't asphalt, it isn't concrete, and it‟s some new thing that comes about. She can't be complacent and thinking that's all ever people are going to want. So she needs to, as a savvy business person, keep up with research, anticipate those changes, perhaps look to take on that new product or to market her product in a new way as a result. So I want to ask you to put your hand up if you think you think intimately know your customer's needs and what they need from your business and what you do – what you need to do to address those needs. Do you feel like you do know your customers that well, hands up? Are there any doubts? Great. Some of these things may seem very, very simple, but you need to think of a strategy to connect with your customers. You need to think of a policy to look after them as well. What people and customer service you can offer. And also what systems you could use to support them as well. We'll talk a little bit more about those in a moment. But there's some great ways within the workbook. We can find out more about how you can service your customer needs. And as well, at the end of this Webinar, I'll tell you about another Webinar coming up which is all about retaining your customers. That Webinar is very much focused on developing your business and how to retain your customers by finding out what they want and then making sure that you're doing the right thing. [Slide 6 – Octopus Diagram] Now, this next slide looks pretty crazy. But it's up on your screen anyway now. There we go. It kind of looks like an octopus, doesn't it? There's very small writing on there, but I guess this shows you all the different things that can impact on your business. It was actually created in 2009. Now, right now, we're having some pretty severe things impacting our business around the world. And I say around the world. It's been here in Queensland massively and that's where we're all based, presumably, but now in New Zealand but everywhere else in the world. I've got friends in Iceland, I've got friends in England, I've got friends in Africa – I talk to them and massive, dramatic things are affecting their businesses, their ability to do business. So this screenshot's taken again straight out of the workbook. And look at the different gray bubbles in there, global connectivity, that's become a big thing only in the last few years. What does that mean to your business or if your business is new and brave, what could it mean? Digitization, same thing. You know, once upon a time the accountants and similar trades, it was all about paper and I had so many filing cabinets. But I know for sure that these businesses out there are digitizing everything in their offices so it doesn't need to be a paper-filled office, necessarily. I mean, even recently, I was involved in a real estate transaction, and once upon a time, you would've had to drop that hardcopy off to the real estate agent or post it. These days an e-mail is actually okay. Debt is a massive thing right now. You can see the tentacles coming off that. Debt stress, luxuries, single person households, etc. – the world is still experiencing something of a global financing crisis and these disasters certainly aren't helping. So how does that affect your business? For instance, if you offer a luxury item like let's say fashion shoes. Do people really want to buy these shoes, or are they really just focus on survival items like food and shelter etc. Aging. You can see another similar pattern here. That affects a lot of businesses. Now, if you're in the business of making – I don't know – let's say hearing aids or something, as people age, that they tend to often have problems with, perhaps spectacles, that's probably a growing market for you. And certainly something that you need to consider as well. So I encourage you to take a look at this blend trend and identify which kind of trend you think will have a significant impact – whether that's positive or negative – and text me which one you think it will be for your business and why. So if you can't find the chat, it should be down at the bottom, so click on the red little arrow. Go down to the bottom, click on chat, and expand that. But I want you to type in there, which of these, just choose the root, climate change, for instance, and you can say positive – because I'm in eco solar heating so that's okay with me, is an example of what you could send me. And while you're doing that, we're going to move on, but I really want to hear from you and get to know what issues your business is facing. And you need to know these issues really clearly because that's how you can strengthen your business. Now I'm not receiving those yet but hopefully you're just tapping away on your computers. [Slide 7 – Which type of company are you?] Alright, next one. Which type of company are you? Complete this exercise in the workbook. This is something else from the workbook which I just want to highlight. Something I do encourage you to go away and look at. Because there are these macro-trends such as things within society, technology, economy, environment, politics, etc. And then there are sub- trends under these. So right now, if you're going to text-chat me, just one example from the page before, but I would actually like you to all make the time, after this Webinar perhaps, and certainly tomorrow, while it's still fresh in your mind. And go through the complete list in the workbook. Or you can draw this up yourself and consider technology. What parts of that will affect your business? What sort of impact will it be? Are there opportunities as a result of that impact? Economy. What's the sub- trend coming off that? So, you know, for instance, Christine just explained that asphalt is a cheaper alternative to concrete. So cheaper and still good quality. So, sub-trend could be that people are looking for cheaper solutions under economy. The impact could be more people looking for cheaper products, cheap alternatives. That's exactly an opportunity I'm talking about, as well. [Slide 8 – Generating more revenue] Now, something a lot of businesses want to do to strengthen their business is to generate more revenue. Hands up if that's an issue for you – you would love to be make more money. More money coming through your books. Many hands – Todd – More hands here. Jag, it'd be quite good if you could just text Scott individually and make sure he's with us. … Because we're not getting as many responses from him as some of the others. Okay, usually – everyone wants to generate more revenue. Now take a look at this diagram, because if you look at the dark blue aspects, this can really impact on how you can generate more revenue. If you have more prospects and you're converting at a higher conversion rate, which is the color dark blue, and you're retaining more of those, you're going to have more new customers, and more profitable customers. That equals your customer base, as you can see. And if you can sell to them more frequently, rather than just once a year, twice a year. Maybe rather than once or twice a year in their whole lifetimes. If you can sell a larger size, so sell not just the one package but also a bigger amount, and if you can charge them more for that, that is how you increase your turnover. Now, these are simple, little figures which sound easy to do, but harder to actually emulate in practice. But in the „Improve your Business‟ we go further than that. Also some of the financial ones. We'll show you some scenarios of exactly how little small increases can really make a massive indent on the bottom line, on that revenue figure you're seeking to improve. So that's something for you to go away and get familiar with. Look at that diagram yourself, perhaps after this Webinar, and think, if I could just increase my prospects by 5% this month or this year; if I could just increase the frequency by even 5% – run the figures yourself and see what you get. Put them somewhere visible and really commit to trying to achieve them. [Slide 9 – Retaining your customers] Certainly your business, as you can see on this next slide here, also involves retaining your customers. That increases your customer database. It's not just about getting new ones all the time. You really have got to look after the ones you've already got, because as this shows here, finding customers can cost five to ten times more than satisfying and retaining existing ones. Now, often as a marketing professional, I've called out to businesses and I say, and I ask them why am I here today, how am I going to help you – and they will say, we need to market, we need to get more customers. One of my first issues I throw back is always, well, how customers do you already have, and when was the last time you communicated with them? When was the last time you surveyed them and found out what it is they're looking for from your business or enjoy dealing with or would prefer to be offered? And often their faces look a bit blank at that point and I often have to suggest, well, perhaps, we actually survey them first and locate where they're at; perhaps we go to that big filing cabinet of names; back through all the old e-mails, back through all the old account systems, and look at all of that, there's time involved in this. But that is a better place, generally, to start. There are warm leads who did at one time purchase from you. They have a high propensity to purchase from you again than going out and looking for brand new customers. Which, as you can see, it costs a whole lot of money. It costs you time and it costs you money. Now, a 5% reduction in customers leaving you can increase profits by 25 to 85%. So, you're trying to strengthen your business and you've got to increase your profits, that's where you could be looking. That could be a target you could set yourself and if you have one your team, to put into place. Now, the average company – you're wondering what's normal? I do lose some customers. But do I beat myself up over losing some? Because, I agree that sometimes you can't please everybody. Sometimes a customer and a business relationship is just not a match made in heaven. There might be a personality involved or something like that. So just know that the average company does lose 10-30% of those customers, but obviously the smaller you can keep that figure, and the happier you can keep your customers, the better off you'll be. So, I'd like to know what your strategies to retain profitable customers are. Would anybody like to volunteer or share one of their strategies to look after their key clients? Something that they think works really well for them? Raise your hand if you'd like to participate. It'd be good to hear what you have to say. And the other group can learn this from you. Come on, you shy people – I'm really not that scary. I can keep telling you about strategies we use, or that I've seen used. Okay, Scott, brilliant. Jag would you mind un-muting Scott? Oh, Scott, that's pretty loud, can you hear me okay then? Scott, are you there? [Scott] Okay, can you hear me? Okay, now, that's an improvement – are you still there? You came and you went with a loud amount of noise. Okay, can you come back? Ah, there he is back. [Scott] How's that? Can you hear that? That's perfect. [Scott] Oh, I muted it. Okay, Scott, so tell me where are you and what is your business base – what are you in the business of? [Scott] I'm a business broker, so I'm in sales and acquisitions of businesses. Okay, so – [Scott] Middleman, that's what we'd call it. So what are your strategies to retain profitable customers? [Scott] Retain profitable customers. It would have to be just to do a professional, good job while selling their business for them. And as much as possible so they walk away as a happy client and they remember the job that I did for them. So is it very often that you would sell a business for the same crowd more than – you know – it's not a one-time sort of thing? [Scott] I have not – I haven't been involved with it for very long, but, as for selling business for one crowd, you just said? Or one particular type of crowd? Sure, like, do you know business owners who sell more than one business over a period of time? Or I imagine you may be a little bit different and that often you may sell one business for one person, and then it is a new customer that you're dealing with, would that be correct? [Scott] No, not so far, I haven't really niched into that sort of environment where I'm working in a department like logistics or anything like that – is that what you're referring to? Is that right? No, all I'm referring to is – when you sell a business for a client, do they usually sell more than one business – so you get the one frequency probably, they just sell one business once or do they sell multiple businesses, do they own multiple businesses? [Scott] No, no I haven't had that type of opportunity yet. Sure. [Scott] No – But as you say, you're new to it – [Scott] Actually, I just sold my first listing the other day, so I sort of haven't had that great a deal of dealing with clients in this area. Sure. [Scott] If it – Sorry, so I commend you for getting on tonight and maybe getting some new skills on board. What were you trying to say there? [Scott] Yeah, I'm trying to get my face out there a bit, and develop a bit of a profile, so I'm doing as much as I can to get involved with things. Where I sit now, it's a bit difficult, but yeah – I get involved. And where exactly are you calling in from, Scott, out of curiosity? [Scott] I'm actually in Kawana at the moment. Kawana, Sunshine Coast Oh yeah, we know the area. It's not so far from me. Isn't it funny? I know exactly where you mean, Scott. Thanks a lot for participating. We're just going to mute you again, actually, and continue, because we've got a few more slides to share, but I wish all the absolute best in your business adventures and I hope that you're getting lots out of tonight and will join us for future sessions as well. [Slide 10 – Consider your product or service lines] Okay, next up, business owners: I want you to consider your product or service lines. So – there are some examples of products, you know, but you may or may not sell those. Some of us are in the business of selling a product. Some of us are in the business of selling a service. And some of us sell other things, again, events and all sorts of things. Now, I want you to be really objective here. Are your business products or services you're selling profitable? Now that might seem like a ridiculous question. You may say of course they are. I wouldn't be doing it otherwise. Why would I be doing it if I wasn't making any money? But there have been instances when I've sat down with a business owner, an example is a landscape gardener, and crunched the numbers of what costs and sales and expenses they had in their business and then what they're charging on an hourly rate. And one guy I did this with was absolutely horrified for me to explain to him, after all was said and done, that it was costing $5 every hour to go and work for somebody else, even though he was charging $60 or $65. Because he hadn't factored in all the petrol, the travel time, just insurances and all sorts of stuff like that – so make sure you know if you are profitable, and, you know, maybe one of your services is for example the lawn moving but the landscape gardening was not - he should have been charging a higher hourly rate or something like that. Can they be profitable? Now, this is what every big business owner has to do because product lines have trends, they go up and down. I've been reading a lot of Richard Branson lately and he, obviously, through his Virgin Music empire, got into – he diversified into electronics when Sega games came out. They had a different product trend. For a while, they were very trendy, they took on Nintendo and they did very well. And then the phase kind of petered out. So he identified, actually through his kids funnily enough, but they got older and weren't intercede in those games, and that perhaps it might be on a bit of a downward spiral and he may want to get out of that particular product line. And he of course was very diversified and had a lot of product lines. If they're not going well or if they are going well, are they likely to go well in the future? Another example is Karen Adcock, the woman behind Pandora Jewelry here in Australia and New Zealand. I had the pleasure of meeting her at the Telstra Businesswoman's Awards last year. Now that is a phase that she anticipated. She was from Denmark, she went there and that's where Pandora is from. She anticipated that it would grow, demand for those products here in Australia and New Zealand in the future, and she sought some kind of distributor for them in this Australia. And did it grow? Yes it did. Was it a crazy - it is and it's still kind of is, it would have had some ups and downs, but I bet she's carefully looking at these trends that we're looking at here. Also just look at that formal part of the strategy plan for your business. It's pretty important when you start a business or even when you're going, to have a plan. Because let's say somebody comes along and says, would you like to sell this product as well? It's not what you're already selling. You need to look at that and say, Well, does that fit my strategy or is that diversifying too much or is that going to dilute my time and effort on the other stuff? And look, as a business owner, you're absolutely allowed to make the call and say, Yes, I'm going to go for it, it is within what I want to do – as long as it's a conscious decision. Don't just keep saying yes and taking things on and not really working out whether they fit into the strategic plan. And I'm really encouraging you to commit to doing this, asking yourself these key questions to know how your business is performing and then having the information on board to actually strengthen your business. [Slide 11 – 80/20 Rule] And here's another interesting consideration – did you know that 20% of your customers, this is real fact, their purchases will provide 80% of your business. So to maximize profit, grow your profitable lines and customers. How do you do this? Well, there's a rule called the ABC Rule. Have you heard of this? Put up your hand if you know of the ABC Rule. It‟s a way of strengthening your database through your client database. No one's heard of it? Or we're just slowly going to sleep on the net. Bernie's awake. He says that he knows the ABC. Good, Bernie, I hope you won't mind me covering this again, but I will give you my spin on it as well. ABC. Of course, A can be your top clients, or VIPs if you like. They're the people who spend the most money with you. Who refer the most. Who return to you. And maybe you just like really dealing with them. They're just super-nice people. So I call my A's, in a way of remembering them, I call them Awesome. B, I call them my basic customers. They'll buy some stuff off you. They don't spend up a lot. They don't refer a whole lot. They're okay. You're glad they're there, but they're not your biggest spenders, they're not your A's. And then C, you could deem as your casual people, they're kind of there, they might come and go, they're really not regular, they're really very small. They can sometimes be a bit of a hassle to deal with; maybe more trouble than good. So, if you know that 20% of your customer's purchases will provide 80% of your business, you can probably guess that most businesses have about 20% of classified A customers if they would actually crunch the numbers. And what my company does is, it's an annual ritual, around Christmas time, we have a strategy-planning day before we break for Christmas. We actually take all of our 300 odd clients and we break them down into As, B's, and Cs. And for us, we're even more ruthless. Our Cs, we actually cull - so we work out, who do we not enjoy working with? Who are the people who are giving us the hardest time, who are never happy no matter how hard we try for them, who don't spend that much money, who just aren't – it's just not a match made in heaven. And we will find ways to extricate ourselves from that client relationship. And there's are a number of strategies I could talk you through if that is something they're interested in. But with A's, we look at ways, on the whole, how we can service them better. How we can make them happier. How we can keep them being our very important customers that they are. So are there some good ideas in that lot for you guys? Show me your hands if you're already thinking of things that you might be able to do, and you might even after this go and do an ABC client list. Bernie's going to, good start. [Slide 12 – Marketing] Alright, now marketing. Marketing's a really important way that you can strengthen your business. Now, we do have future events. One's called „Retaining your profitable customers‟ and one's called „Attracting new customers‟. They are good marketing Webinar sessions to get on with us in the future months. But, in the meantime, just to strengthen business – you need to test your marketing. You need to measure it. A lot of people, I will say what marketing are you doing? And they're kind of just listing everything off the top of their head. There are no documents in place, it's not up on the wall, and it‟s not on a spreadsheet. And I encourage you to have a list of your offline and online marketing activities so you have that clear picture, but more importantly, you've got to be able to measure it. Now, there's all sorts of measurement devices that you could use, like Google Analytics, which is a free statistical program from Google, Google Analytics is a way that you can measure your website traffic. You need to have, as well, some kind of in-house tracking. If you receive e-mails and phone calls – you need some way of making a little note, how many phone calls you get a week, how you are assisting customers and what's working for you. You probably need to have staff start training on this stuff to make sure they're measuring on your behalf. You may need a CRM or a client relationship manager – an actual, dedicated system that tracks who's coming in and what conversations take place so you can run reports at the end of it. If you take the time to gather that data, you can then refine, which is the third step in this chain process, what's working and what's not. You can get rid of the marketing activities that are just not working. You can make the ones that are working okay work even better. And then once you've got down – that down to them working really well, you can repeat. And that's a certainly exciting phase when you get to that one. There is hard work involved. It is like a jigsaw. That's why there's a picture there. And you've got to have tenacity to do this. You'll note there I've got online marketing tends to being more measurable, which is why a lot of people these days are going for online marketing activities. One, they can work better. Two, they can cost less. But three, and really importantly, they're easier to measure how things are going. Otherwise, you're relying on human, and sometimes human error to track each of those phone calls, e-mails, human interactions. So, an example is, what we've done for businesses – often, we will test and have tracking for them. How many enquiries they're getting from a certain marketing activity. Let's say, maybe Yellow Pages. And sometimes, even though they've always done Yellow Pages, they'll start to deduce that perhaps this marketing isn't as effective as some of the other online marketing things are these days. And that's certainly a trend that I see time and time again lately. So I encourage you to evaluate your current marketing activities and associated spin, as that will definitely strengthen business yet again. [Slide 13 – Pricing] Right, pricing. I want to know – and if some of these pricing systems I'm offering are new to you – so let me know if you've seen this before. Hands up if you've used this, you know what I'm talking about, about what's on screen, cost-plus, market base, skimming etc. And I love for you to text me too on this list what you're already using as part of your business pricing models. Let me know. Okay. Because if you go through them: cost-plus is adding a percentage of the cost of the product to determine a selling price. That's a pretty common way of working out your cost. So you say, this is my cost and I have this service, and so I'll add 40%, 50%, 100% is pretty common in retail for instance. Market based, where the selling price is determined by research compiled from your target market. There are big companies who do a lot of this, because they want to have research marketing teams working out what exactly they should sell the item for. So let's go back to the Mr. Branson scenario. I'm sure he didn't just sell the Sega devices without adding a certain percentage. He was in a highly competitive market with lots of other big companies vying for the individuals' business – so he would have had to been dictated by some degree by the market and I believe market research would have been a really important strategy for him to set his prices. Skimming is another one. You can set the selling price high and sacrificing a high number of sales for a high profit. That's only going to work for a high-demand product. So you can't just say, Oh, that sounds good – I like the idea of selling this and dealing with this customers, and just skimming the market – it is a strategy, it is a pricing model, it can work, it can work very well, but it's a luxury, high-demand, very unique, nobody else is offering it – you've got to really keep with the difference, then you can offer that. But it's something to be aware of, maybe not now, maybe not implement in the future. There's penetration pricing as well, which is kind of the opposite. Setting the selling price low to gain customer's interest and to get a foothold in the market. Now sometimes when you enter a very aggressive market where there's lots of competition, that is a model you have to go for. Take for example some of these electronics supplies, they do have very low profit margins. And they are trying to get established in the market and do the volumes that sell as many TVs, fridges, toasters, kettles, all those sorts of things, and that's how they keep competitive. You can see it yourself – the last time you went into one of those electronics stores or the light appliance stores – and what was their strategy to get your business? So I encourage you to consider experimenting with new pricing systems. Don't always settle for the percentage one. [Slide 14 – Distribution] Alright, distribution. This is a way you can strengthen your business too. How are you getting your products and stuff – this is more talking about products and services, although in some cases it does apply – how do you distribute your products? What is the reach of your product - where is it getting to? Is it just Sunshine Coast wide, is it Queensland wide, is it Australia wide, or is it going to ten countries – that's exciting stuff. What's the cost of distributing your product as well? You've got to think of those things. Is there a cheaper way you could distribute it? Would you choose new locations that it will be cheap to distribute to? Could you get a distribution in-house, on the ground in some of these countries when you get big as well? What about forms of product funneling – so if they're going to buy something from you, can you sell them something else at the same time? And how can you improve in order to keep all this happening? So I want to ask you – are you happy with your distribution channels and could you explore new ones? Send me a text, yes or no. If you could explore new channels. There are some ideas on screen. Customers, costs, integration as well. I'm actually going to keep going in the interest of time. I've still got a bit to cover, a big old topic this one. [Slide 15 – Strategy] Strategy, now I wouldn't mind if somebody would volunteer – again, someone we haven't had so far – another volunteer at this point – just to keep in touch with you, make sure you're still there. So put up your hands – how about you Todd, or Alexandru, or Bernie, perhaps? Would you like to be like one of our willing volunteers right now? Please? We might just pick you on the spot otherwise. Jag, shall we just try un-muting – oh, Bernie, good on you – he's, I was going to say Todd, but Bernie was quick-draw on the call – let's see how he is – hey Bernie, how you doing? [Bernie] Good, can you hear me? Yeah, I sure can. Welcome to the Webinar tonight. [Bernie] Thank you. So are you enjoying it so far, learning a few new things? [Bernie] Certainly. Excellent. Okay, Bernie, on the screen you can see a few questions – so I just want to go through this now. Firstly, where are you calling from and what's your business? [Bernie] I'm at Beaumont Tiles franchise in Mount Isa. Oh, good, good to have you on all the way from Mount Isa. So your market position – where are you at right now, with your tyres in Mt. Isa? Are you the leading in the market? [Bernie] Tiles. Tires, did you say? [Bernie] Tiles. Tiles. [Bernie] Tiles. Tiles. As in floor tiles. Tiles. Beaumont, oh okay. So sorry. We'll get that right for you. Where is your market position in Mt. Isa right now? [Bernie] As far as tiles, probably leader, because we're the only specialist tiles place in Mt. Isa. There are carpet shops that sell tiles, but we're specialized in tiles. Okay, that's nice and clear market position, liking that. What are your goals and objectives as a business – where do you want to go, what are you trying to do? [Bernie] There are still market opportunities, not only in Mt. Isa, but outlying areas. We don't – we have limited contact with stations but we do some with stations. There's Cloncurry, there's Northern Territory. We also sell bathroom wares, so it's consolidating with bathroom ware and with builders and plumbers. Okay, so let's get a little bit more defined there because there was some good conversation in there but what's your key objective? Is it to expand your reach into other outlying regions, for instance, did I articulate that well? [Bernie] That's fine, yes, and two is to consolidate – consolidate and make sure we service our current builders and get any new builders that are in the area on board as well. That's probably the two prongs. Okay, excellent, well that's nice and clear. Often, actually, it's not just you, Bernie, but when I talk to businesses – there is a lot of discussion. I kind of know the sorts of things that are going on, but I really encourage you to get crystal clear, like really narrow it down, give it a nice, short, sharp description – kind of like the elevator pitch, because then other people can share that vision, that objective, and they can get on board and help to get there. Whether that's marketing professional staff or suppliers or whatever, so that's an important one to know. And finally, how do we get there? You've sort of described where you want to go – how are you going to do it? [Bernie] One is get in contact with the outlying areas through mail, mail out service. As far as Cloncurry, actually going on the ground there hopefully. As far as our builders, it's maintaining the builders we have – so shooting them is number one and sending out newsletters, giving them special tours, and obviously contacting the builders that we don't have on board and marketing to them on site. Okay, great – well, often in business – would this be the same for you, Bernie – you don't always take time out to ask yourself these key questions – you're just kind of wrapped up doing it, but it's pretty useful stuff to think about these things sometimes, isn't it? [Bernie] Sometimes you actually have to stop and think about it, yes. You do, absolutely. Well, I really appreciate that, you were nice and clear. Hopefully I've offered you a few suggestions to pin on the objectives front. Do you have these written down about being communicative with staff? [Bernie] Yes. It's something I've actually done. Probably in the last three or four months. And is that helping? Getting everyone focused, on track, performing? [Bernie] Definitely. Good to hear. Alright, thank you so much for sharing, Bernie, all the way from Mt. Isa – and thanks for getting on tonight. We'll just mute you again. Okay. I'm loving interacting. I love this job so much. I get to talk to people from all over and all these different businesses, its' really wonderful and actually by you hearing from other people – you learn too. [Slide 16 – Growth Strategies] Alright, part of strengthening your business – once you've got the strategy – you've got to grow the business. So what are those strategies? So are you going to bring your existing products to a new market – so that sounds like what Bernie's trying to do? She's trying to take their tiles to the outlying areas of Mt. Isa. Or are you going to develop new products for new or existing markets. Maybe Bernie meets a new supplier of amazing tiles and she can start to take those products to the same market she has or to those new markets she's exploring. Here are just a few very simple ways of understanding growth strategies. But, to do that, and these are things Bernie would face as would you if you were going to grow your business – you've got to consider the transportation costs – because if she's going to get these to those outlying areas – how much will it cost her to get them there? Is fuel going up? There's one of those external factors we talked about at the start is trends. That's something she needs to map out and consider. What about how well they'll be handled? I mean, gosh, what about broken tiles arriving? I'm sure she's got great strategies around it – that's something she had to think about it. If you were importing them – let's say she was bringing beautiful Italian tiles in from Italy, what would be the regulatory approved of foreign products. Consumer affordability – you know, it's great if she brought in these amazing Italian tiles, let's say, but what if nobody can actually afford them – that's something to consider. Relative pricing. Electronic suppliers, like these guys are using, distribution margins, expected price per unit, respect of intellectual property and legal infrastructure. So intellectual property is not going to really apply to those particular tile scenarios, but if you're selling, I don't know a conceptive image, something that's probably more service-based, these are certainly things you'll need to think about. What's the total customer base? Now if you're looking at going to these outlying areas, how many new customers do you think you could pick up? How much do you think you can increase the market size? Segment the market to identify what portion could be targeted by your product or service. So you may say in one of these outlying areas, for instance, there are 4,000 residents, and I'm going to target 25% of them so I can get a thousand of them buying my products in the next five years, that would be a great result. It might be an example. So really that sort of clear definition of what I'm looking for – really minute detail. Expected penetration of the product or service into the market – a competitive environment. Is there anybody else out there, is there not. What's the local labor cost going to be. And look at the other factors – because sometimes there is corruption and all sorts of things to deal with, particularly when you're dealing with international markets – so give all of those a bit of consideration as well. [Slide 18 – Strategic customer management] Now, strategic customer management. So we kind of talked about the 80/20 rule, but what about these two? And this is a diagram straight out of the workbook, once again, which, once again, I encourage you to look at. Now you have high-value customers with a low payment risk. So examples of that would often be things like government clients – because they may – have a good contract but they are generally going to pay. Sometimes you can have a high-value customer – seen some examples of this in the construction industry recently – big contracts, but big risks. And actually, unfortunately, there's been a few dominos toppling in that market recently. They're high-risk because they're all kind of relying on one another and when one topples, it can be, like I said, a domino effect. Is it a low-value customer with low-payment risk? So you might say, look, you know, I'm not making as much money off them but there's not as much risk so that's the kind of customer I'm choosing to have – just going to start small and build it up. You know maybe Scott is going to try and turn over some little business sales to get started because he's still finding his feet and that's the sort of area he wants to be in. Or is it a low-value customer with high-payment risk, which is probably everyone's least desirable type of customer – so try and be analytical. Don't just accept everybody. Sometimes try and think about whether they are the right customers for you. And I do encourage you to go back to the workbook. There's a good exercise in there relating to that. It looks like kind of like this. Where you could say, okay I do have these high-value, low-risk customers, so I'm going to develop and automate some customers in order to make sure I look after them, because they are such good customers. High-value, high-risk. I'm going to correctly manage them. Make sure I correctly understand their buying motives and position on the supply chain, right? You haven't got someone approving the work to be done who doesn't really actually pay the bills and there's going to be a problem with it being paid. Could you change their payment terms or the terms that you're providing the service or the business product on? Specifically, for those customers as well, is another strategy. Low-value, low-risk. Can you automate in order to reduce the transaction cost? So, happy to take them, but if you can automate those processes, that would be a good way to go. And the low-value, high-risk – can you eliminate these customers altogether or get them onto other distribution channels, try and get them spending more or something like that? So those are important for your business, think about strategies for you. [Slide 19 – Review your business performance] Alright, you need to – once you've got some runs on the board – also review your business performance regularly. Now, some people always intend to do this and they don't always do it. My preferred way is just a simple spreadsheet where I put some key performance indicators – KPIs, they're also known as – and for different aspects of the business. So maybe you pick a few financial metrics, which we talk about in upcoming Webinars. Pick some key marketing metrics. Maybe it could be the number of unique users on your website. Could be the number of online enquiries you've had. Could be the number of page views you've had. Etc. Because then once you've got those performance things being tracked. You can start looking back, month by month. Wow, this month's wasn't much better than last month, that's interesting. Hmm. This month's much better than this time last year. That's interesting. Or worse. And you can start to kind of get more in control of your business. And that also will help you choose the appropriate strategies because if you're not growing at the rate you want to be, then you at least know what's happening. [Slide 20 – Cash flow management] Cash flow management, as will come up on the screen in just a moment, is a killer for a lot of small businesses. And there are two reasons why a lot of businesses don't survive past the three-year key crucial phase. One is growth. They don't grow fast enough or they grow too fast. And the other is cash flow. So there's too many businesses, unfortunately out there, and I hope you're not one of these, that just run out of cash. So they may have billed the people but the money doesn't come back soon enough because the payment terms aren't there, it's not enforced, they're not chasing up people quickly for their money, or they don't have good systems in place. So, how this works in a diagram flow – is that you spend cash to maybe buy a product or service. You make a payment maybe for the raw materials or the labour. You know Christine may pay people to do the labour, the asphalting of the ground, and then the goods that they produce, they may produce the driveway, and finally the customer makes payment which injects cash. So have a good clear look at that cash flow system. And I really hope that you will understand it and have some good, really good terms in place, which we do talk about in future financial Webinars as well. [Slide 21 – Receivables] Now, receivables. This is this process as well. So when the sales order is recorded: the value, the invoice, and the collection. The collection is the part that I think a lot of businesses make the mistakes on. What I really encourage businesses to have is an automated follow-up system and these do exist, so rather than rely on a bookkeeper or yourself to get around to calling people and going, You actually owe us some money – if you automate it, it lets them know that they owe money, if you can take money online, if they can do it automated any time of the day or night, and they can check their statements so they don't have this thing, Oh, I don't know, send me the statement, I thought I paid that, fun and games, that will usually improve your business cash flow. Pretty important stuff. There's a great system I recommend called Freshbooks.com that actually does that very well if that's an issue for you. [Slide 22 – People] People. This is how you strengthen your business too. People are so important. Now, we're in a tough economic time, so it's a good idea to try and retain your staff, but maybe they don't want to go anyway, even if you didn't want to retain them. And because – you don't really want to have to be hiring and training somebody up. It's good to always have happy staff. Also, to keep them, you've got to communicate with them – and you've got to keep them motivated. And even the motivated staff can sometimes lose their way. But things like having a clear strategy, those clear objectives – like I was just thinking about for Bernie, you can really help them understand what you're trying to do, what their role is in it. And what I actually do get my staff motivated and to get my staff to perform is get each of them to perform on a different aspect or area of the business. So, even our 18 year old trainee reports on social media activities of our company and understands how they're increasing and further activity on those, that can increase our business for the better. And our bookkeeper reports on the financial side. Our financial manager reports on the estimating side and new business side. So we all together come together and know how our parts of the jobs are fit into the business – and you know what? Having a job description, that's a super important aspect of having good strong business as well. And even if it's just you, I encourage you to write down all the things you do in a day, look at the things you'd like to give away, and then when you're ready to hire your first PA or bookkeeper or whoever it is that you hire for a staff, then you then give them that component of the job description. And another point there, super important if you work with friends or family or partners, that you have clearly defined job descriptions each. Saves on a lot of heartache and trouble. [Slide 23 – Systems – Work smarter not harder] Alright, systems. I'm going to open a poll now or perhaps Jake you could do that for me? You guys should have a little poll pop up in your screen. Okay, here we go, that's popped up. Now, while we're looking at that, I will just talk about systems. You're getting asked what systems is your business already using? There's some components we've been talking about tonight. It's all well and good. They sound like they make sense. We know we should be doing. Some of us are doing them, some of us aren't, and some of us are doing them a little bit. I want to know what systems your business is already using and to go through this. So, CRM. This is a system I recommend every business has. If you can track who you talk to, when you talked to them, what you talked about – whether they are a prospect, that is not someone who is paying you yet, or even a client or even one of your big VIP clients, then when you do get in-help – whether it be a temp, a student, or an actual staff member – it's a nice good record. And even for yourself – if you talk to them again in six months time – and they say, oh I met this person and they inquired about the driveway. You can pull up their file, and go, Oh, yes, Mrs. Jones, I see here you had an acreage driveway in Palmwoods – now can you imagine how amazed they would be at how well you remembered them? And that would increase their propensity to buy through you. So, CRM. That's just one of the many benefits. Enterprise resource planning. If you're doing any kind of business that's involving quite large projects, maybe complex phases, maybe multiple staff and lots of time. Then you may need some kind of project management or resource planning system. And sometimes, even if that costs a bit of money and takes a bit of commitment to getting up and running – the money it will save you and the customer service it will increase, etc., are well worth it – so be aware of those, take a look at those. E-commerce. How many of you are taking transactions online – whether you're actually selling physical products or could you be taking money online for the invoices and things to speed up that cash flow, improve that area. Online account systems. Now, look a huge amount of Australia is on things like QuickBooks and MYOB and I believe that both of them, if they don't already, are about to have online solutions – but I've had for quite some time rather to use a system called FreshBooks, and another one called Xero, Xero.com – the reason I do is because they're online. So I can invite my accounts person or financial adviser to log in and look at how our things have been performing, being reported, or rather than looking for old files that we have stored, we can pass over to them and wait for it to come back, there's risk aversion control. The other issue is if you have a disaster, whether it be a flood or the computer just falls over, you've lost all that data. You may have back-ups and I hope you all do back-ups. But if you don't, these online systems are wonderful because they're backing up it all up in a cloud. And in the future months, we're really excited; we're doing a Webinar specifically on cloud computing, which is exciting too. Finally, I've got on there an online operations manual. And there's actually others I could've mentioned there. An online operations manual has clearly got to maintain step-by-step exactly all the different aspects of your business – what they are and how to do them. And again, even if you're by yourself now, which I was once too, believe you me, I documented those and it meant my business could grow – and later on when I couldn't remember how to do something, I could go back to that procedure and follow those and get into it quickly again, not bumbling around and wasting time and not being able to find the files and remember the logins etc. So that's also a really great system. So I encourage you to invest in technology, in short. Don't consider the commercial costs. Consider the time and money you can save by investing in hardware, software, networking stuff, and connectivity solutions. Whether that be with customers, suppliers, distributors etc. Try and avoid manual data entry. Try and do it the smart way, not the hard way. Disaster recovery. We've just seen great examples of why you need to back up everything – make sure it's all nice and safe and unable to be hacked. So hopefully – the end result will be good. Okay, I needed to – I'm not sure what – there we go, people are – are we good with that, now, Jag - Something might have happened, so do give it another crack if it's not working. You can see some of the results we're getting – okay, guys, thanks for hanging in there, we're really nearly at the end. Okay – the polls closed, Jake's telling me, because some of you didn't vote. Maybe you didn't have a lot to fill in, say you didn't fill it in, and that's okay too. [Slide 24 – Business Value] Business value. I'm sure our friend Scott Gazelle knows a lot about this because this is the game he's in. I want to encourage all of you, whatever business you're in, to actually consider your business value. Because a lot of people get into business for the excitement, to have a lifestyle, to make more money, all these sorts of reasons – but all they're thinking about diving straight in. They're not always thinking about the other end, which may be retiring, selling the business. Now, most people at some stage, are all going to exit the business – whether that be because they've come of age, because they're bored with it, because it's not doing what they thought what it would do for them. And sometimes health reasons and terrible things like that as well. So I encourage all of you, while you're still in business, to be always thinking about how you can increase the value. If you have that mindset, you will definitely strengthen your business. Value is based on things like this. There's the profit margins and whether someone can improve upon them. So you've always got to make sure that your profit margins of your business, year on year, month on month look good. The stability of the business. Are you in a business, like we talked about those trends, that's going to fall over tomorrow because we are experiencing climate change and we are having an economic downturn. How stable is this business? What's its competitive advantage? Are you the only one who's with this product? Are you definitely the best quality? Are you definitely the best price? Now what is the competitive advantage? The maturity of the industry, as well, and how reliant the business is on the current owner. This is why, again, the procedures manual, the online things – the systems are really so important. Because if you were to step out of the business could someone else operate it tomorrow? If they can, you've got a nice valuable business on your hands – wouldn't you agree, Scott, raise your hands if that's what you're looking for when you're going to sell these businesses? Yes, he's got his hand up. I thought it might be somehow. I really hope that you're taking steps to achieve and improve your business value. Right. [Slide 25 – Forecasts] I want you to think about therefore what was your coupling groove today. How can you afford to fund this growth? Are you going to need to go and get loans? Are you going to need to get creative? Are you going to purchase any items? Commercial property? Furniture? Equipment? What's your new venture? Are you going to buy or build the business? Are you going to apply other businesses – right now, if you're in a position, it's a good time to buy other businesses – I imagine Scott would agree with me here? Because some people are really suffering. And it doesn't mean that they haven't got a good business – maybe they just didn't run it well, maybe they've run out of cash, maybe they've run out of steam as well. [Slide 26 – Business risks] There are business risks. You need to really just consider how likely these things are to occur and what you can do to prevent it. In other – Webinars – we do talk about business risks quite a lot. Particularly in the „Business continuity planning‟ one, which we ran, interestingly enough, in October/November, because we were warning it's likely to be a very heavy-duty cyclone and flooding season – and what do you know? It sure was. [Slide 27 – Financial risks] Your financial risk, liquidity risk, and interest rate risk – these interest rates keep going up. How is that affecting your business? How could that affect your business? What your credit looks like. What's the commodity price like. Foreign exchange – if you're buying from overseas, if that U.S. dollar remains strong or if it goes down, what will that do for your business as well? [Slide 28 – Questions] Look, people, there is a lot of stuff to cover, and I realize we're actually at 8:30 already. So I'm going to end it there, and ask you to raise your hand if you would like to ask me any questions, but don't log off, because I've got a couple more announcements in just a moment. So, lots to digest there, obviously, lots and lots and lots. Would anybody like to make a comment on tonight or just ask me a question about anything we've covered or anything? I may be able to help you in business. Raise your hand now. Nobody? Sometimes when one person starts it, the next person will ask, they're just afraid. I had three of you I had the chance to talk to tonight. Andrew I haven't. Are you sure you don't want to have a quick chat? Speak now or forever hold your peace. Question time. No? Going, going. And gone. Okay, people – well, you're deserving a well-earned rest after a big business day – so once again, I thank you for logging on to tonight's Webinar. I hope you got lots of out of it. I always – I do talk fast. I do try and give you as much value as I can in the short time I have with you which is of course one hour. [Slide 29 – Next webinars] We've got more Webinars coming up so if you found this useful, and some of those topics I've been referring to throughout this session sound a bit of interest, there's a range of further topics and they're all free as well. And I'm very excited to announce, it's just all been confirmed today, the dates – there's some new Webinars we're going to be running. We're running one on social media, which is really in vogue, very buzzy. Something that yes, every business owner should be thinking of – no longer is it the people just to muck around. It is something every business, I believe needs, and – so if you're interested in that, April – if you want to know more marketing strategies, March and April, we've got the attracting your customers, retaining your profitable customers, and another new one, Search Engine Optimization in May. So if that's something you want to know, take a look. And recordings from previous Webinars will also be available very soon. This week. And you can register for those on one or two websites, whichever one, I suppose, you find the easiest to remember. [Slide 30 – Help is available…] Now, I do want to let you know that there is lots of help available for you as a business owner. I'm just scratching the surface of what the Queensland government makes available. If you want to see all their resources, all their articles, all sorts of fantastic benchmarking and budget sheets and all sorts of things you can download, go to www.business.qld.gov.au and search, search for whatever you're looking for, and you may well just find it. If you can't find what you're looking for, we'd love to reach out to someone looking for business help, here's a 1-300 number – it is 1-300-363-711. Write that one down and keep it somewhere safe. You may not need it now but you may in the future. [Slide 31 – Feedback] And finally, to wrap it up, it is a requirement of our contract with DEEDI, to get everybody, I mean, each and every one of you, to fill in a quick feedback form on tonight‟s session. Even if you've been on one of these Webinars before and you've completed a survey before, I do need you to complete one for tonight's session as well. As you should know, it only takes a moment – so Jag should have texted that link through to all of you. Certainly click on the link, stay online, click through a few questions, and give us your feedback. We do read each and every one of them. We report them back to DEEDI, and we take on board your very welcome suggestions, compliments, and criticisms and turn them into new revised Webinar formats. Thank you, once again, for getting online tonight. Please, please do the survey before you log off for the night and I do hope that you've picked up some great tips that can give you lots of areas that you can strengthen your business and I wish you all the best and your business activities, your adventures I say, because it is one big adventure. Good night, everyone.
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