Tag Archive: growth

The Secrets Of Strategy – Part 1 Of 2

The Secrets Of Strategy – Part 1 Of 2

The Secrets Of StrategyThe Secrets Of Strategy – Part 1 Of 2. A step-by-step guide to creating a growth strategy based on your current situation and future possibilities.

I’ll bet you think you already have a strategy.

And well you may, but strategy as a concept is just like love: much used and little understood. Many businesses (and that includes small entrepreneurs, large corporations, non-profits, community organizations, governments, NGOs…the works) neither know what strategy really is, nor how to get one. The Secrets Of Strategy – Part 1 Of 2

And even if you do, in fact, have a strategy — is it the right one? The best one? This is so important — marketing guru Jay Abraham says — and I agree — a superior strategy badly executed will beat a bad strategy well executed, any day.

It’s easy to say, “This is big company stuff. We know what we need — why should we do all the extra work.” While a “strategy-less” group of marketing tactics may work well and produce good results, is it taking your business in the best direction? You may be making money, but are you making the most money possible? Could another suite of tactics implementing a superior strategy produce far better results? 

Which brings me to the point of this two-part article: how to formulate strategy. In the next 1500 words, I’m going to present the first half of a basic system for identifying high-impact strategies in your business. (Just the first half? Yes. While I strive to make this as simple as possible, it still takes a bit of explaining, and editors and readers alike detest long articles!) So Part 2 will finish the outline, and in future articles, I will discuss each system component in finer detail. 

Let’s begin with a working definition of strategy.

Strategy is the guiding principle on which are based a series of interlinked decisions regarding the selection and deployment of resources and tactics, whose purpose is realizing a vision and achieving decisive objectives in a competitive and changing environment. The Secrets Of Strategy – Part 1 Of 2

This definition tells us a few things:

* The purpose of all strategic decisions is achieving your vision and “decisive” or critical-to-purpose objectives.

* Strategy is about selecting specific resources and tactics to get the desired result.

* Strategy is not static; it is decisions in a series, and evolves continuously over time.

* Strategy is broad and all-encompassing. With that in mind, here are the 8 steps in formulating strategy:

1. Set your vision

2. Gather environmental and competitive intelligence

3. Take stock of your organization’s strengths and weaknesses

4. Select your “grand strategy”

5. Establish decisive objectives

6. Rate and rank your “SWOTs”

7. Match your internal and external factors to identify strategic alternatives

8. Select specific strategies for implementation

Of course, there is one last step: turning your strategy into tactics and game plans, and execute. We won’t get into that in this article.

Step 1. Establish your vision.

People complicate the idea of vision. A vision is simply a story describing how you want things to be in the future. Some people can tell these stories easily — they know exactly where they want to be and what it will “look” like. The Secrets Of Strategy – Part 1 Of 2

Others need help. The best approach is to answer a series of questions regarding what your organization does, who are it’s clients or beneficiaries, what its impact is, how big it is, where it is, how it operates, when all these things will occur, and so on. As a result of answering these questions, your vision will emerge.

Of course, you may already have a vision. If so, now is the time to insure that it is relevant and powerful.

The test of a good vision is if it inspires; not only you and your management team, but all of your stakeholders: your partners, employees, clients, investors, vendors, lenders, your community, your government-and perhaps the public at large. A great vision inspires, and it also provides direction. Every action you take should further your vision. If it doesn’t, don’t do it. The Secrets Of Strategy – Part 1 Of 2

Step 2. Gather environmental and competitive intelligence.

To develop the best strategies you must understand the world outside your organization. Quantify and qualify, not just absolutes, but trends. And importantly-identify changes in the status quo. Key areas for focus include competitors, technology, market size and trends, your clients’ industry health, macroeconomic trends, availability of key resources (people and materials) government regulations and other political considerations, and changes in demographics and psychographics — like customer taste.

Devise relevant measures for each of these key external areas. For instance, examine your competitors for revenue, profit and market share growth (or decline), product and service changes, shifts in marketing and sales strategy, changes in geographic distribution, strategic alliances, and major customer announcements. The Secrets Of Strategy – Part 1 Of 2

Macroeconomic factors include the obvious such as interest and employment rates and trends, production and consumption statistics, along with finer grained-industry issues such as new home buying-which impacts a wide variety of businesses, or defense spending-which impacts a completely different set of sectors.

Step 3. Take stock of your organization’s strengths and weaknesses.

Now it is time to shine the light on your organization. Examine each functional area looking for strengths and weaknesses. Identify strengths that will help the company realize its vision, and weaknesses that will impede its goals. The Secrets Of Strategy – Part 1 Of 2

The following is a starter list of focus areas:

* Ability to get new prospects (Marketing)

* Ability to get new clients (Sales)

* Products and services, both existing and those in R&D

* Finance or Money, including cash flow, access to capital, revenues, profits, ROI

* Leadership, including values and vision alignment, decisive objectives

* People, including skills inventory, staffing levels, employee loyalty, compensation

Other areas to examine include:

* Client satisfaction

* Client services

* Logistics

* Competitive positioning

* Unique Client Proposition

* Management team

* Administration

Step 4. Select your Grand Strategies.

This “grand strategy” approach is based upon industry/product revenue growth rates. It is specific to a business unit with one major industry and/or product focus. If your business is more complex, you may repeat the process for each focus sector. The Secrets Of Strategy – Part 1 Of 2

First, consider your industry and product sector growth rate. Is it growing or declining?

Second, consider your competitive strength within that sector. For this analysis Competitive Strength has two components, the size and trend of your market share, and your organization’s financial strength; specifically either cash flow from operations, or access to capital.

To simplify: strong market share + strong finances = strong competitive position. Either strong market share or strong finances = average competitive position. Neither strong market share nor strong finances = weak competitive position.

This defines a two-by-three matrix of strategic choices from which to select your grand strategy.

The exact choice you make will be dictated by the specifics of your situation: sector strength and competitive strength, along with your stated vision and purpose. Choose from the list which best describes your business:
Strong sector, strong competitive position

This means that you are in a growing market, hold a commanding market position, and have cash with which to maneuver. Your strategic choices include:

* Market strategy to increase demand and sales for existing products and services, in existing and new markets

* Marketing strategy to increase market penetration for existing products and services and capture greater share

* Enhance or extend existing products and services; add-ons, backends, strategic joint ventures

* Gain control over distribution – bring external sales inside. Take sales from distributors

* Gain control over suppliers Acquisition, merger, or joint-ventures with competitors

* Develop strategic partnerships to increase distribution, or gain new products

* Develop related products and services for existing customer base – backend strategies

Strong sector, average competitive position

Here you are in a growing market, but have either a commanding position, but limited cash-or vice versa. The exact choice available to you depends on your situation. You can:

* Seek underserved niches: move into small, defined and profitable markets

* Marketing strategy to increase market penetration for existing products and services and capture greater share

* Enhance or extend existing products and services; add-ons, backends, strategic joint ventures

* Strategic partnerships – seek products/services for existing customers

* Exploit assets via joint ventures and host-beneficiary relationships

* Develop related products and services for existing customer base – backend strategies

* Increased marketing penetration via distributors and 3rd parties

* Get more money: raise capital via debt or equity

Strong sector, weak competitive position

You are in a strong sector, but have relatively small market share, and limited or no cash. Your choices include:

* Seek underserved niches: move into small, defined and profitable markets

* Marketing strategy to increase market penetration for existing products and services and capture greater share

* Strategic partnerships – seek products/services for existing customers

* Develop products and services for existing customer base – backend strategies

* Sell your client base to a competitor or cooperator; or reposition your existing products to appeal to new customer types

* Sell the product line and use cash to reposition remaining assets

* Sell the company

Weak sector, strong competitive position

In this case, you dominate a weak market and have cash to exploit your position. You should:

* Add related products and services for existing customer base – backend strategies

* Add un-related products and services for existing customer base – backend strategies

* Add new products and services for new customer base

* Create joint ventures in unrelated markets

Weak sector, average competitive position

You are in a mediocre position in a weak market. Depending on your exact circumstances, you can retreat, use what’s left of your cash to buy your way out with new products, or try to enroll a strong partner. Choices include:

1. Reduce costs however you can

2. Add related products and services for existing customer base – backend strategies

3. Add new products and services for new customer base

4. Seek to dominate the smallest definition of your market using low-cost / no-cost strategies

5. Create strategic partnerships and joint ventures

Weak sector, weak competitive position

Sorry to say, you are in a bad place. In a word — retreat! You can do this by:

1. Reduce costs however you can

2. Sell product line

3. Sell company

If you don’t want to liquidate, seek to expand your marketing using low-cost / no-cost marketing strategies – but this may be a losing proposition

Also, as above, attempt to create strategic partnerships and joint ventures, but it may be difficult to attract partners to a market with poor fundamentals. At this point you might say, “…sell the customers? Sell the company? No way. I’m holding on.” That just isn’t a strategic point of view. The Secrets Of Strategy – Part 1 Of 2

Strategy says you can make more money doing something else — so you best start thinking about it.

In general, these choices are listed from most attractive to least. Your organization’s best choices will be based on your particular circumstances.

By now you have formulated a vision, gathered analyzed your external environment and organization, identified relevant strengths, weaknesses, opportunities and threats, and begun to zero in on a grand strategy. That should keep you busy for a while.

In The Secrets of Strategy, Part II, we’ll complete the process.

Remember-you don’t need a strategy. But having one increases your chances of generating the greatest profits from your resources. After all, that is the whole point of strategy.

(c) Copyright Paul Lemberg. All rights reserved

How To Attract and Keep Top Performers by Tim Jacquet

How To Attract and Keep Top Performers by Tim Jacquet

How To Attract and Keep Top Performers by Tim Jacquet. Good people are hard to find, the saying goes. For example, by the year 2000 over 190,000 computer programmer and other information technology jobs will be vacant, according to a Bureau of Labor Statistics report. (This is now a bit out of date, and although the dot-com bustups and the 2000-2001 recession has eased things a bit, it is still difficult to lure top talent.) It may be easy to fill these empty positions if you are a software giant like Microsoft, but there is a tremendous challenge attracting (and keeping) top performers if you are smaller and less well known. How To Attract and Keep Top Performers by Tim Jacquet

According to chief executives and industry recruiters who were interviewed for this article, there are three main areas on which to focus: the quality and market position of your product or service, environment, and compensation.

Leading edge technology and a high perception of quality will lure top technical and design people, salespeople and support people, all for different reasons. Technology people relish the challenge of developing something new, plus they need ongoing opportunities for skill enhancement to remain fresh.

As for top sales people, a strong product means they can earn bigger commissions, and their egos are fulfilled by being on the leading edge. And top support people are smart enough to know that a quality product makes everyone’s job easier, and it enables them to earn their incentives. For everyone, superior products will earn your company better returns, enabling more reinvestment in R&D, providing challenges and adventure for your technical people, and more and better product for your sales and marketing team. How To Attract and Keep Top Performers by Tim Jacquet

What if your product is not cutting-edge, or your quality not up to snuff? Appealing to top performers is not going to be your only problem. Unless you control a mature market niche, your company will need to update and upgrade to remain viable – this requires high caliber people. If you want to survive in the marketplace you must concentrate harder on the next two factors.

Environmental factors – the corporate culture, the caliber of co-workers, the attitude of your management team, and your physical environment can be pivotal in finding and retaining talented people. How To Attract and Keep Top Performers by Tim Jacquet

Corporate culture is one area smaller companies have an edge – that “hell-bent-for-leather” attitude makes it exciting and challenging to come to work, and there are fewer layers of bureaucracy people find so stifling. Real teamwork, where success is shared and the team affirms a common commitment, will draw other top professionals.

Having a smart, talented staff will captivate more smart, talented people. So will a collegial atmosphere which values the opinions of the rank-and-file along with open-management policies keeping the troops informed on the state-of-the-company. How To Attract and Keep Top Performers by Tim Jacquet

A training plan, designed career paths and professional conference attendance are more ways to attract and keep people. Other small but significant options include dress code, flextime, telecommuting, offices with walls – these all help.

Last is the issue of compensation. The big salary problem is no matter how much you pay, a competitor can pay a little bit more. So in terms of salary level itself, you simply have to be at or near your market rate.

Pay-for-performance however, can take compensation much higher while avoiding salary inflation. A system of carefully designed bonuses and incentives will enable you to pay people for exceptional production.

Equity – stock grants, options and equity-like phantom stock – is a powerful way for smaller companies to entice people at all levels. Plus, smaller companies can grant equity without the usual waiting period required by public and larger companies. (Just remember to include a forfeiture clause in case of early termination.) How To Attract and Keep Top Performers by Tim Jacquet

What does all this mean in real terms? Some of the ideas in this article are harder to implement than others, and some describe conditions you simply can’t achieve. Must you arrange for every item mentioned above? Of course not, but systematically providing your people with the challenge to be their best, the opportunity to learn, the freedom to be creative, the incentives to perform and produce, a feeling of ownership, and the respect as professionals – these are the things that will make top technical and sales people want to join your company, and have them stay. How To Attract and Keep Top Performers by Tim Jacquet

Managing ‘Goldilocks’ Growth: Avoiding the Traps of Expanding Too Quickly or Too Slowly

Managing ‘Goldilocks’ Growth: Avoiding the Traps of Expanding Too Quickly or Too Slowly
by Sherron Lumley.

When Goldilocks of fairytale fame first launched Three Bears, LLC, the small start-up company was a long ways from where she wanted it. “Oh no, this business is too small!,” she complained. Right away she set about making things happen, working day and night to build the business of her dreams. However, after a period of rapid growth and expansion, she was struggling to meet customer demands, sacrificing quality, scrambling to fill vacancies and feeling stressed out by finance payments on the loans she took during her growth-at-any-cost mania. “Oh no,” she found herself saying one day, “this company is too big!”

Managing the pace of growth for your small business may feel like the proverbial Goldilocks tale, an eternal struggle to find just the right size for your business that avoids the pitfalls of being either too big or too small.

The scenic route

Brian Easter launched Nebo, an Atlanta-based interactive marketing agency with his brother Adam Harrell, in early 2004. For Easter, coming from the global telecommunications field, his previous experience within a large multinational was not a fit with his personal values. The company he pictured as his ideal was one that was smaller, where human relationships would be seen as important.

The business model he created wasn’t about maximizing profits. “It was about doing great work,” says Easter. This emphasis on being a small company with strong values and a focus on doing good work led to dozens of marketing awards and a strong client base with steady growth of approximately 20 percent per year for the first seven years.

Then last year, the business grew 57 percent in net revenue, which brought up an unusual question for the brothers. “For our business, we asked, ‘Why do we need to grow?’ We don’t believe in taking a project for a paycheck,” says Easter, adding, “sometimes, no is more powerful than yes.” The decision to turn away some projects was a deliberate move to stop runaway growth while focusing on doing more high quality work with their best clients.

So what is the driving force for Nebo now, eight years after start-up? “One of the things I want to do is grow revenue without growing employees,” says Easter. “I want to focus on the people in the room, to raise their skill set and earning potential. I want them to grow in terms of salary and quality of work,” he says. This de facto curbing of growth by putting the brakes on hiring is one good strategy for keeping growth in check.

PQ_ManagingGrowth.jpgCritical velocity

“We want to do great work and be professional, but we are also trying to defy gravity,” says Easter.

Many small business owners understand what those words mean. Defying gravity represents doing the seemingly impossible, such as maintaining high standards during periods of rapid growth and expansion. But the reality is, if defying gravity were really that easy, then everyone would do it. For some small businesses, conquering growth is more like learning to ride a bike, if you don’t pedal fast enough, the bike falls over and it’s try, try again.

This was the case at a marketing firm in a galaxy, far, far away—not really, just the suburbs of Chicago— where an altogether different approach did not work so well. “For my small business the struggle came in the form of having plenty of clients, but not enough workers,” says Ruth Ann Weisner, founder of Raw Marketing. “Within a few months of formation I realized I must hire help or there will be no chance for the company to grow,” she says.

However, in a rush to hire people to meet quickly growing demand, she took on staff with the wrong skill sets, hoping that with the proper training it would all somehow work out. “I went about it the wrong way,” she says, “after several months it was back to square one…lesson learned.”

Gathering a team

Philip Noftsinger is the Business Unit President for CBIZ Payroll, Inc which provides professional business services to help clients manage their finances and employees. Noftsinger is responsible for creating CBIZ’s monthly employment index, which highlights small business employment trends and brings a deep understanding of small business growth (or lack of growth) and connected dangers.

Noftsinger’s experience with outsourced payroll and HR services for 5,000 clients gives him a unique perspective on the success or failure of small businesses. “I know for certain in the last three years, there is an increased ability to be more agile,” he explains. First, with regards to human resources, he sees a lot more 1099 professionals (e.g., contractors and freelancers) and more temporary workers. A fluctuating workforce means small businesses today are better able to meet changing demand than the small businesses of the past. Secondly, he sees small businesses embracing the idea that Main Street companies need lean production, looking at the cost structure of the labor and resources that go into their production process in the same way that large companies do.

Financing for growth—and when to say no to demand

“Small business owners, when they are first looking at growth, often it’s because they have a great product, and in that case, demand will outstrip capacity to produce,” Noftsinger says. “When demand is outpacing supply, for large companies that’s easier to deal with,” he adds. Small businesses, on the other hand, have to look at how much investment capital is available to meet demand and whether that money will come through debt financing or growth through profits. “Occasionally, a small business has to deny demand and walk away from sales,” he says.

Easter describes his financial strategy as conservative. He and his brother decided to fund the start-up of Nebo from personal savings and without the help of outside investors. “It was a reaction against the industry,” says Easter. “I’ve seen one of our competitors lose control of his company, recklessly taking investment dollars,” he explains.

Happily ever after

“It didn’t happen overnight,” says Easter. “There are no short cuts,” echoes Weisner.

When it’s time to expand your small business, consider the company culture you want, then set a deliberate pace for growth. Don’t be afraid to deny demand or spend the time and money to hire appropriately if you feel those strategies best fit your long-term plans. After all, it’s about finding the pace that’s just right for you.

Managing growth – first steps for small business owners

Create the company culture you want. Establish core values and a company mission.
Forecast for growth. Plan ahead for the next three years and revisit the plan often.
Maintain standards by setting a deliberate pace for growth.
Understand the ramifications of financing growth; know your cash flow position.
Say no to demand when necessary.

Hard to grow your client base as a single-person operation?

When you are one person trying to run your accounting, finance, administrative, marketing, operations, and customer service departments during a 24 hour period each day, you start to wonder “How the heck am I going to grow this thing?” You do not have the time for networking events or posting flyers and you do not have the budget for any sort of advertising campaign (both online or in the physical world!)

So what do you do? I say focus on how you deliver your product or service!

Think about it! If you are a service-based company, then you are being hired because of your expertise in a given area (or because you are cheaper than your competitors.) The only thing your client expects is for you to deliver what they are paying for. You, however, actually have much more knowledge about what your service is provided for and why it is needed than your client may know and/or think they need to know. Educate your clients about your industry, products, and services and why they are needed. Share your knowledge with your clients that can help them make better informed decisions in the future and possibly prevent any problem situations that may arise down the road. Giving your knowledge to you clients is free to you, but invaluable for them!

The rest is up to you! You should be managing the entire client experience with your company in a way that promotes honesty and integrity! Become a vendor they can trust and count on! Show them you want them to become as successful as they can be by exceeding their expectations! Not just in terms of the service you are providing, but the way you provide it and the knowledge you share with them! They will love you for it and sing your praises, and not just to you! When they come in contact with others that need your services, they will remember you!

Now your business growth is fueled by FREE marketing in the form of word-of-mouth advertising and client referrals!