Posts Tagged ‘Business Planning’


Why Most Business Mergers Fail (and What to Do About It)

It starts off as a brilliant idea. The small business owner is interested in buying another company or they want to sell theirs. Dollar signs and possibilities float around in their head. After a lot of hard work, the transaction is done and everyone celebrates. But then, it ends up hurting the future of the combined companies more than grow them. In fact, 70% to 90% of all mergers fail.

What goes wrong? Here is how to get the odds in your favor:

1.     Product offering synergy. Determine if the two products or services really fit together. Will they compete or cannibalize customers when the companies are merged or are they complementary? Many times, the offers have less synergy than the two companies initially think. How to test before the sale: Approach five current customers to see if they will buy the other product or service. Then, find out why or why not.

2.     Management match. Can the combined teams work together? Which executives will lead which functions? Many times there is overlap and certain managers and departments need to be eliminated. Remember, there should be clear leaders in the new company and not management by committee. How to test before the sale: Have both management teams participate in making a few important decisions for the proposed new company. Hire a consultant to observe how well this works and report back.

3.     Culture blend. Can the cultures of the company work not only together, but will they blend over time? Often, one culture dominates the other and valuable employees can’t thrive in the new environment and leave. How to test before the sale: Set up three teams of employees from the two different cultures and have them accomplish a task. It should be planning an event for the company or a new recognition program. Evaluate the results.

4.     Setting expectations. These are usually set too high for a short period of time. Many mergers actually push the company back in terms of profitability before it propels them forward. Assume no gains from synergies for at least the first six months. How to test before the sale: Review the growth and profitability of the two companies before the sale and cut their future growth by 50% for the next six months to get a closer estimate of what will happened post-merger.

5.     Market assumptions. How will the other companies and customers in the market actually react to the merger? Many times the expected changes never come. How to test before the sale: There is no way to test his since it is impossible to simulate what the market will do realistically. However, similar past transactions in the same or parallel industries may provide a clue.

How successful was the merger of your company?


Mondays with Mike: Empower Your Employees With These 3 Questions

We’re entrepreneurs at least partly because we want to be in charge.  We have the vision, the plan, and the drive to achieve success.  That’s why it’s hard to loosen our grip on the reins sometimes.  Hard, but absolutely critical.

If you insist on making every decision in your company, you’ll never, ever grow much beyond where you are right now.  Why?  Because no one person can do it all.  I don’t care how smart you are or how many hours you’re willing to put in.  Growth requires that you relinquish some control and trust the good people you’ve hired.

But you can’t just send new hires off and let them start making critical decisions.  There’s a process – three steps that you can use to help your staff (and yourself) make the very best decisions possible.  Use this list of questions to guide your employees’ decision making process.  Until they can answer “yes” to question one, there’s no moving on.  When all three questions get affirmative answers, then they can proceed.

  1. Does this decision further our company’s uniqueness?  Seriously, this question matters more than you realize.  Your points of difference are all that distinguish you from the hordes of competitors dying to steal your clients.  If a decision doesn’t contribute to the unique offerings you provide to the marketplace, then you run the risk of becoming invisible – and that’s fatal.  Push your employees to understand the ways in which your uniqueness is critically important, and if they can’t answer “yes” to this question, they have to stop.  They can’t move on until they’ve reworked an opportunity to reflect what sets you apart.
  2. Does this decision further serve our best clients?  One of the great challenges of running a business over the course of time is being able to reinvent yourself while still preserving what brought customers to you in the first place.  You must train your staff to keep in mind that without customers, there is no revenue.  Unless an opportunity can improve your service, then you shouldn’t proceed further.
  3. Does this decision maintain or enhance profitability?  Once your employees have an idea that preserves your company’s uniqueness and better serves your clients, then the last hurdle is the bottom line.  Companies can’t run on ideas alone.  If a decision doesn’t pass the fiscal test, it’s dead in the water.

Now, it’s important to note that each of these questions can be a dead end, but perhaps only temporarily.  Just because you answer “no” doesn’t mean you can’t rework an idea or an opportunity so that it turns into a “yes.”  Teaching your staff not to be easily frustrated is another big part of empowerment.  Working through options to refine and polish your decisions will inevitably teach your staff valuable skills that will serve them throughout their entire career.

Good decisions are often what separate success from failure.  Training yourself and your staff to make better decisions not only helps you become more efficient (by empowering your staff.)  It also sets your company up for growth and success. 


Six improvements to make in your customer service experience (that you can begin today)

Here are six areas of your customer service experience that may be ripe for a review and overhaul: areas where you may be able to make a significant improvement due to their importance and how often these areas are overlooked in many businesses.

1.      Become scientific–and traits-based– in your hiring. The reality is that not everyone is cut out to work face to face (or phone to phone, or terminal to terminal) with employees. For success with customers, hiring needs to be a scientific process.  Hiring on a hunch is deadly, and — quite often — discriminatory.  So: Hire to a profile, study your results, revise your profile, and keep at it.  (For a shortcut to get you started, use my acronym WETCO as your rule of thumb for the five traits most crucial in employees with frequent customer contact:  Warmth, Empathy, Teamwork, Conscientiousness, and Optimism. )  

2.     Reinforce your customer excellence standards daily. The very best organizations talk about the importance of customer service every single day, every single shift.  The Ritz-Carlton has been doing this since the 1980’s and they don’t miss a single shift.

3.     Pay special attention to the two parts of the service experience that are most memorable to a customer: the beginning and the end of the customer’s interaction with you. Also: be sure to recognize that the beginning starts before the beginning”—that customers are picking up info and implications about you before they ever arrive at your official website or the front door of your establishment.

4.     It’s crucial that you have a customer service recovery process in place for when things go south. It doesn’t work to wing it every time a customer is irritated, frustrated, or flat-out furious. No matter how superb your product or service is, every company needs a service recovery process with the goal of restoring (or even enhancing) customer satisfaction, as well as reducing the possibility of a recurrence.

5.     Be as timely as your customers expect you to be: A perfect product, or perfect customer service, delivered late, is a defect. Being late or misleading about timetables, being insensitive to the timing issues and pacing preferences and expectations of your customers, is problematic.  Great institutions are doing everything possible these days to adjust themselves to the customer’s perception of time: this includes self-service options for project tracking (for example, USAA Insurance allows you to see the progress of your insurance claim online, 24/7), flexibility on delivery times, guaranteed times for menu items in fast casual restaurants, and more.

6.     Strive to see, taste, feel and even smell your company the way your customers do? You can learn a lot by parking where your customers park, entering via the same entrance your customers use, calling in on the same phone lines and using the same retail website and perhaps-laborious login routine you make your customers go through. You learn a lot this way. If you use reserved parking and the employee entrance and your intranet, or–worse–spend the day holed up in your office, you won’t.  You’ll, tragically, find out about your company’s problems on Yelp rather than from your own eyes.‚Äč


How your business can make a great last impression

1-21 lasting impression smallAll of us, at one time or another, have had the importance of a first impression drilled into us.  But what about last impressions? Both the beginning and the end of a customer's experience with your business are disproportionately important parts of the customer experience, because of the way a customer's memory works.

Yet while we often do manage to focus on and refine our “hellos,” customer goodbyes are often rushed—or skipped altogether. After all, you as a service provider are frequently so relieved to have gotten one job wrapped up successfully and to be able to move on to the next one. The result is that a transaction often ends with nothing more personal than an invoice.

What a wasted opportunity! If your customers are happy, the goodbye is your last, and one of your most notable, chances to bond with them, to add an important final chapter to the service story.

Try to close each interaction with your customer in a way that is memorable and sincere. Make sure an otherwise-fine service experiences doesn't come to a miserable close that consists solely of handing back a credit card or ‘‘OK’’ or ‘‘NEXT.’’ How much hard-earned good will can be lost that way? A lot.

So, try to never close an interaction without providing a personalized farewell and an invitation to return. If handled properly, this farewell will be personal, resonant, and long lasting (see below)—but before you move to the closing, make sure you ask a final question, slowly and sincerely. This question should be some form of (but doesn’t have to be these precise, scripted words), ‘‘Is there anything else I can do for you?’’

If the answer is ‘‘No, thank you,’’ then move to the closing, as follows:

1. Personalize your goodbye: Use the customer’s name. Offer your business card, if appropriate for your type of business. Beyond these obvious things, customize your language to fit this customer’s history with you. For example, if this is the last day of a convention or holiday, add your sincere wishes for safe travel. If you are a retailer, express your hope for satisfaction with the item purchased.

2. Make your goodbye resonant: If appropriate, give a parting gift. It can be a lollipop for the customer’s child, a vintage postcard, or a book. An ideal gift is something that is emotionally resonant with your brand as well as appropriate to the customer. Invite your customer to come back again as she leaves.

3. Extend the goodbye in a memorable way: If appropriate for the type of purchase and your relationship with the customer, send a follow-up note. Personal and handwritten is better than preprinted—this is the best $1 investment you may ever make.


Mondays with Mike: 4 Signs of a Lousy Business Opportunity

Opportunities are a dime a dozen, so the real problem isn’t a shortage of opportunities, but the difficulty in discerning which ones are good.  Some opportunities aren’t even worth your dime.  You’re not helpless, though.  Here are four signs you should walk away from a partnership, buyout, merger, or investment:

  1. More talk, less action.  Everyone can talk a good game, and in fact, there are many great prospects with slick, buttoned-down pitches.  How can you tell when an opportunity sounds too good to be true?  One way is when you’re seeing all talk but very little in the way of evidence to support grandiose claims.  If an offer’s legit, there will be more than just a sales pitch.  How can you sift out the real deal from the pie-in-the-sky?  I suggest building milestones into any deal.  Set clear, measurable goals that must be met for the deal to proceed.  If a prospective buyer fails to submit satisfactory financials or if a potential partner doesn’t have anyone willing to vouch for her, then you should build fail-safes into your deal that let you get out without a loss.
  2. Sketchy history.  The surest way to predict what a business (or person) will do in the future is to look at the past.  Take the time to vet the people you’re looking at doing business with.  If you’re considering selling your company to a firm known for gouging customers on price, then you’re not likely to be more fairly treated.  If there’s a partnership on the table, but your prospect has a history full of unhappy clients, then you should ask yourself how you can expect to be treated.  I’m not saying a leopard can never, ever change its spots, but I am saying that leopard is unlikely to be transformed into a lapdog. 
  3. Radically different goals.  This sign is most relevant for budding partnerships, but its importance can’t be overstated.  Before you begin negotiations, it’s critical that you ask any potential partners what their goals and objectives are.  If you’re fundamentally interested in raking in as much money as possible, while your partner values giving back to the community regardless of the cost, then there’s no way on earth your partnership is going to work.  While different approaches and perspectives can absolutely enrich joint efforts, fundamentally different goals will kill your venture before you begin.  Make sure you have a heart-to-heart before you ink a deal.
  4. You’re desperate.  We’ve all been there.  You need a cash infusion, and you have a prospective buyer, or you’ve been looking for the right company for a merger to alleviate a thorny challenge.  Anytime you’re really desperate to close a deal, you’re vulnerable.  Make sure you take a step back, take a look at your motives, and be aware of any circumstances that might lead you to make a foolish decision.  You can’t eliminate the reasons you might have for needing to close a deal, but you can certainly be aware of your desperation and take extra steps to evaluate the pros and cons objectively. 

We all enter into business opportunities for different reasons, but my single best piece of advice is this:  make sure your business is in good shape before you take any leap.  Getting your expenses under control and your financial house in order makes you a more attractive prospect for a sale, a partnership, or as an empire builder. 

 

    


Watch for These Business Communications Trends in 2016

In 2015 we saw a surge of devices and technologies hit the market that have dynamically altered the way we work. It is becoming more apparent that it will be necessary for companies to adopt new technologies in order to maintain a competitive advantage. Technology continues to leave its footprint on innovative business growth ventures, and it looks like it’s going to stay that way. Here’s a look at some communications trends to watch for in 2016:

Web & Cloud-Based Communications

As more companies migrate towards a tech-friendly work routine, they continue to implement more web and cloud-based communications platforms and tools. VoIP (Voice over Internet Protocol) continues to see an upswing, largely due to the reduced cost of use, ease of implementation and feature-rich offerings. VoIP provides features that, previously only afforded by large corporations, are now fundamentally changing the game for small and medium-sized businesses.

With the advent of web and cloud-based communications, employees are able to access information from anywhere and provide better customer service.

Remote Employees

It is becoming more accepted that not all employees are office-bound anymore. A growing trend shows that more companies are open to hiring remote employees, or allowing employees to occasionally work from home. This opens up a need to have access to files, CRM software, and business data remotely, which will put more pressure on businesses to amp up the cloud-based technology they use.

Mobility

It should be no surprise that mobility is valued by businesses large and small. The importance of being able to work on the go, from anywhere, will be a continuing trend in 2016. This is one big reason why web and cloud-based platforms and apps are relied upon by both in-office and remote employees. Apps will continue to boost mobile capabilities and productivity.

Heightened Security

Security will be top of mind this year in the wake of newsworthy security breaches over the past few years. More devices offer more opportunities for hacks, which is why caution is more important now than ever before; security breaches and hacks could come through any device. Companies may invest more energy in encryption and other security measures during 2016 in order to ensure their systems meet their needs. Industry guidelines also come into play as some companies need specific types of encryption for regulations.

GenZ Goes to Work

Generation Z will be graduating college and entering the workforce this year. They will have high expectations for more devices, as they are the most computer savvy generation yet. Companies will need to shift towards more advanced consumer-grade technologies in order to attract this new work force.

Internet of Things (IoT)

As the Internet of Things advances, more and more devices will be connected. This will lead to advanced data and information sharing between devices, as well as a flood of new data and information for companies to use for their advantage.

Unified Communications

With all of these factors at work, companies may be searching for unified communications solutions in order to streamline their workflow and processes. Unified communications allows for the integration of voice, video, mobile and web collaboration in one complete solution.


Should Your First Business Be a Franchise?

If you’re thinking about what type of business to start, buying a franchise might be worth consideration. Franchises are great for many entrepreneurs: everything is laid out for you, which makes your work a lot easier. But on the other hand, many business owners find that franchises stifle their ability to make creative decisions. Ask yourself these questions to see if becoming a franchisee is right for you:

1. Do I Want an Out-of-the-Box Solution?

That’s what a franchise is, essentially. You’re handed a book full of guidelines for your business, and presented with marketing materials that are identical to what all the other franchises of this company use. If you like the idea of this simplicity, dig further into franchising.

2. Do I Seek a Proven Solution?

When you start a business from scratch, there’s no guarantee that your business will thrive. When you buy a franchise, you can look to dozens or hundreds of other locations to see how popular they are, as well as get a sense for how much you can make as a franchise owner. Knowing what to expect with your franchise can cut down on some of the risk you take on as a business owner.

3. Do I Like Playing By the Rules?

Because there are a lot of rules with a franchise! You can’t, for example, add a new product to the menu at your burger joint, or change the logo. If you’re okay adhering to what the franchisor has set as the rules, keep considering the franchise. If you prefer to play by your own rules, you’re probably better off starting your own business.

4. Do I Have the Capital for a Franchise?

Typically, buying a franchise is a fixed fee, and an ongoing royalty fee. You can find out what it is by inquiring with the company you’re considering. This will likely cost you far more than starting your own business from scratch. But one advantage is that at least with a franchise, you know what to budget for startup costs.

5. Do I Know What Kind of Franchise I’m Interested In?

There are food franchises, health franchises, grooming, boutiques; you name it. There are even business coaching franchises. So if you’re not already clear on which category you want to buy a franchise in, spend some time researching your options. Ideally, it should be in an industry you have experience in.

6. Am I Appealing to Franchisors?

While money certainly talks when it comes to buying a franchise, many franchisors won’t even talk to you if you don’t hit their net worth requirements. Many premiere food franchises require interested candidates to have a minimum of two million net worth and the ability to purchase three franchises not just one. They’re not just trying to sell you a franchise; they want to be sure you have enough money in the bank to help it succeed. Make sure your financial health is top-notch so that you’ll be a competitive candidate for buying a franchise.


Top Apps for Small Business Owners

top apps for businessOwning a small business is a tough job, and purchasing the appropriate systems for organization, communications, finance, and more can be stressful.  In today’s mobile world, it is essential that you can access tools while on the go.  Thankfully, there are many applications that are inexpensive, easy to use, and extremely helpful!  I’ve rounded up the top mobile apps that will help you streamline your business and stay connected from anywhere:  

Evernote

Evernote is a multi-purpose organizational app that is amazing for assisting small businesses in keeping track of tasks, discussions with employees, and more.  It seamlessly syncs with your computer, so your information and notes can be accessed from any of your devices.  You can also use it for personal documents and keep that information completely separate from your work files.  Pricing varies from free for basic components, to $12 per user per month if you’d like to take advantage of more advanced features.  Easily share content, coordinate projects, and keep remote coworkers up-to-date in one app!

Tripit

If your business involves any travel, Tripit is a must-have app to keep you on track.  You simply send your email confirmations for any flights, hotels, etc. to Tripit, and they are automatically converted into a custom itinerary.  You can manually or automatically update the plans, add them to your calendar, and share plans with others.  If you purchase the Pro version for a small fee per month, you can access even more features, including receiving real-time flight alerts, tracking rewards points, and getting seat upgrade notifications.

Nextiva

The Nextiva App is an all-in-one communications tool for your business, and can be especially helpful if you have employees frequently on the road or working remotely.  It provides a complete VoIP softphone, allowing you to use any functions available on a desk phone right from your desktop or mobile device.  Additionally, it includes instant messaging, video collaboration, cloud sync, and call controls, serving as a complete communications package.  The app is available with our Nextiva Office plans.

Expensify

Expense reports may never be an activity you look forward to, but with the help of Expensify, your company’s reporting process can be modernized and easy to manage.  Employees can quickly add expenses and automatically import credit card charges within specific dates.  Mileage can be captured via your phone’s GPS, receipts are scanned and input into the system, and approvals are made via rule-based workflows.  You can also connect bank accounts to the app to make reimbursements even simpler! 

Square

If you’ve made a purchase from a food truck, farmer’s market, or other independent vendor in the past couple years, you have likely seen Square at work.  It is a great app for any small business with a need for accepting in-person payments via credit card.  After purchasing a chip or magstripe reader that is compatible with both Apple and Android, basically any mobile device can be transformed into a point of sale system.  It can also integrate with other applications such as Weebly and QuickBooks, making account syncing a simple process. 

These apps, along with many others, can be extremely helpful in mobilizing and organizing your business tasks.  Take advantage of the user-friendly applications available to business owners today, and keep your company tech-savvy, flexible, and secure.


Are You Pickier Than Your Pickiest Customer? (You Should Be)

12-31 Picky Eater smallIt’s time for you to stop cutting your business a break, to stop letting things slide. If you want to improve as a business, learn to out-picky your pickiest customer. Try putting on your pickiest view of the world, and force-fit this filter onto your employees’ eyes as well.

Let’s try out this pickier-than-the-pickiest-customer view of the world with a look at the very simple, often ambiguous behavior that one of your employees might exhibit. For example, you could be watching, through your new grump-tinted glasses, one of your clerks coming out from behind the checkout counter chewing on her last bite of a ham and cheese sandwich.

 Your employee makes her way to the register, swallows the last bite of her sandwich, and says, “May I help you?” to the customer waiting at the counter.  Not an uncommon behavior and something most of us have seen at some time or other in our life as customers (people gotta eat, right?)

Now that you’ve watched this scene unfold, take your employee aside and ask her to describe what the customer at the register thought of the interaction, including the not-quite-finished sandwich with which it started.  Your employee will usually ascribe the mindset of someone like her own sweet grandmother to the customer; she’ll hear in her mind’s eye the customer thinking “Oh, that poor dear. She missed her dinner and had to eat standing up. She rushed right back to work after taking only five minutes of her lunch break. She’s so dedicated.”

This, my friend, is one of those big ole teachable moments: If you take this opportunity to ask your staff member to look at her own behavior as your pickiest customer would see it, you help her understand how her behavior actually appears to some customers. Because your pickiest customer would interpret the sales clerk who comes out to the register chewing the last bite of her sandwich more like the following: (with dripping sarcasm): “Oh, how nice! You have time to sit back there and have a leisurely lunch while I’m standing in the line for 20 minutes waiting for you to get off your backside and come help me. I’m soooo sorry to have bothered you – no – you go back and finish up while I stand here, at your leisure, just waiting to give you my money. Don’t worry about me or anyone else dying here in line…”

Needless to say, this is a very different interpretation – but it’s the one that will help you grow as service providers and as a business entity.

If you teach yourself, and your staff, to view their service behaviors as would a customer who’s a hypersensitive, hypercritical crank, your staff and you will begin to see flaws in the customer experience and any number of inanities that you’d otherwise miss. Let’s say you manage a restaurant and catch a busser in the following behavior:  He sees a half-empty glass of ice water and says to the guest, “Would you care for some more water?” It’s a pretty innocuous service gesture, and intended to be helpful. However, viewed through the eyes of your pickiest customer, the response might be something like, “No, don’t bother – let me die of thirst” or “what do you need, an engraved invitation – it’s just ice water” or “Excuse me, I was talking!”

Viewed through this lens, you can help your employee reevaluate whether or not he should continue to interrogate guests on their refill needs, rather than just pouring it without a word and moving away from the table.  




 
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