Onepenny

A few weeks ago I asked my readers what the most important issue was in their business. Hundreds responded with a variety of answers, but one of the most common was, “How do I get everything that needs doing done?” Happily, I have an answer for this question, but like many things in life, it carries both good news and bad news. The good news is, if you are one of those fortunate few with access to unlimited resources, you can get everything done. But that’s really the bad news, isn’t it. Because among all the people I know - not a single one of them -not one - has access to unlimited resources. Even executives I work with whose budgets run into the hundreds of millions - even they do not have unlimited resources. Even they have to make choices and trade-offs. Earl Nightingale once asked the question, “What one thing would you do if you knew you could not fail?” And Jack Palance’s Curly in City Slickers, asked a similar question: “What is the one thing?” Their questions contains seeds of the answer to this quandary. Because all things on your plate are not created equal. They are not all important. They do not all have the same impact, the same dependencies, the same possibility of reward. And even if you think they do, upon close examination you’ll find they do not. The trick of course, is to figure out the one thing that matters most… Right now… And focus on that. Of all the ideas I have sifted through in my role as an executive coach and business coach among the most relevant is the concept of sacrifice. My definition is giving up something of value for something of even greater value. Sacrifice is the key. You have to let go of your attachment to most things on your plate, and figure out what things are of greatest value. You don’t get everything done, and you can’t get everything important done. If you select well, and are willing to sacrifice the rest, you can get the most important things done. By letting go of the rest, everything essential, everything vital, everything earth-shattering can be done. Can you imagine what life would be like if you only worked on things that were earth-shattering? While this seems simple, obvious even, most of us have struggled with it all our lives. You probably have trouble figuring out, from day to day, what is going to make the greatest difference. I’d be willing to bet that if you take a look, you probably can’t even figure out what the criteria are. So let’s go back to Earl Nightingale’s question: What one thing would do if you knew you could not fail? Look at the things on your to-do list this way: What will have the biggest impact? What will yield the greatest revenues and profits? What will open the doors to the future you desire? What has the strongest possibility of success? What has the largest reward to risk ratio? What will give you the finest return on your investment? What will free up the most time? What will free up the most resources? What will help you realize your success strategy? And, what will bring you closest to your goals? If you can first figure out which among these questions are most relevant for you, and answer them for all your projects, you can rank the things on your plate according to what matters most and is absolutely essential. And once you do that, you can figure out which among all the various tasks you have should - no, must - get your attention. THOSE ARE THE ONLY ONES YOU WORK ON. Get those done, and if you have time left over, turn your attention to the next batch. I call it strategic focus. Figuring out what’s really going to rock your world. Figuring out what is really going to deliver the goods. And working on those things. Only those things. The rest of it will simply have to wait. Maybe forever. If you can wrap your mind around this one simple idea, figuring out what to do next becomes pretty easy. And because you are focusing your energies on few things instead of many, things get done. Best regards, Paul Lemberg (c) Copyright Paul Lemberg. All rights reserved

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In the first part of this series we looked at the effect prices have on profits. A change to the upside can have a wonderful effect on profits while reckless discounting and careless price reductions will surely have a disastrous one. If you don’t fully understand the implications, or haven’t read Part 1, go back and do so now. (http://www.paullemberg.com/higher-part1.html)By now you may be asking yourself, “What should my prices be?” Before you go start changing prices, you need to clarify a core part of your overall positioning. You need a pricing perspective.Do you want to be a low priced provider, or would you rather sell the premium product? There are good reasons for being a low priced seller. Just as Michael Dell - that’s where he started, although he certainly isn’t there now. Or look at Costco, or Amazon. If you look to these models for inspiration, make sure you have three things: a firm grasp on your margins, deep pockets, and the ability to do lots of volume. Without all of these three, you will surely go broke. Where are you personally more comfortable? If you sell at the high end of your price spectrum, you are likely to attract higher end clients, and it would help to be comfortable in that rarefied atmosphere. On the other hand, you may feel better on the low end. It’s a choice and you have to make it. What will attract the type of clients or customers you want? Your price is a signal to your potential clients telling them who you are in the marketplace. And if your goal is to raise the quality of your clientele, the easiest way to do so is increase your prices. Do you want a low service, volume business, or would you prefer fewer, select clients and give them “high-touch”? High-volume, low-touch businesses can be very profitable, and can generally scale more easily, but require more planning. Low volume, high-touch (select always means high-touch) businesses, may be easier to build and require less overhead. If you are thinking of a lifestyle business, go the latter route. Do you want a quick in-and-out transactional business, or would you rather develop long-term, nurturing client relationships? If you want to build something easy to scale and perhaps sell down the road, high-volume, low touch may fill the bill. If you are developing a life style business to carry you into old age, or a “professional” business with a strong public image, think long-term and nurturing. Higher prices usually go hand-in-hand. Develop a pricing perspective that fits your goals. Your decision will go a long way to determine who you do business with and how you do it, and will also affect how you can dispose of your business. There are no clear guides to the right choice. It’s more a matter of preference and positioning. But perspective is not the only element to pricing. By itself it will tell you how to price (high, low, middle of the road), but not the exact price itself. Before I share with you how to do that, let’s examine a few common approaches to pricing. As nuts as this may sound, lots of people price to pay the bills. No kidding. I’ve seen this advice in more than one article for professional service companies. “How much money do you want to earn? Divide that by how many hours you have to sell…” And so on. (By the way, cost-plus pricing is just as crazy.)Price to time. This is what most services people do. They set their prices by the hour, or by the day. The biggest problem is this makes it way too easy for prospects to compare your price. It also puts them in control of your time if they do buy. Price to competition. This is the most common form of pricing, and is the core of all prices based on market research. And it makes sense if your offer is comparable to that of your competitors. One last common pricing structure is front-end or loss-leader pricing. Loss-leader pricing is not designed to generate operating profits. Its purpose is either to take market share from competitors or create customers to whom you will later sell other things. If your goal is to drive your competitors out of business, and you have deep pockets to sustain an unprofitable price war, this can work brilliantly. Many big box retailers, including Staples and Home Depot have followed this strategy. Long years of low prices eventually crushed their competitors, and both raised prices when their markets thinned out. If you have a profitable and expensive product or service, an effective approach is to sell something that is cheap. For instance, if you have a high-end seminar, a low end ebook or free consultation can bring in all the customers you want. There are other considerations to pricing besides the bottom line. But if you want to understand how to increase your profits, stay tuned for Part 3.(c) Copyright Paul Lemberg. All rights reserved

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Of course you’ve heard that when you do what you’ve always done, you’ll likely get what you’ve always got. In this case that means playing the tactical game: coming up with acceptable–or worse–comfortable options and executing them as time permits. Likely, what you’ll get is business as usual, and things will be… well, they’ll be fine.But “fine” may not be what you’re after, and you are probably reading a series called “How to Create Strategies That Work” so you can do better — perhaps much better…And if you are willing to take some time and do your homework: the research, inquiry, analysis, synthesis, and the activation of strategy — you can add dramatically more power to each one of your individual tactics, and potentially revolutionize your entire business. In the beginning of this series I showed you how to start the process of selecting a market-dominating business and marketing strategy.The first four steps are: - Set your vision- Gather environmental and competitive intelligence- Take stock of your organization’s strengths and weaknesses- Answer the Global Strategy QuestionI covered those in The Secrets of Strategy, Part 1. In this article I’m going to cover the next four steps: - Establish decisive objectives- Rate and rank your “SWOTs”- Match your internal and external factors to identify strategic alternatives- Select the highest-impact strategies for implementationEstablish Decisive ObjectivesStrategy is contextual. This means you should not make any kind of strategic decision–choosing strategy A over Strategy B, for instance — without first setting a context with Decisive Objectives. The word decisive is from the Latin decidere, which means to cut off. Decisive objectives are the goals that cut off irrelevant business opportunities and distracting details. They define the boundaries of your company’s efforts and direction, and establish the measures by which you will gauge your success. This step is to select company-defining goals, the attainment of which will mean your vision has started to become a reality. These objectives or goals should relate to the following:In what markets will you do business?What market share will you have? Will you be a marginal player with a small percentage, a big player with a significant portion of the market, or will you dominate your market and crush all competition?Where will you operate geographically? This question ties back to the issue of market share; you might dominate the market locally but be a small player nationally.How much revenue and profit will you earn? Larger revenue goals will have different strategic needs.What impact will your business have on your industry, your community, your world?How will you exit your business? Will you run the business and eventually pass it on to family members? Will you sell it privately? Will you go public?These are examples of the kinds of goals which shape your company. The decisive objectives create the context for the strategy alternatives you generate. Rate and rank your “SWOTs” Previously, you analyzed your external environment and internal strengths and weaknesses. Now rate and rank the most important factors. Evaluate each external factor: is it an opportunity to be taken advantage of, a threat to be defended against, or is simply something neutral you can safely ignore? Do the same for your internal factors: are they strengths to capitalize upon, weaknesses which much be bolstered or outsourced, or neutral conditions? Using your Decisive Objectives as a guide, select amongst the potential opportunities, threats, strengths and weaknesses, those factors you consider critical to the success of your business. (Ignore the neutral factors.) Group the critical factors into internal and external. Rate each internal factor from .01 to .99 based on its perceived importance to your business. The total should add up to 1.0. Do the same for the external factors. Select the top five to ten internal factors and external factors for matching. Match your internal and external factors to identify strategic alternatives Matching combines each internal factor with an external factor, generating a potentially relevant strategy. A software manufacturer might match an internal strength such as flexibility with an external opportunity of a new law in a related industry, yielding a strategic alternative to reconfigure the software and provide solutions to the new legal requirements.Or, a duck farmer might match his internal strength of breeding expertise with an external opportunity demanding low-fat, high-protein foods to yield a strategy selling low- fat duck.Strengths are matched with opportunities to create SO strategies. These are generally your strongest, highest leverage options. Strengths match with threats to create ST strategies. These use your natural assets to minimize external threats to existing revenue streams and your current competitive position. But since the best defense is often a strong offense, you may find yourself reverting to an SO strategy — typically a better alternative.WO strategies use external opportunities to reduce the impact of internal weaknesses. Of course, you may simply choose to put your resources into areas of strength and outsource weak factors.WT strategies are the weakest of all: defensive approaches designed to minimize internal weaknesses or external threats. Sometimes necessary to protect weakening revenue streams, there are often other, more powerful approaches that take better advantage of company strengths.This process is often called SWOT, named for the four types of internal and external factors. I prefer to call it SOT, since the most powerful options will not pay much attention to weaknesses. In our business philosophy you will gain more ground more quickly by amplifying and exploiting your strengths and outsourcing — or ignoring — the areas in which you are weak.Select specific strategies for implementation At this point many people choose to intuitively select which strategies to pursue. Others may prefer to bring rigor to the ranking process. This final step combines your various subjective analyses into a defined framework, giving each strategy a strategic impact score.Compare your new strategic alternatives to your list of critical factors to find those factors affected by each strategy. For each match, rank the attractiveness of the strategy relative to the factor from 1-4 (1-not attractive, 2-somewhat attractive, 3-reasonably attractive, 4-highly attractive) and multiply it by the factor’s rating (.01 - .99). Sum all the scores for that strategy into a total “strategic impact score.”Lastly, select your go-forward strategies based on the highest strategic impact scores.This is a demanding process with many steps, but it is well worth the effort. The strategies you create will take greatest of advantage of your strengths and opportunities, while protecting your company most effectively against threats and weaknesses. They will provide your company with leverage to make the most of your assets, your competitive position and your markets, all while insuring your strategies are consistent with your company’s vision and goals.Important notice for strategy-minded entrepreneurs:Strategy creation is a long road to hoe, and goes much more smoothly when you know what questions to ask and in what sequence. To make it easier for you and your senior team, I’ve created the Growth Strategy Roadmap.This program of flowcharts, questions, checklists, and detailed processes takes you through the entire progression of evaluating your external and internal environments, and provides all the steps and forms necessary to generate matched options, and rate, rank and select a high-leverage, high-growth strategy. (c) Copyright Paul Lemberg. All rights reserved

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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. 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. 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. 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. 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. 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 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. 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 marketsWeak 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. 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

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What does an old Russian joke have to do with getting new business? Did you increase your business in the past 12 months? Don’t discriminate between more new clients or old clients spending more money — count the increase either way. If you didn’t, you really should be asking yourself why not.Yes, I know — it all started with the Internet implosion. Then came terrorist attacks. Next, the global recession. And after that, a war that threatened to destabilize the worldwide political structures for peace and harmony. Who knows what’s next, but the fact is, none of these “cataclysmic” events has really mattered.How can I say such a thing? Because for most of us, several more clients or a few additional transactions can turn a mediocre year into a great one. And large scale macro-level trauma and transition don’t really impact our micro-level ability to find that next client or do the next deal. The only place those macro-things matter is in your head, but — for good or for bad –what happens in your head tends to powerfully affect what happens in your business.Yefim, a Latvian ?migr? who worked for me years ago told a joke (if you can call it that) from the old Soviet Union. He said, “What’s the difference between an American and a Russian?” “The American expects things to get better, and the Russian hopes they don’t get worse.” Well, after a year or two of lackluster, even dismal, business, you’re probably getting more like the Russian: not sure if things can ever get better. And you’re questioning whether you can expend any resources to do anything about it.When you believe the world is going to hell in a hand-basket, not taking steps to improve your business seems natural. You expect that clients and prospects will say no to even your best proposition. After a while you simply stop trying.Thinking about more business starts with thinking such a thing is possible — nay, probable –but if you’ve read this far you still may be a believer. And if you think increasing your business is possible — despite what’s reported on the evening news — then it is time to get busy. No more excuses. Not the weather. Not the season — I don’t care if it is Summer or Christmas or Ramadan. Not even the economy.So what’s the good news? In 1966, Richard Farina wrote a book called “Been Down So Long It Looks Like Up to Me.” Feel that way? Great, because making a difference is going to be easy. You’ve probably been dormant so long, any improvement will look simply marvelous.Here’s the secret.There are only three ways to grow your business: you can find new clients, you can have your clients buy from you more often, and you can have clients — old and new — buy more each time.”You mean that’s it?”Listen closely, grasshopper. This little formula can yield great insight into how to approach your business right away — if you let it. Want help? Answer the following questions.What ways are you currently using to find new clients now? Go ahead — make a list, even if it’s only in your head. Are those ways working? (No — probably not, otherwise you wouldn’t be reading this.) Are they the same ones you were using a year ago? (Shame on you — they weren’t working a year ago, why should they work better now?)What new products or services have you introduced in the past six months to help your current clients? (You haven’t– no one’s spending any money.) Of course not, they already have all the stuff you sell they think they need.What new combinations of products, or products and services, or subscriptions, or renewable services, or… It boggles the mind how many ways there are to increase the value of each individual purchase. How many of these new offers have you made to your prospects and clients in the past six months? (I’m not even going to wait for your answer.)If you meditate on each of these questions like a Zen Koan — you will assuredly invent at least two — and perhaps many — new ways to increase your business.Of course, these aren’t the only things you can do, but they are a great start.Can’t come up with any ideas? Let your clients do the work for you — after all, it’s in their own best interests. Do a survey — call up 10 or 20 and find out what they need from you that they can’t get. Even simpler — use one of the online survey tools like http://surveymonkey.com or http://zoomerang.com.While you’re at it, you may want to insure that your core product still makes sense. After all –clients aren’t buying it like they used to. That can only mean a few things — either you’re doing a bad job telling people why they want it, or they just don’t want it.Both of these problems can be fixed, but it’s important to make sure you’re fixing the right one. If you fix your marketing and tell people about something no one really wants, you’re just wasting money. On the other hand, if your products really are right for the market, but you’re not communicating effectively — you might end up changing your products unnecessarily.I hope you realize from this simple exercise how easy it is to quickly begin generating new and increased business. Just ask yourself good questions and invent some good answers. After all, that’s what thinking is.Then take those thoughts and put a few into action.–PL(c) Copyright Paul Lemberg. All rights reserved

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