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Archive for April, 2007

More planning tips for business owners

Friday, April 20th, 2007

In addition to valuing your business and thinking about an exit strategy, here are some additional planning tips for privately-held companies:

Engage all your employees. Don’t leave anyone out of the planning process because in a smaller organization you run the risk of alienating some people. Although you may not think it’s appropriate to include everyone on staff, how will it look if everyone but two or three members aren’t included? Find ways to engage everyone in the process.

Recognize your constraints. As the owner, you probably have grand ideas and big plans. But remember not to overwhelm your staff by thinking too big or grandiose. Recognize your constraints and create a realistic strategic plan.

Have a clear vision. Being crystal clear about what the owners want to achieve is critical to the success of any privately-held business. Do you want to grow or stay small? If you want to grow, by how much (see the preceding valuation discussion)? What future do you want to create for your business? It’s really important for you to be clear about your owner’s vision. Because if you’re fuzzy on your vision, it will never materialize.

Just do it! I know this slogan can be overused, but it fits perfectly here. It seems like setting aside time for planning in smaller organizations is hard because you don’t have a person who can dedicate their time to strategic planning. Take the time to make strategy part of your culture. After the effects of executing your strategic plan are felt, you’ll realize that you didn’t have time not to do it. I promise!

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Creating a strategy-focused organization

Monday, April 16th, 2007

Organizations that are strategy-focused are more effective with their resources, have higher employee retention, and make more money because they serve their markets better than their counterparts. And they stay in business longer because they proactively respond to the environment around them. Want to create a culture that’s strategy-focused? Here’s a hit list of ideas gathered from a bunch of different organizations to help create the organization:

  • Be a strategic leader. Lead by example and prioritize your strategic plan over everything else. Stay committed.
  • Cut out the jargon. Make sure everyone in your organization really understands the plan.
  • Hang your one-page strategic plan in the break room or another central location.
  • Involve your staff in the final development of the plan. Ask for and use employee ideas.
  • Create a “champion” or owner for every goal and action. Make strategy everyone’s job.
  • Ask your employees to create the action items to support their assigned goals.
  • Review the plan with management or the group. Align the organization with the strategy.
  • Use a scorecard to monitor progress monthly.
  • Schedule regular updates. Hold a monthly meeting, one-on-one with the team leaders, where you only discuss strategy. Hold a quarterly full staff strategy meeting to report on the progress.
  • Challenge underlying assumptions. Revisit and refine the strategic plan three months from now.
  • Hold yourself accountable through a mentor, personal coach, or business organization.
  • Link strategy to performance.
  • Continually scan your environment to identify changes that may impact your strategy.
  • Reward success! Throw a party when significant goals are reached.

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Printing up a superior customer experience

Friday, April 13th, 2007

When a weekly community newspaper analyzed its value chain, the publisher realized that several of its supporting activities detracted from the overall customer experience. For example

  • In the general administration area, the newspaper’s invoices only offered one method of payment, when there were actually three ways to pay. The publisher immediately revised the invoices to include all options. The cost to the company was next to nothing as they were computer-generated. Decrease in delinquent accounts: 40 percent.
  • In the human resource management area, the organization’s high turnover rate made customers question the viability of the newspaper. The publisher instituted a more rigorous hiring process that included a third-party skills and personality assessment to make sure that the right people were “on the bus.”
  • In the area of technology, the newspaper didn’t have an online renewal form. This feature was quickly added, which allowed subscribers to maintain their subscriptions with a click of their mouse instead of calling, faxing, or snail mailing in their renewal forms.

Don’t these changes seem obvious and straight-forward? It’s easier to see the errors of others or after someone points them out to you. Well, it wasn’t until the publisher used the value chain that he realized where the links were broken. The organization’s core product is highly regarded in the community, but the supporting activities were hindering business growth.

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Partnering through franchising

Monday, April 9th, 2007

Franchising is exploding in popularity as a way to grow your business potential very quickly. Franchising is a partnership of sorts between the two parties because they’re sharing assets for a mutually beneficial outcome. You can license your intellectual property to wanna-be business owners in exchange for their cash in the form of a franchise fee. The benefit to the franchisor is to expand through quick access to capital and human resources. The benefit to the franchisee is the ability to buy a proven business model with no time or money needed for research and development.

Want a good example of franchising? Great Harvest Bakery has successfully opened 206 franchises nationwide with an unusually loose model. The company encourages entrepreneurial spirit and open communication between storeowners, who enjoy the freedom to run their businesses their way. In fact, the Uniform Franchise Offering reads: “Anything not expressly prohibited is allowed.” Because the company is privately held, financial information isn’t available, but its continued growth, with 13 stores expected to open this year, is an indicator that the company developed a very successful partnership model.

Wonder why you wouldn’t want to franchise?  Check out Jamba Juice, the maker of fruit-juice smoothies. They backed away from franchising as a growth strategy specifically because of the inability to control product quality. At the time the company was making the critical decision about how to grow, founder Kirk Perron decided that consistency in location, store design, in-store merchandise, and smoothie ingredients was what would lure repeat customers. By franchising, Jamba Juice didn’t have the ability to monitor the quality so important to the company’s distinctiveness. Opening wholly-owned stores funded by a handful of big name venture capitalist proved a winning strategy for the company. The company now has 500 stores nationwide with net sales of $300 million in 2005.

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AOL’s advantage: Make it personal

Friday, April 6th, 2007

Remember back in the early 1990’s when Internet Service Providers (ISPs) were springing up everywhere? If you bought a computer from a major manufacturer in those early days of Windows, odds were that you also got up to three separate trial ISP accounts preloaded on your computer at the factory. I got CompuServe, Prodigy, and America Online preloaded in 1993.

Years later, America Online is now the biggest ISP. Prodigy and CompuServe are virtually unheard of anymore. How did America Online win the war? The folks at AOL understood two key things customers valued at that time:

  • Personalization of accounts: A person could get an e-mail address like joesmith@aol.com from AOL whereas Prodigy assigned him the e-mail address JS12345@prodigy.com, and CompuServe assigned 56789@compuserve.com. As a customer, I want my name if I can get it, or something else that is personally meaningful to me, like a personalized license plate from the DMV at no extra charge, would you do it? Most people would.
  • Fewer rules: AOL has fewer rules governing the virtual community of chat rooms and bulletin boards. People could pretty much talk about whatever they wanted to in cyberspace within AOL, whereas CompuServe and Prodigy had more restrictions on that kind of activity. Naturally the virtual community growth was viral, multiplying their user base tenfold.

Over time, most people picked AOL over the competition. AOL went for customization and personalization against the bigger, more well-funded competition. That’s using competitive advantage to dominate your space, to grow, and to become successful!

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Anthropologie, a nationwide retail store

Monday, April 2nd, 2007

“A female about 30 to 45 years old, college or post-graduate education, married with kids or in a committed relationship, professional or ex-professional, annual household income of $150,000 to $200,000. She’s well-read and well-traveled. She’s very aware – she gets our references, whether it’s to a town in Europe or to a book or a movie. She’s urban-minded. She’s into cooking, gardening, and wine. She has a natural curiosity about the world. She’s relatively fit. Her identity is a tangle of connections to activities, places, interests, values, and aspirations. She’s a yoga-practicing filmmaker with an organic garden, a collection of antique musical instruments, and an abiding interest in Chinese culture.

The Anthropologie customer is affluent but not materialistic. She’s focused on building a nest but hankers for exotic travel. She’s like to be a domestic but has no problem cutting corners (she prefers the luscious excess of British cooking sensation Negella Lawson to the measured perfection of Martha Stewart). She’s in tune with trends, but she’s a confident individualist when it comes to style. She lives in the suburbs but would never consider herself a suburbanite.”

Can you visualize Anthropologie’s customers? Without a doubt! Now don’t worry if your customer profile isn’t this specific. In fact, it probably won’t be. Not everyone in this company’s market exhibits all of these traits; that would be too narrow. Nevertheless, this example illustrates the power behind really, truly knowing your customers. You can immediately see how this profile helps the company select which products to carry in the store, what messages to use in the advertising campaigns, how to price the merchandise, and what type of customer service drives repeat business.

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