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Sales is an investment in growth for any organization, and the most successful results are attained when the return on investment (ROI) is measured.  By partnering with Cogent Analytics, we will analyze the effectiveness of your sales and provide solutions to address performance that will increase your return on sales investment.

Sales planning and strategy are key in setting goals and providing focus for your team.  We review areas that affect solid sales performance such as market positioning, compensation planning, sales training, incentives, CRM systems, lead generation, team development and overall talent.  In so doing, key performance indicators can be established and your return can be measured.

Sales improvements from Cogent allow you to focus on reinforcing your core competencies and build your strategic advantage; which by default, boosts sales performance.

We stay committed and dedicated to provide Business Owners the knowledge and experience to help improve their business. Please utilize our list of resources including: Blogs, Articles, and Case Studies focusing on Improving Sales and Performance within the business.

Sales Management Optics Funnel Management

GENERAL 

Sales Funnel Management is a sales productivity tool that allows Salespeople and Managers, to manage the sales process.  Managing the sales process is critical to ensuring long term and sustained sales success.  Knowing and quantifying the sales process will allow you to pinpoint strengths and weaknesses that ultimately impact results.  Knowledge is power.

The following steps/levels will assist you in identifying where your customers are in the sales process. Yours may vary but be cautious not to have less than 4 or more than 10 limited. Too few will limit the usefulness of the data and too many will limit participation or skew the accuracy of the data reported.

INITIAL CONTACT 

The Initial Contact is simply your first contact with the client/customer.  These contacts can be either premise visits, telephone contacts, digital lead sources, lead lists or referrals.  If you have previously contacted them but are starting a new sales initiative, also identify it in this stage.

SUBSEQUENT CONTACT 

Subsequent Contacts are obviously contacts made after the initial contact.  It doesn’t matter who the contact is with, however the contact needs to be strategic and add value to the sales process. These contacts can be either premise visits, telephone contacts or written forms of correspondence. There can be multiple subsequent contacts per sales initiative.

DATA GATHERING 

The Data Gathering stage involves your efforts to gather information that will ultimately allow you to develop a solution.  These sessions can take place in either the initial or subsequent contacts and with any relevant employee of the company.  A customer remains in this stage until you have gathered all necessary information to develop a solution or determined the sales opportunity is lost.

SOLUTION DEVELOPMENT 

Solution Development takes place after you have gathered information.  This stage includes determining which product(s) meet the customers needs, pricing, proposal preparation, etc.  When a customer reaches this stage, they remain here until you make the presentation or decide the sale is dead.  A sales initiative can only be counted once in this stage.

PROPOSALS

The Proposal stage is reached once you have presented your solution to the customer.  It stays in this stage until the customer agrees to buy or until the sale is dead.  

SALES

The Sales stage is reached once you and the customer have reached a contractual agreement.  These include new sales, win-back sales or upselling existing sales. This is not a forecast of sales or a verbal promise of purchase or even a Letter of Intent. 

QUALITY and QUANTITY

Sales Funnels measure both quantity and quality. Quantity – how many contacts does it require to make a sale, or conversely, to make the total sale required how many contacts are needed. Quality- how efficient are you in moving a contact through each step of the sales process.

SET THE EXPECTATION

1 – The best place to start is working the funnel in reverse.  Using total revenue or total sales (based on average revenue/sale), how many sales are required by the company, each sales team, and each salesperson.

2 – Calculate the number of proposals that are needed to make a sale.  This will typically be based on an actual or expected proposed-to-close ratio or percentage.

3 – Calculate the numbers required in each step using similar ratios between each step of the process.

4 – The end result will provide the quantity of opportunities needed in each step and the quality expectation illustrated by the percentage/ratio from each step to the next.

WORKING the FUNNEL

Now that you have established the funnel requirements begin tracking actual data from each salesperson daily or weekly.  Roll the data up through each level of management until you reach the company level.  

  • QUANTITY Perspective: The quantity in the funnel will quickly allow you to determine if there is enough activity from top to bottom to produce the sales required.
    • If there isn’t, the quantity perspective says add more at the top
  • QUALITY Perspective: Tracking the closing ratios from step to step will help identify quality issues where sales opportunities may be leaking out.  Managers … it isn’t always just doing more.
    • If the standard for propose-to-close is 50% and a salesperson is at 25%, but they are in line with all other steps in the process, the quality perspective says fix this one step versus adding more quantity to the top of the funnel.
  • BLENDED Perspective:  Improve the quality in each step of the process so you can add more quantity at the top of the funnel.  This will produce incrementally more sales using the same level of sales resources.

Effective sales funnel management is much more than just managing the numbers, it is managing the people and processes that move the numbers in and through the funnel.  Too often when management does not see the desired results coming out of the funnel their response is to say do more or do better or go do it somewhere else. Basically, they’re just managing the top of the funnel (do more) and the bottom of the funnel (do it better), but what about the all the steps in between?  Do you think it would be important to know why sales opportunities aren’t making it all the way through? Do you think it would be important to set benchmarks at each step so you can readily identify where a salesperson or process is falling short? The answer to these questions and more is a definite yes! Understand the funnel, set quality and quantity benchmarks for the funnel, manage to those numbers, and create specific development plans for improvement.  The result will be what your initial instinct demanded, do more and do it better.   

How To Increase Revenues Through Market Segmentation

Sales revenue is the fuel for your business. 

Developing a product or service that provides value that customers will pay for is what businesses strive for.  The revenue from these sales is what allows the business to generate profit, value and ultimately freedom for business owners.  As businesses grow, they often sell products and services into various markets in multiple ways.  Sometimes these sales are to groups of customers who were maybe not the original target market, however, they are growing to be a significant contribution to overall sales.  We all want to increase our sales, but sometimes are not sure how to go about it.  What can we focus on that will increase sales the most?  What marketing strategies should we employ to grow the markets we serve?  Which of the markets we serve has the most potential for growth with the least amount of cost?

In order to answer these questions, a business needs to understand its markets, where the revenue currently comes from, and where the growth opportunities are ripe for harvest.  The structured evaluation of our revenues and market is known as ‘Market Segmentation Analysis.’  This involves understanding our markets, breaking them down into various segments, evaluating their historical performance and looking for opportunities to grow each one.  Each market segment has unique characteristics that once known, help the business make informed decisions on where and how to invest in market growth.  A marketing program for one segment may not be appropriate for another.  Each market segment needs to be evaluated to determine the best approach to growth.  In some cases, you may find that a particular market segment is not worth investing in and might even be losing money that could be better invested in other more promising markets.

There are as many ways to look at your market with marketing professionals. 

Market segmentation is an art-form.  Some typical marketing segment breakdowns include geographic, demographic, behavioral, psychological, distribution channel, etc. 

Depending on your business and how you go to market, different marketing segment breakouts provide insight into your focus, investment, and even compensation or discounts.  These concepts work for both business to consumer as well as business to business sales.  Some companies may have both, which would likely require different approaches.

Geographic market segments can also referred to as ‘territories or regions.

These could be within the United States or globally. An example of a market segmentation for US sales might be Northeast, Southeast, Central, South, Midwest, Northwest, and Southwest.  Some successful companies assign these territories or regions to individuals responsible for obtaining sales in their respective areas.  Each area may have its own unique set of characteristics, pricing and buying habits.

Demographic market segments are typically made up of groups of buyers that have common characteristics. 

For instance, age groups, gender, disposable income, capacity for trying new things, business or consumer, size of business, etc.  In this area, it pays to be creative in understanding who your customers are, why they should be buying from you, and how you can best address their needs.  If you have not previously looked at your buyers in these ways, do some ‘sampling’ by talking with your customers, creating surveys or mining product registrations that allow you to begin to collect this data.

The way you interface with your customers requires different approaches. 

A retail store, for instance, may focus on some things for those who walk into their storefront to purchase or research.  An on-line buyer may need other tools to facilitate their buying decisions. If you sell to resellers, wholesalers, or other businesses, you need to understand their needs, and decision processes.  This type of segmentation is often called ‘Channel’ or distribution segments.  Channels are the different ways the end user of a product or service becomes aware, researches and purchases the product or service.  Examples of distribution channels are storefronts, on-line, distributors and wholesalers, direct sales, and perhaps even phone solicitation. 

Many retail chains purchase their store inventory from wholesalers, who purchase from other distributors or wholesalers or directly from the manufacturers of the products.  These ‘buyers’ have different requirements and needs that will assist you in marketing to them if you understand these things.  A single company may sell its products directly to end users through phone, email and web-store, sell to ‘resellers’ who buy the products at a discount, and ‘resell’ them to specific groups, and distributors who serve various markets.  Some of these distributors may have exclusive geographic or territorial boundaries.  All of these can exist simultaneously, but each one requires a different set of messaging and service to grow your sales and understand the significance of each to your marketing approach, revenues, and profitability.

Another means of market segmentation is behavioral or psychological characteristics. Again, this is an area for you to be creative in defining these groups of customers or segments.  One very common segmentation for companies developing ‘new’ products is the customer’s propensity for trying new things before they are commonly understood or fully developed.  This segmentation might be broken into innovators, early adopters, early majority, late majority, and late adopters.  Examples of these groups can be seen in the adoption of new or breakthrough technologies like electricity, telephones, automobiles, facsimile machines, personal computers, hand-held devices, cell phones, navigation devices, smart phones, apple or android watches, electric vehicles, and . . .  Understanding these market segments and their unique behaviors and psyche can significantly aid your company in adapting and marketing to these unique groups and growing your sales over time.

Market studies by professional market research firms provide insight into your industry’s market segments. 

While these market research reports can be pricy, the right ones at the right time may be worth it to propel your sales to the next level.  Subscribe to your industry’s market research newsletters.  While they continually send market research synopsis information in order to interest you in actually purchasing the entire market research study, they often revel important mega-trends within your particular industry.  Staying in-tune with your industry’s trends, disruptions and new directions helps you manage your marketing and product development strategy and investment.

Once you have defined and organized your data within your markets various segments, you can begin to analyze them and mine the information to assist you in understanding and growing each one.  This analysis is more than just percentage of revenues generated by each group, although that is a good start.  It can also delve into the varying costs of marketing, distribution etc.  This can allow you to evaluate growth potential and profitability by segment to help guide investment decisions in additional marketing or product changes to serve a particular segment.  Understanding the ‘why’ and ‘how’ your customers purchase your product or service will help you refine your offering and improve its’ ultimate value to your customers.

A market segmentation analysis is one step towards growing your business. 

In the early stages of a start-up, small business will sell to anyone who will buy, but don’t fully understand the ‘why’ or ‘how’ they make their decisions.  As a company grows beyond its start-up phase and matures into a growing enterprise, this analysis can provide insight to help a business align its sales revenues, product mix, marketing messaging, and much more.  This allows you to better understand your markets and make decisions based on the information gleaned from market segmentation analysis.

Strategic Planning – Clear examples of Success

What is strategic planning?

Let’s start with the most basic. Strategic planning is the process in which a business defines and executes a long-term plan to achieve organizational objectives through analysis of present and the desired future state, the company’s environment, and its existing gaps. This planning is done to respond to internal and external changes, so that the company remains competitive in the market. It not only consists of setting specific objectives but establishing the actions and steps to accomplish those objectives. In essence, it is a fundamental tool for making internal decisions in any organization.

How to build a strategic plan?

If there is an image that illustrates the concept, it is this:

Let’s understand the illustration with a personal example:

If I want to have a large income, it is necessary to be specific on how much I want to have. Based on this number, I must carry out a strategy and activities that allow me to have that specific amount. But nothing will surely be carried out if I am not suitable and prepared to carry out this strategy. It is necessary that I have a series of principles, values ​​and skills that allow me to DO in order to HAVE. For a business, it is exactly the same. Thus, in order to build a strategic plan, we will approach a series of stages framed within the cycle of “Be-Do-Have” of a company.

There are many examples of companies that have followed and executed strategies that were purposely and strategically designed within this cycle with tremendous success.  I want to share three multinational companies as the best examples.

Toyota

Humility as a business strategy1

In 1973, the ‘Big Three’ automakers in the US had more than 82% of the market share. By 2016 they have less than 50%. The main reason for this was the aggressive (and unexpected) entry into the US market by Japanese automakers, led by Toyota in the 1970’s.

Cars are big, heavy, and expensive to move. That’s one of the reasons the American market was so shocked when Toyota started selling Japanese-made vehicles in the United States, and at prices much lower than they could match. The auto industry was a massive contribution to the US economy, so one of the government’s first reactions was implementing protectionist taxes on all auto imports, making Japanese cars as expensive as locally made cars.

But the tactic failed. Within a few years, Toyota had managed to establish production plants on American soil, thus eliminating the need to pay any of the new import taxes. At first, American automakers weren’t so concerned. They assumed by having to move production to the US, production costs for Japanese automakers would surely rise to the level of the local auto manufacturers. But that did not happen. Toyota continued to produce cars (now made locally on American soil) at prices significantly cheaper than American companies.

Their extremely polished production process was so efficient and lean that they could beat American automakers at their own game. You’ve probably heard of the notion of “continuous improvement.” In the manufacturing world, Toyota is practically “the grandfather” of precisely this and its strategy has been managed by utilizing the Balanced Scorecard.

 Toyota’s strategy consists of two aspects: studying the competition, continually improving their weaknesses, and being humble. Toyota spent years studying the production lines of American automakers like Ford. They knew that the American auto industry was more advanced and more efficient than the Japanese. So, they studied their competitors and tried to copy what the Americans did so well. They combined these processes with their own strengths and came up with something even better. They continuously thrived in the BE-DO-HAVE cycle.

Toyota proved that knowing your own weaknesses can be the key to success and one of the best business strategies you can implement.

Can you name a single famous executive at Toyota? It is very difficult, and one reason is that Toyota’s number one corporate value is humility. Not even the top floor executives have named their own car spaces. The humility that helped them break out of the United States market is deeply ingrained in the organization, from top management to their workers, and of course embodied in its strategic planning.

Tesla

The long game…

The conventional business logic is that when you start something new, you create a ‘Minimum Viable Product’ or MVP. Basically, that means that you create a version of your product that is very lightweight in terms of functionality and “gets the job done.” It also means that the first version of your product should generally be sold at a low starting price, both to make up for its lack of features and to generate interest in a new release.

Some organizations (including many tech startups) take this concept even further and release the first version of their product completely free, with a plan to “monetize” later once they have added more features and the product goes through more rigorous testing where the company feels more comfortable that the consumer to be willing to pay for the offering. Tesla, on the other hand, did things ultimately the other way around. They clearly defined their long-term goal and the path that would lead them to achieve it. Its long-term goal is to be the largest automobile company in the world. They know that to become the biggest by volume, they will have to thrive in the low-end consumer car space, meaning the cars that cost less than $30,000 to consumers.

However, instead of starting with this market, and creating a cheap, low-profile version of its electric car to reach scale quickly (and thus benefiting from economies of scale in addition to meeting its growth targets), Tesla created the absolute most luxurious and expensive, a sports car with all the features they could muster. That car was the Tesla Roadster, and the latest generation Roadster retails for more than $ 200,000 for the base model. This was the first car they ever produced, knowing that they couldn’t achieve the scale or efficiency necessary to make a profit (even at such a high price). Well, Tesla recently defeated General Motors to become the most valuable automotive company in the world.

The first thing to keep in mind is that Tesla has made incredible progress toward its goal of making mass-produced, affordable electric cars. They have even made annual profits last year for the first time in their history. The second thing to keep in mind is that much of Tesla’s business strategy was strained. There was no way they could have created a profitable electric car for the mass market without economies of scale.

At the end, Tesla’s supply chain strategy is one of the most brilliant moves they have ever made. They knew from the beginning that batteries present not only the biggest technological hurdle for their car, but also the biggest bottleneck to production. However, instead of letting this stop them, they took full control of their supply chain by investing in factories that make batteries. This has had the added benefit of allowing them to use those same batteries in parallel commercial ventures like their Powerwall. 

PayPal

Dare to challenge the status quo1

There are specific industries that you just don’t want to mess with. Industries such as aeronautics, large groceries and supermarket chains, and banking. Frankly, banking is probably the most challenging industry of all because the substantial entry barriers. You need a large capital, go through a ton of regulatory approval, and it takes years to build trust with customers around their most important asset – their money. Banks’ business models haven’t significantly changed in hundreds of years, and they make huge amounts of profit, without really modifying a single thing on their strategy. They are incredibly powerful and almost impossible to displace. But for some “stubborn” reason, PayPal didn’t seem to care. Currently, it is the leader in online payments. It is likely that when deciding to enter this highly competitive industry, what they had in mind was the creation of a blue ocean. Blue Ocean strategy means creating and capturing uncontested market space by pursuing differentiation while simultaneously creating new demand, where there is no competition. PayPal strategy was based partnerships and a marketing campaign.

The first thing that PayPal did was to massify its use through an aggressive marketing campaign that consisted of offering first $ 10 and then $ 5 for registering in the system, which caused growth between 7% and 10%3. Consequently, they became the preferred payment provider for transactions on Ebay which led to Ebay acquiring them.

The second strategy was making partnerships. Banks had always been cautious about forming partnerships directly with retailers; instead, they relied on their scheme partners (Visa / MasterCard) to do it for them. They didn’t want the hassle of managing so many different relationships, and they were extremely confident in the fact that credit and debit cards would always be at the heart of the financial payments system. But the problem was that MasterCard was already working on a partnership with PayPal. Leaving banks out of the action. Before the COVID pandemic, PayPal proudly held an incredible 20%2 market share of online payments in the US, and 62.7%3 of the eWallet space. Most of that growth comes from its direct relationships with merchants large and small.

PayPal lived in the BE-DO-HAVE and even used the Growth-Share Matrix (BCG) to develop its strategy. This matrix was created in 1968 by Boston Consulting Group’s founder Bruce Henderson, it has been used by almost half of the Fortune 500 companies; this gave PayPal the ability to build their plan by defining their strategic advantages while continuously differentiating themselves from the competition:

  • PayPal spends less on technology than an average midsize bank; nevertheless, their platform is far superior.4Consumer trust in PayPal is equal or greater than a brick-and-mortar bank, even though they have existed for a fraction of the time. 
  • Consumer purchases via PayPal are not shared with the banks. They simply appear on the bank/card statement as “PayPal”, this gives PayPal the ability to mine data and monetize the relationships between consumers, retailers, and service providers.
  • PayPal is faster, more agile, and almost always first-to-market on any new payment innovation.
  • PayPal refuses to associate itself directly with banks; instead, they have chosen to build partnerships and alliances with retailers and consumer service providers.

Strategic Planning is fundamental to the success of any organization. However, not only is its development important, but continuous follow up and execution of action items just as crucial, because from the results of these actions that changes can really be established, and decisions that influence behavior be made. There is no difference on the size of the company or organization, the fundamental steps to creating and executing a Strategic Plan remain the same, the commitment to its importance, execution and understanding of the cycle will define the longevity and success of a business. 

  1. Corporate Strategy – Ulrich Pidum 2019
  2. Statista.com- 2021
  3. Spendmenot.com – 2020 Statistics on payment platforms vs banks
  4. The Economist: “Banks vs big tech” May 8th, 2021

How Accounts Receivable Impact Cash Flow and Net Profits

The extension of ‘credit’ is often very lax in the startup phase of a business, and usually, no written policy exists.  Past due accounts receivable is often a result of not clearly defining the customer’s expectation, granting credit to customers without consistent criteria, and a lack of disciplined follow-up ofaccounts receivable by the business.  Businesses with significant past due balances have ‘trained’ their customers to expect a lax or non-existent collections effort. 

These outstanding receivables are costing the business money.  The business has already expended time, resources, and cash on providing the product or service to the customer.  No matter what type of accounting is used, Cash or Accrual, the business has not received payment, and therefore ‘cash.’  Consider past due balances as a ‘gift’ to the customer until paid.  Once a business owner recognizes that they are giving away their hard-earned business, they are more likely to pay attention to past due to AR.

Start By Reviewing The Balance Sheet and Accounts Receivables Aging Reports.

Look for ‘past due’ account balances and aging.  Determine the percentage of aging based on total AR or Sales.  If there is a significant amount of ‘past due’ AR, it is likely that much of it has been ignored due to infrequent reporting or not wanting to ‘aggravate’ existing customers by requesting payment, or perhaps no policy is in place to define credit terms or collections policies.  The first step to resolving large past due balances is to STOP extending credit without clear criteria, customer vetting, and adherence to a written policy at every level. 

The next step in the process is to analyze past due credit balances, starting with the most significant balances.  First, make sure all customer credits have been applied to the appropriate invoices.  This is referred to as ‘housekeeping’ tasks.  Most successful past-due collection efforts start with the 61–90-day balances.  If the client has a great deal of over 90-day balances, much of this debt will be difficult to collect and may need to be ‘written off’ as a Bad Debt expense.  Bad Debt expense goes directly against Net Profits and is contrary to achieving long-term wealth and retained earnings.

Establish a Collections Approach

The recommended past due balance collection approach is to start with a phone call.  Phone calls are more personal and offer an opportunity to connect with and understand your customer.  If you must leave a message, identify yourself, state the reason you are calling, include pertinent invoice information, and request an action such as ‘Please call to resolve past due balance today.’  Sometimes, this process discovers something as simple as an invoice that was lost or misplaced.  These situations are easily remedied, result in payment, and often establish greater customer loyalty for understanding and resolving the issue.  During the initial phone call, it is always important to establish that there was no problem or issue with the product or service.

Always attempt to get payment over the phone if possible.  It is also best to give the customer a couple of discrete options such as ‘pay half today, and the balance in XX Days’ instead of asking open-ended questions like ‘when can you pay the past due balance?’

A detailed log of collection activity and conversations is essential to reducing past due balances.  This log is helpful as the process progresses and signals to the customer that you are serious about collecting past due balances.  Immediate follow-up to confirm the phone conversation is another key success factor in managing past due balances.  An email or letter sent immediately after briefly recapping the conversation and commitments may help reinforce the collection action.  These written follow-ups also are referred to in potential future discussions if obligations are not kept.  Make sure to identify to whom you are speaking in notes and follow-up correspondence.  Often you need to escalate who you need to talk to if past due balances continue to be unresolved.  If a customer gives an excuse that they need someone else to do something, then contact that ‘someone else.’

Establish Solid Policies and Stick To Them

Good AR practice starts with a solid credit policy and approval process.  STOP the extension of credit without a proper credit approval process immediately.  If a Credit Application exists, does it gather pertinent information on the potential account?  This should be tailored to the business and consider the conditions that led to existing past due balances and seek information to qualify accordingly.  This vetting process is critical to keeping accounts current, and bad debt write-offs to a minimum.  If you require a customer to provide banking or credit reference information, follow up to make sure it is accurate and a good credit risk.  This step is often skipped but has everything to do with a customer’s creditworthiness.  The process of filling out a credit application causes the customer to evaluate their situation and potentially discourages them from seeking to obtain credit currently.  By requiring business information, including billing contacts, business longevity, and references, the result of collecting AR balances improves dramatically.  Several independent agencies such as Dunn and Bradstreet exist for evaluating creditworthiness and should be used where appropriate.  Another good technique is to require that a customer establish good credit by paying for products or services for several transactions before considering extending credit.

Define and implement an AR and Credit policy with buy-in from Owners, financial managers, and sales personnel.  Start with a good template and tailor it to the business.

Buy-in from every part of the organization is essential, involving others in the development and implementation process.  The credit portion of the policy should establish the vetting process, which makes the final decision, and establishing the ‘credit limit’ extended to each customer. 

The AR policy should establish the steps the company will take in monitoring and collecting past due accounts.

Look Within Your Own Business

Often a business owner is quick to judge its debtors harshly, and yet has aging Accounts Payable as well.  An assessment of the total AR and AP encourages a complete picture of the business’s cash position, and highlights the need to reduce AR and AP.  The old adage of ‘treat others how you would expect to be treated’ goes a long way.  Regular review of AR aging reports, along with clear AR and Credit policies, keeps past-due account balances low and bad debt to a minimum.

Utilizing tools such as a cash management system, cash conversion cycle calculations, AR-AP worksheets, and working capital metrics, you will establish good processes and measures to achieve a good cash flow position and minimize bad debt expense.  By proactively managing and measuring your cash flow accordingly, you will be able to maximize wealth generation and increase retained earnings. 

How to Assess Revenue vs Profits for Business Health


Why to Learn How to Assess Revenue

Wall Street judges you on it. Shareholders demand it. Management scrambles to make it happen. Revenue growth is the mantra of modern-day business. Quarter by quarter, the pressure is on for sales numbers to increase. But the question at hand should be: “Is your bank account increasing?” Are you profitable? You may be surprised to learn after assessing your revenue that increases don’t necessarily translate to profitability. There is a very distinct difference between the two. 

The difference between profit and revenue.

Assessing Revenue

As is true with most businesses, the common thought within the industry is that profitability is tied to volume. Au contraire! Let’s get out the calculators and do some business math. 

For the sake of this exercise, we’ll assume an operation has two customers for whom internal manufacturing costs are $20.00 per widget. A manufacturing reserve fee (much like a retainer) is $500 per month. Customer A has an order volume of 500 widgets per month and will pay $25.00 per widget for a total revenue of $13,000 or $26.00/widget (500*$25=$12,500 + $500=$13,000 $13,000/500=$26.00). 

Customer B has an order volume of only 100 widgets per month and will also pay a manufacturing reserve fee of $500 per month plus $25.00 per widget for total revenue of $3,000 or $50 per widget (100*$25=$2,500 + $500=$3,000 $3,000/100=$30.00.)

Which customer account is more profitable to the processor?

At first glance, it may seem like a no-brainer. Go after the big volume customer that is paying more per widget. It’s the smaller customer; however, that will bring greater per widget profit. 

The manufacturing profit for Customer A is $6.00 per widget ($26.00 – $20.00 = $6.00). The profit for Customer B is $10 per widget. $30 – $20 – $10). The bottom line is that Customer A has greater revenue, but Customer B has greater profitability. Revenue numbers may look good on paper, but profitability is what you have in the bank. 

To make this simplified illustration one step further, we’ll consider the labor costs involved based on the assumption that the time required to process a widget for Customer A is the same as it is for Customer B. If the manufacturing operation had four more customers like Customer B – each with 100 widgets per month – the amount of labor and accompanying expense required to process these 500 widgets would be the same as that required to process for Customer A. Yet Customer B and the four other small customers would bring in a profit of $5,000. Compare that to the $3,000 profit made from processing Customer A’s 500 items. It takes the same amount of work to process the five small accounts as it does the one large one. But you get a bigger return (67% greater) with the smaller customers. The contributing factor is the manufacturing reserve fee. This accepted fee by both parties increases the per widget profitability of the smaller volume customer over that of the large volume account. The fact is that while a large volume account may generate more revenue for an organization, it may not be the most profitable course of action.

Still, it’s big numbers that get the attention of management.

Wall Street rewards revenue growth. However, a company could have a decrease in sales from one quarter to the next but see profitability climb. The irony is that unless revenue rises, stock prices fall. The truth of the matter is: profitability is the real indicator of a company’s health. An investor gets a dividend when profits are up – not just sales.

shifting-profit-to-profitability-is-challenging-but-can-be-accomplished-with-accountability-motivation-and-teamwork

Nevertheless, many manufactures continue to turn down small accounts because they don’t understand the concept of profitability. Given the choice between a single account that will bring 500 widgets and 5 customers that generate 100 widgets each, a production manager will invariably choose one large customer. It’s easier to manage. And it’s easier for a sales associate to sell one high-volume account than to sell 5 smaller ones. When the numbers are calculated, though, it becomes clear that these are not sound business decisions.

Because incentives are based on revenue, salespeople will go to any lengths to win big-name, big-volume, and significant revenue accounts.

Seldom is the priority given to profit over revenue. Take any major industry and think of it as a pyramid. A limited number of companies usually occupy the top tier. Common practice is for most of the manufacturers vying for the business of those few top-tier accounts. Often, to win the business, a price discount is offered, further eroding the profitability. The “lucky” winner of these high-volume accounts may not be so lucky after all. 

Not only has the price been driven down, but the manufacturer has more than likely spent quite a bit of time and money to compete for these deals. 

A smart alternative strategy is to go after the companies in the lower two-thirds of the business pyramid. They are typically willing to pay full price than to bid down the price that manufacturers do with larger customers. 

Another benefit of having several smaller customers than one large one is a risk. It is less likely that you will lose all your small customers at one time. The loss of one high-volume account has a much greater impact on your business than the loss of a single small volume customer. 

Refocus on profit by understanding how to assess revenue effectively.

Understanding your business and working smarter are critical factors to achieving success. It is therefore essential that profitability considerations play a major role in business decisions. All decisions must therefore be based on profitability. That means shifting strategies and expanding the myopic view of revenue alone to include a focus on profits. Revenue on its own does not represent the vibrancy of an organization. Many of the past dot-coms serve as prime examples of companies that had millions of dollars on paper but incurred greater expenses than revenue earned. Lack of profit sent them to the annals of failed business ventures. 

Perhaps it’s time to look at and approach business differently. Learn to effectively assess revenue, then you’ll make a new kind of history for the record books. One that will be emulated by others for years to come.

Increasing Profitability In A Organization

A challenge facing owners and managers of all businesses is how to increase the profitability of the company. The focus almost always turns to increase sales revenue. The strategy is to increase sales to existing clients, finding new prospects, and/or adding new products/services.

Typically, each of these avenues of pursuit requires a lead time before the realization of the additional revenue. The identification and sale to a new prospect are conservatively less than a thirty to sixty-day effort. With more complex, larger volume, and more expensive sales, the elapsed time can easily be three to six months.

Even after the sale, there is a delay before revenue is recognized. The elapsed time required for delivery, installation, and billing can easily add another month. In the best of cases, companies recognize a 30 – 45 days sales outstanding on their receivables.  

So, in a best-case world, we might be able to realize increases revenues in as little as 60 days, but more realistically, it can take more than two months before additional revenue appears on the bottom line.  

What would be management’s reaction to a proposal to increase profitability in less than sixty days? Such a suggestion would excite almost anybody in the business. What if this could be accomplished without increasing sales volume? Sales volume could remain the same, and profits could improve!

How Is It Possible? 

In most companies, the following operational inefficiencies represent between 10 to 20 percent of sales revenue. In less efficient companies, this “operational waste” may run as high as 30 – 50 percent. 

Sources of “operational waste”: 

  • People – Inefficient staffing and scheduling, unnecessary work, overtime, lack of training 
  • Materials – Scrap, wrong supplies, excess inventory
  • Machines – idle time, excess downtime
  • Method – bottlenecks, inefficient process workflows
  • Information – lack of communication, miscommunication, delayed communication
  • Environment – unorganized work areas, poor or delayed staging of work 

Let’s Take a Look 

For illustrational purposes, let’s take a hypothetical company that has $10 million in sales. Assume the company earns $1 million in profit before taxes. Also, assume the cost of operational inefficiencies is a conservative 15 percent. 

Translated, that means that the cost of “operational waste” costs the company $1.5 million per year. 

With efficient operational management practices, assume that with a concerted effort, the cost of these inefficient processing practices could be driven down 5 percent to a 10 percent level. 

The savings from improvements in operational efficiency are a cost avoidance or reduction in existing expenses and drop straight to the bottom line as the expenses associated with these inefficiencies have already been accounted for.

Let’s take a look at the profitability opportunity from a 5% reduction in “labor time waste.” Assume a company is realizing a 70% utilization/efficiency of paid hours. (2080 hours/year/staff * .7 efficiency = 1,456 productive hours). A five percent improvement to 75% is 1,560 productive hours or a gain of 104 hours per staff per year. With a labor force of 30 staff members and a labor burden of $25/hour, a 5% gain is $78,000 annually in eliminated “labor time waste”.

It is a rare instance when profitability improvement or elimination of “operational waste” is realized from a single source. The reality is the profitability improvement is the cumulation of waste reduction efforts across all the different lines of business.  

The effort and cost to realize these improvements are already included in current expenses. The improvements are recognized by improving processes, increasing efficiency/utilization, and making changes in management culture, methodology and approach.

In a comparison of efforts, a reduction of operational inefficiency expenses from $1.5 million to $1 million per year would require 5 million dollars in additional sales, at a 10% profit margin, to generate an equivalent $500,000 in additional revenue.

In our hypothetical company eliminating 104 hours annually of wasted time per staff member appears to be a challenge. However, when broken down to a daily goal, a savings of 24 minutes per day is a lot less daunting.  

To shave 24 minutes of wasted time a day does not require supervisors to implement Draconian controls on staff, but instead focus on the minimization of the small lapses in time control that have crept into the operation over time. An uptick in supervisory diligence of 24 minutes of “operational waste” over a day is feasible.

The following are possible opportunities for reduction of staff non-productive time creep:

  • Personal cell phone calls or use during work hours. 5 – 10 minutes
  • Extended or additional breaks. 10 – 15 minutes
  • Extended lunches. 10 – 15 minutes
  • Slow daily startup. Prep time before starting the day. 5 – 10 minutes
  • Early quitting/end-of-day wrap-up/cleanup. 5 – 10 minutes
  • Time spent waiting for work or changing tasks. 5 – 10 minutes

Improving labor efficiency by cutting half of the estimated 40 – 70 minutes daily non-productive time makes the 104-hour annual goal less daunting.

If the opportunity to eliminate “operational waste” in labor can be easily identified and corrected, how much additional opportunity exists in other areas of the business?  

Reinforcing a change in operational mindsets and culture with an operational waste elimination-based incentive program (savings commission) can prove to be an easy and quick way to increase profitability.

Forming Strategic Partnerships Checklist

Look around and you will see that at every level of business – from Nike and Apple to your local landscaper and painter – companies are joining forces. Strategic partnerships are becoming more common and will continue to grow. They will grow because there are many benefits to establishing a strategic partnership.

Some of the benefits include: increased market share, building your reputation through positive association, added value for your clients, shared costs/resources, scalability, brand revitalization, greater audience reach and moving you ahead of your competitors.

In a typical strategic partnership, each business operates as a separate legal entity. But, even though you may not be legally liable for your partner’s problems, there is always the potential for other risks. Here are 6 things to do to reduce risk, and have a successful partnership.

1. Shared values – Research and understand your prospective partner’s past, present and future corporate missions, goals and strategies. Also, be very clear with them about yours. You are looking for synergy, common ground and similar ideals.

What do they stand for/against? Do you have the same ideas on how business should be conducted? Do they meet your level of professionalism?

2. Brand vision – Make sure you share the same brand ideas, and that both parties will benefit from working together. Although your products may go together your visions may not – your brand is based on a “good, quality product”, while their brand is “our product is inexpensive (cheap)”.

Does the partnership evenly improve each of your brands, or is it lop-sided? What is their attitude toward customer service? Do they have a well conceived, long term plan for their brand?

3. Due diligence – It is vital that you take the time to do your homework. It may save you from problems (i.e. financial, reputation, market share, legal, guilt by association) in the future.

Are they on firm financial ground? How do the market, customer and community view them? How, exactly, will they enhance your business?

4. Communication – The key to initial and on-going success depends on communication, a lot of it. It is important to make regularly scheduled meetings a priority. You want to: monitor the action plan, review problems/issues, track ROI and assess goal attainment.

When and how will you communicate? What is the process for decisions making and who will be involved? What are the approval and refusal rights for all communications?

5. Identify expectations and division of work – Identify in writing who, what, when, where, how and why. Partnerships usually fail and end up in court because of unclear, therefore unmet, expectations. At the start identify and provide solutions for any problems which might come up. As the partnership progresses immediately address and resolve all difficulties.

What is the strategic plan and who is responsible for getting it completed? What ROI does each of you expect? Who is the project manager, what are his duties and how much power does he have in each company? What resources are each partner contributing (i.e. financial, staff, time, knowledge, experience)?

6. Legal – Even in the best of situations problems occur. It is always good to talk to a legal expert when you enter into a business relationship. Partnership agreements can be very helpful in building trust between companies.

Do you need a partnership agreement? Should you include arbitration? Does either partner have any past, present or possible future lawsuits?

Forming a strategic partnership with other companies who offer complementary products and services can be a great way to grow your business – when it is done correctly. But, when it is done incorrectly a partnership can be quite damaging to your business and brand. Take these steps to increase your chance of success.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Secret to being a Successful Sales Professional

The best sales professional has an extensive set of tools that they can utilize to close a sell. One of the most important tools they have is called empathy. Empathy is best described as the ability to understand and share the feelings of another.

Every salesperson would like to join the ranks of the best of the best, the top 1% of selling champions that bring in the lion’s share of the sales in their organizations. I have witnessed these people. Some are one-hit wonders, here today gone tomorrow. Then there are the ones who consistently stay on top. They are high achievers, humble in their own right, quietly going about their business, and racking up sales. What do they possess that many within the sales profession don’t? What’s their secret? That’s what this paper is all about.

Sales Professionals | Empathy | Cogent Analytics | Business Management Consulting

Successful and responsible sales professionals often have a willingness to serve, an attitude of helping and giving to others. Lending a helping hand is one of the easiest things a sales professional can do to make a difference and an impact in someone’s life and in this world, one day, one relationship, one earned client at a time.

Approach each prospect/client/customer (PCC) with the mindset as an opportunity to serve, visualizing yourself sitting on their side of the desk, getting an understanding of what is going on in their world, (with empathy), when interaction with PCC in that manner will be a step on the path to greatness.

I appreciate the book Good to Great by Jim Collins. Level 5 leadership is a concept developed by Collins. Collins explains that Level 5 leaders demonstrate a compelling mixture of personal humility and invincible will. They’re especially ambitious, but their ambition is first and foremost for the cause, for the organization and its purpose, not themselves. As sales professionals, we can certainly learn a lot from that wisdom. Personal humility and an indomitable will, in my opinion, are the hallmarks of any sales champion.

Can you learn to develop these qualities “values.?”

After reading Collins’s hypothesis, he mentions that there are two groups of people: those who possess the seed of Level 5 and those who do not. The same can be said about salespeople in general.

Collins goes on to say, “the second category of people—and I suspect the larger group—consists of those who have the potential to evolve to be great, the capability resides within them, perhaps buried or ignored, but there nonetheless. And under the right circumstances—self-reflection, conscious personal development, a mentor, a great teacher, a significant life experience, a Level 5 boss, or any number of other factors—they begin to develop.”

Being in sales today can be challenging. It requires unique, and well-rounded skill sets that’s hard to come by. However, while there are “natural sales professionals,” core skill sets are essential for any level of sales professional, and they can be developed.

If you wish to create a favorable response with PCC, you do so by example with, sound communication skills with the art of persuasion, not by being deceitful but by genuinely getting to know them, by having an honest conversation, by asking good questions and truly listening to them and their needs.

Concentrate on their positive attributes, not only what they fear or dislike. When you get to know them, learn about PCC’s hopes, dreams, and aspirations, determine what motivates them. Then show them how to align their goals with your value proposition, working together for mutual advantage. When you do, everybody wins.

What’s the secret of high achievers? The greatest quality and the secret of high archivers is that of service to others, then delivering exceptional value without any expectation of reward. By further the interest of PCC and delivering what they want and need your scorecard will be your paycheck.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Cogent Analytics, LLC is a business management consulting firm, with a primary focus to help small to medium size, privately held businesses achieve success and long term profitability. Cogent provides powerful solutions with integrity and transparency to privately-held businesses throughout the United States.

Want More Sales? Improve your Brand

The idea to improve your brand isn’t new, but it can be a confusing concept for business owners. People think of branding as an “it.” They believe a thing (i.e., website, logo, catchphrase, product/service) is the brand. But, your brand – your reputation – is not a finite object or idea; it is how the customer perceives and experiences your company.

Improve Your BrandA customer’s experience is composed of many different interactions and aspects, which collectively create their perception of your company. These perceptions create an image or idea about your business and its products or services; this is your brand.

If you are like most business owners, you have ignored the link between branding and sales for too long.

Well, it is time to get serious about it because your competition has probably been ignoring it too. As your competitors’ customer service gets worse, due to the continued neglect of their brand, you will be able to gather the low hanging fruit through the maintenance of your brand.

Creating and managing a brand can seem overwhelming, confusing, and mystifying–especially if you are already having trouble keeping up on all the other things a business needs (i.e., production, regulation, finances, quality, personal) but this does not have to be the case.

Remember, a brand is your way of selling to your customers through their perception of you and what you have to offer.

The way to build a customer-centered sales philosophy is to break the process down into small manageable pieces that you and your employees can achieve over time.

Depending on your type of business, starting with these two fundamental principles may be all you ever need to establish and support your brand. You will undoubtedly be far ahead of your competition.

1) Improve Your Brand – Visual Image

One of the first things owners lose sight of is their company’s visual image, especially their electronic presence. They get caught up in the inside day-to-day operations and ignore how the world sees the outside. Ignore the outside at your own risk – that is where your clients are.

You may not care about how things look, but potential and current customers do, and it is their opinion that matters.

What people see is what they remember, it heavily affects their perception (i.e., your brand). You want to project success, professionalism, and trustworthiness. As your company grows its image should grow also.

Are you using the same cards, website, letterhead, logos, taglines, graphics, and documents you have had since opening? Do they look homemade, cheap and out-of-date? What do your service people and vehicles look like? How about the outside of your building? There is a difference between a working yard and trash-filled eye-sore. Do not trust your own judgment; ask people how they see it and listen to what they have to say.

2) Improve Your Brand – Customer Experience

Is your customers’ experience simple, intuitive, and enjoyable? If so, great! If not, why? Why make it difficult for your clients to do business with you?
Understanding your customer’s viewpoint is the second basic strategy you need to create a successful brand. When was the last time you called your company and worked your way through the voice mail system? How about the last time you updated your website? Have you tried to use it to order a product, make contact, or ask a question as a customer? Do you have sales people or order takers? Are your salespeople required to have ideas about improving service? How often are clients asked for feedback on the buying process?

The biggest complaint consumers have about buying experiences is poor customer service–this includes business to business transactions. The practice of impersonally selling via technology has made the need for excellent customer service more important than ever. The simpler you make it for people to do business with you the better chance you have of selling more and more often.

To improve your brand is not a complicated goal if you start with these basics. It takes commitment, effort and time to execute them successfully, but the effort will pay off. Customers want a positive interaction with your company. Show them that you are serious about your brand and giving them what they want. If they do not get it from you, they will get it from someone else.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

When Yesterday’s Advertising Methods Don’t Work Today

Today, businesses are becoming more dependent on the online world for the purposes of advertising. Whether it is all about advertising a product or service or to just simply to find more detail on a specific product, most prefer the online communication avenue. If one looks at past advertising methods, advertising via “word of mouth” offered many businesses a huge success. However, in current times, the platform and methods of advertising have changed. We are living in an age where most people prefer to actively resist advertising received through the telemarketing avenue. Most of today’s advertising methods are based on the concept of push marketing.

Some believe push marketing methods work. However, it is advantageous to know how businesses are attaining clients before their competitors do and often it is not through push marketing.

  • Does throwing money at issues in an attempt to gain resolution really work? Usually not.
  • Is it imperative to add people in an attempt to gain resolution? Rarely.
  • Is it a requirement to employ the services of “hip & cool” types advertising agencies to get the message out to others? Until and unless we are involved, surely not.

It is recommended to stop the use of push marketing methods. Instead, create an environment where customer feedback and publication of this feedback markets the business.

These days, there is hardly anyone who believes in what companies say. However, people do believe what their friends say. Most importantly people tend to show a great faith in the views and opinions offered by strangers instead of directly from the business itself. The best example of this is online business performance and product reviews. Before purchasing products or services, people now prefer to go to the leading review sites to see what others think of the product or the service. Some people believe that these reviews enable them to make the right decisions and can, as a result, influence a business’s sales and profitability. Further proof is the growing number of online platforms that are attaining high demand status for this same reason. One rarely sees an advertisement that promotes or provides an opinion concerning these online portals. The old method of “Word of Mouth” still works! However, the mechanism in which businesses gets their voices out to the market has surely changed.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Net Cash Flow for Small Business Owners

Net Cash Flow for an SMB/E is a critical component of a correct cash flow analysis. To make a correct Net Cash Flow for an SMB/E the SMB/E’s accounting needs to be in at least good order.  In general, the simpler, the better as to how the chart of account is set up as long as it meets the key requirement for correct numbers and timing of the entries.  

Other factors such as account payables and account receivables above 90 days for SMB/E’s need to be filtered out not to skew the analysis.  Make good notes in the accounting software as to how essential line items are treated.    

A thorough business review of the accounting system by a knowledgeable SME is a good start.  

The key accounts are:

 -SMB/E Revenues/subaccounts  

–SMB/E-Cash flow from investing   

–SMB/E-Cash flow from financing  

–SMB/E Cost of Goods Sold/Subaccounts  

–SMB/E Accounts Payables  

–SMB/E Accounts Receivables  

–SMB/E Operational Expenses  

–SMB/E Other regular expenses required for operation  

Net Cash Flow for SMB/E’s Definition:  

Net cash flow SMB/E is also known as the “change in cash and cash equivalents.” – Financial Dictionary. It is imperative to note that net cash flow is not the same as net income, or earnings before interests, depreciation, and taxes.  

It is possible to approximate an SMB/E company’s net cash flow by looking at the period-over-period change in cash on the balance sheet. Though, the statement of cash flows is a more insightful place to look.   

SMB/E Net cash flow is the sum of cash flow from SMB/E operations, SMB/E-cash flow from investing, and SMB/E-cash flow from financing.  

SMB/E Net Cash Flow is different than the straight forward generic Cash Flow as it looks at longer-term abilities of the company.  E.g., to measure an SMB/E company’s health investment income from a specific investment component that may not be a crucial part of the SMB/E operations may just be a ‘crutch’ for cash flow representation and that asset may have to be monetized for expansion at which time that contribution to cash flow goes away.   

Net Cash Flow Cogent Analytics Blog

Investors often hunt for SMB/E companies that have high or improving net cash flow but low company valuation. 

Use this Net Cash Flow information to better your business.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

For Lead Generation, Look for the 3 A’s

A company’s sales plan is only as good as the people who execute it. Sales talent acquisition is an on-going problem for business owners. Too many companies have order takers who wait for the customer to call them, rather than professional salespeople who focus on lead generation. 

Many business owners are unhappy with all things “sales” – people, plans, managers, volume, outcomes, efforts, lead generation, etc. Talent acquisition is an on-going problem and frustration for them. But, it does not have to be that way. The process of finding good salespeople can be easier if owners know what to look for. 

There are non-professional salespeople and professional salespeople. The non-professionals are customer service reps and order takers who have the title of a salesperson. Here is the important take-away

Sales Person Talent Acquisition

Just because an employee has the title does not mean they are selling, want to sell or knows how to sell. 

The dissatisfaction that owners have with sales comes from having order takers rather than professional salespeople. This is not a matter of wordplay. There is a difference in aptitude, attitude, and approach between the two, a difference which directly affects the bottom line. It is a simple formula – talent acquisition of professional salespeople equals lead generation, which means more sales. Let’s look at the characteristics of order takers vs. professional salespeople, the three A’s: Aptitude, Attitude, Approach.

Aptitude 

Order Taker – An order taker often takes a sales job because it was available, not because she wanted it. She does not see it as a career or an opportunity to better her circumstances. It is “just a job,” a way to pay the bills. There is no personal buy-in for the products/services or customers, and little pride in her work. 

Professional – A professional enjoys the selling process and sees it as is a career rather than a job. He enjoys the challenge and is motivated by the rewards it can provide. He chooses to do it and takes pride in his work. He gives good client service, knows the product and understands the benefits it brings to the customer. 

 

Attitude 

Order Taker – He usually says his job is “okay.” His part in the sales process is passive – the customer gives the order, he puts it in, and they are done. He is irritated by having to deal with customer’s problems or concerns. He believes the paperwork is the job, not selling. 

Professional – She likes her career and believes it is her responsibility to take an active role in the selling process. She is engaged with the customer and works with them to identify problems and find solutions. 

 

Approach 

Order Taker – He spends all day in the office waiting for orders to come in from conventional lead sources (i.e., RFP, incoming call, referral, web request), rather self-generating any. He resists ideas and suggestions for getting more sales, particularly if it requires real selling. 

Professional – A salesperson enjoys talking to people, especially customers or prospects. He seeks out opportunities for lead generation (i.e., trade shows, face to face, social media, email, text, newsletters, seminars) with future and existing clients. He is interested in suggestions on how to sell better and smarter. 

No wonder a lot of owners are frustrated; they have a sales department in name only. There are no actual salespeople, skilled in lead generation, in it. This is why strategic talent acquisition is so vital. Sales are too important to be in the hands of people who are unwilling or unable to make them. A sales plan is only as good as the people who are supposed to be following it.  

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Business Goal Examples For Any Small Business

Business goals are more than just numbers, they are what drive your business forward. As an SMB/SME owner, you have a purpose with your business just as you have a purpose in your life.  

Goals are not the end game. They are the beginning of the ‘game,’ business goals are set for a certain period or market status and are continuously reviewed for modification of business strategy or fit with organization status.    

A significant part of the setting, validating and measuring business goals is to have them reviewed by a ‘board’ of objective advisors you can trust giving you accurate feedback.    

Business Goals Things to consider

    • Set goals that can be realized while still being challenging  
    • Communicate the Goals with the team that will work with you to accomplish these goals  
    • Document and Share the goals with the appropriate outside audience, your financial institutions and sometimes your customers as it may fit into your business planning.   
  • Review the Goals with a defined timing of each quarter and year  

Some of the various types of goals are:  

What do you want from creating and driving the business?  

    • Strictly Financial success?  
    • Something for family continuity in the business?  
    • Contribution to the craft of the business?  
    • Recognition as a leader in this type of business?  
  • Contribution to the community? 

Some Potential Financial goals for your business could be:  

    • Return on Sales  
    • Net Profit before Taxes  
    • Growth Factors   
    • Return on Investment (ROI)  

Potential Marketing business goals:  

    • Volume of Units  
    • Size of business as to $’s  
    • Location of business  
    • Markets addressed, geographically and customer segments.  
    • Market Share (this is sometimes a problematic area given that market assessments are not necessarily easy to attain)  
  • Price Points for product/service  

Operational business goals:  

    • Size of Business as to employees  
    • Size of business as to facility requirement  
    • Owner’s time spent in business by week, month, year.   
    • Plans regarding Personnel:
    • Only hire local employees (or not)  
  • Only hire (preferred) employees with a specific background

And it is Important to have an Exit strategy: 

  • At what time/size/financials sell the business or transfer to family/other.  

These are just some examples of business goals to set for businesses of any size.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

U.S. National Small Business Week 2019

Remember U.S. National Small Business Week
May 5, 2019, through May 11, 2019

Each year since 1963. the President of the United States makes the National Small Business Week proclamation. As of the end of 2017, small businesses in the U.S. made up 99.7 percent of the employers in the country according to the Small Business Administration. There are plenty of impressive statistics to be found on this FAQ page of the SBA Website pertaining to small businesses nationally and globally.

The U.S. National Small Business Week for 2019 will begin May 5, 2019, and will continue through May 11, 2019, with opening ceremonies beginning in Washington DC. During this week-long national event, the Small Business Administration (SBA) will take the opportunity to recognize outstanding entrepreneurs and small business owners and throughout all 50 American states and the nation’s U.S. territories.

Chris Pilkerton, who is the acting Administrator for the U.S. Small Business Administration will present all of the ceremonial awards in Washington, D.C.

You don’t have to be in Washington to be a part of the opening ceremonies for National Small Business Week. The week kick’s off with a Digital Commerce workshop at 4:00 pm EST on the SBA Facebook Page. Then, at 6:15 pm EST watch for the following awards.

  • The winning nominee for the Veteran’s Business Outreach Excellence in Service Award
  • The winning nominee for the Women’s Business Center of Excellence Award
  • The winning nominee for the Small Business Development Center Excellence and Innovation Award
  • The winning nominee for Service Corps of Retired Executives (SCORE)

Federal Procurement Awards will be presented to:

  • The best nominee for Small Business Prime Contractor of the Year
  • The best nominee for the Dwight D Eisenhower Awards for Excellence ( this recognizes members of the Research, Development and Services industries as well as manufacturing)
  • The best nominee for the Small Business Subcontractor of the Year

For more information, please visit the SBA events page.

On Monday May 6, a workshop for small business owners on the Facebook Live about Social Media Tips for your Small Business at 10:30 am EST. Followed by more awards at 12:45 pm EST.

There will be many other awards that will be presented throughout the country during their bus tour. Please feel free to follow along and use the hashtag #SmallBusinessWeek.

We would like to take this opportunity to suggest that small businesses be vocal in their communities in support of small businesses everywhere and recognize one another. Perhaps take the time to network with other small businesses in your communities and offer specials and/or create community events of your own.

If you would like to provide advertising on your website to help spread the word and show your support, the SBA has provided the following headers for you to use for your social media sites:

Certainly, high regard and honor are due to the small businesses nationwide who have collectively contributed and continue to support our economy and the citizens of our country, and it’s communities by way of employment and community support.

Congratulations will be due to all of the national SBA award recipients (to be announced). One hopes that all small business owners and their employees will take the time to congratulate one another for a job well done. This nation would never be what it is today without each and every one of you. You are appreciated!

Enjoy U.S. National Small Business Week 2019!

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Company Vision Should Emphasize Customer Service

How can you create a customer-centered culture that promotes quality customer service? This is one of those things that a lot of owners have heard about, sort of know they need but have no idea how to go about making it happen.  If you have no idea how to do it, then your competition probably does not know either.   

This is why you ought to consider creating a company vision that focuses on providing outstanding customer service.  If you are doing it, and your competitors are not, then you develop a reputation of being the superior company, which usually results in more sales.   

How it will help you

Let’s be very clear. Field of Dreams is a movie and its famous line – “If you build it, they will come.” – it is not true.  

You are in the business of selling what you produce.  Too many failing companies stress the creation of their product or service as primary while selling it is only a vague afterthought.  It is common sense – Operations, production, and sales all become easier when a business’s customer service vision is the focus of everyone’s actions, decisions, and strategies.

How it works

When you identify your customer service purpose and values, everything follows from there.  The company’s goals are more realistic and easier for every person to understand.  The customers’ perspectives and experiences impact how managers and employees think and act on a daily basis.  It is not just the sales department’s job to sell.    

A client-centered culture flows from top to bottom and bottom to top.  It is everybody’s – owner, managers, and employees – responsibility to sell through excellent customer service.  They all work together; holding each other responsible for establishing and maintaining the vision.    

They understand the client comes first; they are growing in the same direction.  In a healthy and positive workplace, troublemakers often leave the company quickly.  Peers do not support Their behaviors and attitudes or tolerated by management.  

Creating and maintaining a company vision based on excellent customer service is not always easy, but winners do the things that losers are not willing or able to do.  It requires discipline and commitment at all levels but is worth the effort.  It is your choice, so ask yourself,

company vision customer service culture blog image

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Understanding the Concept of Business Development

Business development is one of those strange business concepts.  When you ask someone to define it, depending on their occupation, you will get different answers.  People usually describe it based on their specialty.    

They will say it is sales, marketing, healthier revenue, strategic partnerships, customer service, growth/expansion, increased profit, more market share, metrics, networking, social media, R&D, quality control, improved productivity, better employee relationships, strategic planning, etc.  It seems like the definitions are too many, varied and contradictory to be useful.   

business development definition

How can a busy business owner consistently hit several different targets, which appear to be always moving?   Fortunately, there is a more natural way to understand and use the concept of business development.  

It may seem like there are many different targets, but there is only one.  The business development target you are shooting at is – To create long-term value, stability, and success for the company.  That is all there is, just one big stationary target that you are always trying to hit.  The goal never changes, but the arrows you need to hit the target do.  

The equipment you need to hit your target may change over time, because what your business needs changes over time.  The types of arrows – ideas, strategies, and actions – you keep in your quiver depend on the unique circumstances of your company.    

Let’s use the list above and look at some examples of how the concept of business development works.  

Company A has all the sales it wants, but it cannot get a consistent product out the door on time.  Possible arrows – customer service, quality control, improved productivity, better employee relationships.    

Company B is profitable but static.  It cannot get to the next level.  Possible arrows – sales, healthier revenue, strategic partnerships, metrics, growth/expansion, increased profit, more market share, improved productivity.  

Company C was doing well but has been losing money over the last few years.  Possible arrows – sales, healthier revenue, metrics, customer service, growth/expansion, increased profit, improved productivity, better employee relationships.   

Identifying the number and type of arrows you need to hit your business development target is very difficult at first.  Pick only a few priorities to focus on; you do not want to do all of them at the same time.  Once you consistently hit the bulls-eye, concerning your chosen goals, then you can move on to others.    

Creating long-term value, stability and success for your company requires an on-going, honest assessment of goals, actions, key people, operations, financials and yourself.  Managing a business development plan takes commitment and leadership, which is why most owners do not do it.  It is also why most businesses fail.  

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Sales Performance and Improvement

Nearly all companies in business today prepare some forward-looking type estimate of what they believe their sales and gross revenue will be over the next revenue cycle at a minimum and most go out until the end of the fiscal year.  The revenue cycle is the time between when raw materials are ordered to begin the conversion process until when the sale of the product to a customer is completed.  This is typically called the “Revenue Forecast,” and it is the primary input for almost every financial decision that a company will make, from investing in new equipment to increase capacity or to initiate a price increase and/or price reduction based on current market conditions.  In most large companies today, some salespeople have the responsibility for preparing the initial revenue estimate for their sales territory and/or key account relationships.  These estimates would go to the sales manager who would roll-up and review the revenue forecasts, and then make any adjustments to the forecast.  In very large companies, this may take place at multiple levels of the sales organization.  Typically, the final revenue forecast is reviewed by the Senior Vice President of Sales and a Sales Finance leader before presenting the revenue forecast to the leadership team.  In smaller organizations, there may only be two or three individuals who work on the revenue forecast and then present it to the owner or president of the company. 

Based on the size and complexity of the organization, there may be just only one product family with a few variations or there may be hundreds or even thousands of SKU’s (stock keeping units) that a company may need to forecast in order to understand the sales variances that have occurred and to make the appropriate adjustments.  In addition to preparing a Gross Revenue forecast (gross price per unit x number of units), most companies provide Sales Incentives (price reductions, growth rebates, coupons, free samples, co-op incentives, etc.) to their customers and these investments must also be forecasted to obtain the Net Revenue forecast.  During the monthly close process, most companies will present the current month financial results and then present a monthly Gross Revenue and Net Revenue forecast extending through the end of the current fiscal year.  The following forecast example will use a Gross Revenue forecast and a Sales Incentive forecast to come up with a Net Revenue Forecast.  This is a very simple Net Revenue Forecast that you would typically see at a small company with one or two finance people managing the day to day business operations.  The individual(s) performing this forecast would likely spend a less than a day at the end of the quarter performing the forecast activity and would more than likely be very conservative in their assumptions.   

Without a detailed Gross Revenue and Sales Incentive forecast for every customer and product, the most used revenue forecast process is to calculate the current year to date actual sales and divide it by the actual sales of the same time period of a previous year (or the budget sales of the same time period).  This is the Revenue Growth Index for that time period. The Revenue Growth Index is then multiplied by the previous year sales for the same time period (or the budget sales of the same period) to calculate the Revenue Forecast.  When forecasting the Sales Incentives for the balance of the year, the best way to do this is to calculate the Sales Incentives as a percent of Gross Revenue and compare the Forecast % of Gross Revenue to the Actual % of Gross Revenue.         

The time periods for this example are the four quarters of the year and are described below: 

  • Actual: Quarter 1 and Quarter 2 of the current year
  • Forecast: Quarter 3 and Quarter 4 of the current year
  • Budget:  Quarter 1, Quarter 2, Quarter 3 and Quarter 4 of the current budget year
  • Actual 1 YAG: Quarter 1, Quarter 2, Quarter 3 and Quarter 4 of the prior year
  • Actual 2 YAG: Quarter 1, Quarter 2, Quarter 3 and Quarter 4 of two years ago

The formulas in the Net Revenue section are the same as the ones used in the Gross Revenue section.

GROSS REVENUE:  The Actual/Forecast vs. Budget, vs. 1YAG, vs. 2YAG boxes, the formulas are as follows: 

Current Actual vs. Budget Qtr 1: 1,125/1,100 = 102.3% growth   

Current Actual vs. Budget Qtr 2: 1,350/1,300 = 103.8% growth 

Forecast vs. Budget Qtr 3: 1,450/1,500 = 96.7% growth 

Forecast vs. Budget Qtr 4: 1,150/1,200 = 95.8% growth 

Total Actual/Forecast vs. Budget: 5,075/5,100 = 99.5% growth 

Current Actual vs. 1 YAG Qtr 1: 1,125/1,050 = 107.1% growth   

Current Actual vs. 1 YAG Qtr 2: 1,350/1,250 = 108.0% growth 

Forecast vs. 1 YAG Qtr 3: 1,450/1,450 = 100.0% growth 

Forecast vs. 1 YAG Qtr 4: 1,150/1,150 = 100.0% growth 

Total Actual/Forecast vs. 1 YAG: 5,075/4,900 = 103.6% 

Current Actual vs. 2 YAG Qtr 1: 1,125/1,000 = 112.5% growth   

Current Actual vs. 2 YAG Qtr 2: 1,350/1,200 = 112.5% growth 

Forecast vs. 2 YAG Qtr 3: 1,450/1,400 = 103.6% growth 

Forecast vs. 2 YAG Qtr 4: 1,150/1,100 = 104.5% growth 

Total Actual/Forecast vs. 2 YAG: 5,075/4,700 = 108.0% 

SALES INCENTIVES: The Actual/Forecast vs Budget, vs 1YAG, vs 2YAG boxes, the formulas are as follows: 

Current Actual Qtr 1: 120/1,125 = 10.7%   

Current Actual Qtr 2: 145/1,350 = 10.7% 

Forecast Qtr 3: 140/1,450 = 9.7% 

Forecast Qtr 4: 110/1,150 = 9.6% 

Total Actual/Forecast: 515/5,075 = 10.1% 

Current Actual vs. Budget Qtr 1: 110/1,100 = 10.0% 

Current Actual vs. Budget Qtr 2: 130/1,300 = 10.0% 

Forecast vs. Budget Qtr 3: 150/1,500 = 10.0% 

Forecast vs. Budget Qtr 4: 120/1,200 = 10.0% 

Total Actual/Forecast vs. Budget: 510/5,100 = 10.0% 

Current Actual vs. 1 YAG Qtr 1: 100/1,050 = 9.5% 

Current Actual vs. 1 YAG Qtr 2: 120/1,250 = 9.6% 

Forecast vs. 1 YAG Qtr 3: 140/1,450 = 9.7% 

Forecast vs. 1 YAG Qtr 4: 113/1,150 = 9.8% 

Total Actual/Forecast vs. 1 YAG: 473/4,900 = 9.7% 

Current Actual vs. 2 YAG Qtr 1: 90/1,000 = 9.0% 

Current Actual vs. 2 YAG Qtr 2: 110/1,200 = 9.2% 

Forecast vs. 2 YAG Qtr 3: 130/1,400 = 9.3% 

Forecast vs. 2 YAG Qtr 4: 103/1,100 = 9.4% 

Total Actual/Forecast vs. 2 YAG: 433/4,700 = 9.2% 

The formulas in the Net Revenue section are the same as the ones used in the Gross Revenue section.  

The original GROSS REVENUE, SALES INCENTIVES and NET REVENUE Forecast is shown below: 

Sales Performance and Improvement Blog

Analysis of the Forecast 

The current forecast seems to be very conservative both from the Gross Revenue perspective and from the Sales Incentives perspective which will make Net Revenue conservative as well.  The Actual results for Quarter 1 and Quarter 2 show the Gross Revenue Indexes vs. Budget to be at 102.3% growth and 103.8% growth while the Gross Revenue Forecast Index is only 96.7% growth and 95.8% growth for Quarter 3 and Quarter 4.  In addition, the Actual results for Quarter 1 and Quarter 2 show the Gross Sales Indexes vs. 1 YAG to be 107.1% growth and 108.0% growth while the Gross Sales Forecast Index is only 100.0% growth and 100.0% growth for Quarter 3 and Quarter 4.  Similarly, the Actual results for Quarter 1 and Quarter 2 show the Gross Revenue Indexes vs. 2 YAG to be 112.5% growth and 112.5% growth while the Gross Sales Forecast Index is only 103.6% and 104.5% for Quarter 3 and Quarter 4.   

The Sales Incentives Forecast also seems to be very conservative as the Actual results for Quarter 1 and Quarter 2 versus Budget were 10.7% and 10.7% respectively, while the Sales Incentives Forecast is only 9.7% and 9.6% in Quarter 3 and Quarter 4.  The Sales Incentives Budget was 10% in every Quarter of the current year. The Sales Incentive Actual 1 YAG Results were 9.5%, 9.6%, 9.7%, and 9.8% in Quarters 1, 2, 3 and 4 respectively, and, the Actual 2 YAG Results were 9.0%, 9.2%, 9.3%, and 9.4% in Quarters 1, 2, 3 and 4 respectively. So it seems like the Sales Incentives % of Sales Revenue has been slowly climbing over the last two years but had a substantial increase Quarter 1 and Quarter 2 of the current year, and should be forecasted similarly.  

The Actual Results for Quarter 1 and Quarter 2 show the Net Revenue Indexes vs. Budget to be at 101.5% growth and 103.0% growth in Quarter 1 and Quarter 2, but the Net Revenue Forecast Index is only 97.0% growth and 96.3% in Quarter 3 and Quarter 4.  The Actual Results for Quarter 1 and Quarter 2 show the Net Revenue indexes vs. 1 YAG to be 105.8% growth and 106.6% growth in Quarter 1 and Quarter 2 and 100.0% and 100.3% in Quarter 3 and Quarter 4. Similarly, the Actual results for Quarter 1 and Quarter 2 show the Net Sales Indexes vs. 2 YAG to be 110.4% growth and 110.6% growth while the Gross Sales Forecast Index is only 103.1% growth and 104.3% growth for Quarter 3 and Quarter 4. 

Adjustments to the Forecast 

Sales Performance and Improvement image 2

As noted earlier, the initial forecast was very conservative and would have ended up below the original Net Revenue Budget (4,560 in Actual Net Revenue versus 4,590 in Budget Net Revenue).  The primary issue was that the Actual Revenue growth in the original model was robust in the first half but was substantially lower in the second half – this shows the Revenue Growth of the 1st  half of the year less the revenue growth of the 2nd half of the year: (Gross Revenue vs Budget: (96.3% – 103.1% = -6.8%), Gross Revenue vs Actual 1 YAG: (100.0% -107.6% = -7.6%), Gross Revenue vs Actual 2 YAG: (104.1% – 112.5% = -8.5%).  The Net Revenue growth in the original model was also very strong in the first half but was substantially lower in the second half – this shows the Revenue Growth of the 1st  half of the year less the revenue growth of the 2nd half of the year: (Net Revenue vs Budget: (96.7% – 102.3% = -5.6%), Net Revenue vs Actual 1 YAG: (100.1% – 106.3% = -6.1%), Net Revenue vs Actual 2 YAG: (103.7% – 110.5% – 6.8%).  If the company used the original forecast to make business decisions, then they may not have made investments that would have allowed them to achieve a higher Net Revenue.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Diversification – Stack the Deck in Your Favor 

Too many businesses stagnate, decline or fail because they are not adequately diversified. Diversification is one of the most challenging decisions a company can make, which is why most business owners do not do it. 

It is called an unpredictable, high-stakes game for good reason. The risks are high, but so are the rewards. There is always the gamble that you could significantly increase the value of your company or severely damage it.  

But, like any risk you take in life, there are things you can do to limit the downside and increase the upside. You can start by thoughtfully, wholly and honestly answering the following questions. This process will work only if you respond with facts – not feelings or guesses. If you do that you will make the risk in diversification, much less risky. 

Diversification - Stack the Deck in Your Favor

Figure out where you currently stand. Every company has assets and liabilities, including yours. The decision to branch out should be based on an analysis of what you can capitalize on and what needs to be fixed before you move forward.  

If your business struggles with being competitive now, you are not in a position to make a good run at future competitors. Using diversification to fix a failing company seldom works; it requires a robust and stable company to be successful. An outside pair of eyes is helpful at this point. Owners are usually too close to the situation to evaluate it accurately.  

What assets do I need to compete with future competitors successfully?  

Determine what assets (i.e., money, time, people, skill, training, knowledge) you will need to compete in future markets. Success in one market does not mean you will be successful in another, especially since you will probably be competing with companies who are already established and have experience with diversification.  

Develop a plan to match or beat them at their own game – merger/partnership, acquire/buy out, undercut pricing, aggressive sales/marketing plan, etc. You should not enter a high stakes game unless you have the resources required to win. You still may not win, but your chances are a lot better.   

What do I want to accomplish and how do I do it?  

It is vital to identify your objectives and make sure you have enough assets to achieve them. A common mistake owners make is not being clear about what they hope to achieve. You want to identify how much of a sustainable market share you can reasonably go after. There is no point in diversifying if you do not know exactly want you want and have a plan for getting it. Here is an example of how not to expand. While it is about a machine shop, every industry has it’s equivalent. A plasma cutter is an expensive machine that cuts plate steel. There is a market for its products, and it can be a reliable profit center. And yet many (yes, many) of these machines are gathering dust on shop floors because the owners did not identify their objectives, nor make sure they had enough resources to achieve them. These owners did not do the basics: have an employee available to program it, hire or train existing salesmen to sell to the capabilities/strengths of the machine, figure out the break-even and profit margins, identify a need for the product in the area by contacting possible customers, or line up potential contracts before purchase. Answering these questions is the place to start if you are thinking of diversifying, not the place to finish. In addition, you will need to do a detailed financial analysis; again, an outside pair of eyes is beneficial at this stage. Diversification is a great way to grow your company and meet all your goals. But, like any game of chance and skill, it is essential to know the ins and outs if you want to be a good player. The smart player knows when to leave with cab fare in his pocket and money to get in the game another day. The dumb one stays until he has to hitchhike home and borrow money to eat next week. 

Generating New Prospects

Often times our clients need to generate additional revenue. They may have a dozen good reliable customers but in order to increase their profits or cover their overhead or replace customers who stop using your services; you need new customers. You need to generate new leads and educate those prospects as to your services and abilities. We need to determine their needs and show them how we can satisfy those needs. Before you can sell however, you need to generate the leads that will allow you to “get your foot in the door.”

The first step is having a library card or access to a library card. This can be done in person usually at any branch. You may need a proof of residency for the county or city that runs the Library. Oftentimes, you can also obtain the card by going on-line to the library web site.

Next, make sure that your Company Website is current and up-to date. Once you make contact with someone they are sure to look-up your Company to make sure you are legitimate and to size up your capabilities. A website with typographical errors or incomplete sentences or grammar mistakes will not reflect well on your Company or your professionalism. Ensure that the website gives an accurate picture of your goods or services and any unique abilities that your Company possesses. Ideally, a good website should be a major factor in creating “demand generation.” In other words, creating an awareness of your Company that people in need of your services or your products might see your Company as a means to fulfill these needs and actually reach out to contact you through the website. However, if we are not getting calls or inquiries, we need to seek out our own new leads. This is where the next step can be very helpful.

The next step is to have an understanding of the North American Industrial Classification System or NAICS. This system classifies and assigns a number to every industry in North America. This system can be accessed on-line by searching “NAICS.” This will give you various industries with the appropriate numbers to enable you to track these industries. For example, if you provide services such as maintenance, servicing and repairing of industrial equipment (conveyor belts) you may want to research those industries where a conveyor belt would be used. They most likely run 24/7 and need regular maintenance or repair frequently. Some examples would be tire plants, paper mills, quarries, and food processors. By going to the NAICS website you can enter the keyword for your industry (paper mills) and the number 32213 comes as a general class number but this can be “drilled down” to Corrugated or Folded. The corresponding numbers are 322211 and 322212. This process can be repeated for all of the industries that you think might need your services.

Another method for selecting industries is to research your biggest customers and determine what are their NAICS Codes. (They may have more than one.) Be careful because the codes are often entered on the tax return by their accountant and can be erroneous or are a code for a segment of the company you are not familiar with. Double check that the number is linked to the service you want to track. Once you have determined the correct number you can research other companies that you could approach to sell the same services that you currently sell to your existing customers.

The next step is to make a list of all the NAICS codes for the industries you are interested in approaching. Once we have our list, we can now access the local Library databases.

Now you need to get online with your local library website. As part of their reference department, a most all libraries subscribe to a database service which have numerous research possibilities. Some of the popular systems used are “Reference USA”, “Hoover’s”, and “Mergent.” Any one of these systems would be suitable. Once you find the “databases” on the library website you select “databases.” This will give you many choices for research. However, we are most interested in those that have “business statistics.” In one database the choice is Mergent Intellect. Once you access this database, you should select the setting for “Advanced Search.” Then select “industry” and select “NAICS code” to use the codes selected. Enter the NAICS code that you want to research and then hit “add to criteria.” Now if you want to check for industries in your region, state, county or city, you can now do that by clicking on “location” and then scrolling down to select the geographical criteria you want. You may want a list of companies in your state or neighboring state; or you can select your county or neighboring county depending on the size of the industry you are tracking. You then add this to “criteria.”

[There may be some small variations between databases and how they are set-up to accept data, but a call to the library reference desk will usually get a very helpful librarian to walk you through any unfamiliar steps.]
This process will produce the names of the companies that are in the selected industry in the geographical location that you want. Highlight the name of the Company on the list produced and it will drill down to give you other essential information such as, number of employees, sales volume, phone numbers, pay history, family tree and date of founding. All of which will help you determine whether you want to pursue this company as a prospect.

As you research each company you can make a list of those who you may want to follow-up on and those who do not look like good prospects; not enough sales, slow pay, too far away etc. Get the phone number and address for those you are interested in.
At this point, someone should be designated to make a call to obtain the name of the decision maker such as head of maintenance or facilities or head of engineering. This will give us the ability to customize a brochure or pamphlet with his name and title and mail it directly to his attention. Ideally the brochure will fit into an envelope that we can mail first class and it will not get put into the “junk mail” category. This may allow you to bypass the “gatekeeper”.

Some people may prefer to call right away and try and reach the decision maker but you may be dealing with the gatekeeper who will not forward the call. For that reason, a brochure or pamphlet sent in advance might open the door or get some name recognition when you do call. The pamphlet or brochure could be the reason for your calling and it gives you an opportunity to explain the types of services you can provide to their company.

All of which can be done without leaving your office and wasting time in non-productive cold calls.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Enhance Your Small Business Public Relations Efforts

As we continue our journey through 2018, we’re keeping an eye on the host of trending public relations (PR) possibilities that will help small businesses continue to thrive.

If we take the time to think about how recent history has affected public relations for small businesses as recently as 2017, we’ll see that many of the platforms that many were excited about have been left to struggle under the dominance of LinkedIn and Twitter. There are, however, some of the 2018 trends that have injected themselves and now seem to be here to stay awhile.

Here are some ideas that small business thought leaders might consider implementing that will help put your brand on the map:

Begin A Conversation:

If you and your employees consider yourselves thought leaders, then you must own your conversations. Fear not when it comes to sharing your opinions and ideas. Stand firm; your readers want diversity in discussions, not the same old song and dance.

Be Consistent with Your Content Creation:

  • If you consistently provide content, you will soon find that your clients/customers will see that you are dependable and will begin to return to your site frequently for the opportunity to study your insights, views, and expertise in your industry. They will also look forward to communicating with you.
  • Be sure to promote and publish content through social media and public events. Enhancing your social media and community image will strengthen your PR strategy. Remember, however, content creation is meant to be meaningful and helpful. Keep the promotion of any products or company brand out of your content.

Remain Humble and Generous with Your Content:

  • Do your best to remain open and generous so that your audience will have the ability to access some of your expert advice on the content you’re offering. Avoid profound restrictions with your offerings.
  • Take some advice from Michael Brenner, CEO and thought leader with Marketing Insider Group. Brenner’s philosophy is that it’s vital to “give to get.” Brenner states that content success comes with encouraging audience members to consider becoming ” an authority on relevant topics by delivering the answers to the biggest questions on the minds of your target audience.”

Provide Personal Elements to Your Content:

Thought leaders should express their human side. Most of us generally respond well intellectually as well as emotionally. Perhaps consider highlighting team members or others who use their products and or services to assist in solving real-life issues. While presenting a personal side to your content, consider making this aspect your main focal point.

Enhance Your SEO:

Use every possible SEO tactic possible. Remain current with Google’s algorithms by using well-chosen backlinks, keywords, and mentions.

Be Certain to Remain Vigilant in Maintaining Your Online Reputation:

  • As a thought leader, it is critical that you are not passive about how you monitor your reputation online. This monitoring accomplishes control of any negative comments that may arise. Maintain a constant interaction with your audience by way of social media and should any negative issues present themselves, act rapidly to resolve the problem to ensure the satisfaction of your readers, clients/customers.
  • Help solve problems along the way. There isn’t an industry in existence that doesn’t experience problem that will often prevent progress. As a thought leader, if you are in a position to offer new ideas, this can make a world of difference to the status of your thought leadership and your PR abilities.

Consider Collaborating with Others on Projects:

If you would like to enhance the power of your thought leadership position from a PR standpoint, think about combining your name with an executive of a higher profile status in your industry. With the addition of your collaborator’s views, this angle is likely to increase the value of your content not to mention the possibility of providing a position for you before a whole new audience.

Remain Accessible to All:

  • If you want to open doors for new thought leadership PR possibilities, leave yourself open to various bloggers, journalists, even event coordinators in your respective industry. You may genuinely enhance your leadership by effectively nurturing your relationships with the press. This nurturing will provide ample opportunity over time to share your expertise with a much larger group of readers.
  • As a thought leader, you should always take the time to be visible to your public. Take the time to make yourself present at community and speaking events. There’s no better way to increase your leadership development and impact.

These are just a few suggestions that we have to assist you in the enhancement of your small business PR goals. You must keep in mind that implementing thought leadership PR strategies will require some thoughtful planning, patience and time. However, as time progresses, you will begin to see the improvement you desire placing your business on a positive path to success.

If you have other public relations ideas that have made a difference in your small business, we would love to hear from you.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Quality Content: Editorials and Your Company Image

Recently, a study made by the Association of Management Firms (AMCF) found that approximately 93% participants believed that companies providing high quality thought leadership are in fact, better companies.

That stated, as a part of the same survey, 94% of those participants felt that companies with poor content had severely lowered their opinion of those organizations.

Given these statistics, it is necessary for small businesses to be aware that quality content is rapidly becoming critical to small business marketing plans. Thought leaders must be able to produce material of high quality and value to their consumers/readers if they want to add content to their repertoire for advancement within their client/customer base.

A lot of online content is consumed and nearly immediately forgotten, due to general and vague messages. If the content/editorial that provides quality offers information providing the reader expert advice or something they may first implement to see how well it works for their business, it’s far more likely the information your thought leaders are providing will bring attention to your expertise.

Only when your readers find value in your content are they likely to share it with friends and associates, through social media and other digital venues. The bottom line is, the content created must not only be original but must provide information that will ensure that the material will quickly find a path of its own and continue to build a memorable journey for all who share and receive it.

Most businesses today would like to see those who are part of their organizations, become thought leaders in their industries. They want an image as experts in their respective fields. To achieve this particular kind of success, those who have the depth and knowledge of any specific aspect of any business should be prepared to share informative pieces of their expertise not only with their employees but within the public arenas that they serve. These are the very actions that will bring repeat and new business to you.

The knowledge you share with your readers that addresses some of the small problems they are experiencing will keep them returning to see what more you have to offer, not only in content but face to face business.

We want to offer some ideas that will assist you in engaging your client/customer base so that they will continue to come to you for what they need to know as opposed to going to your competitors for assistance.

Thought Leader Development

Thought leaders often require development and development requires knowledge, so if you have it, share it. The more those who associate themselves with your small business learn, the more they will share your information with others.

  • The more basic the information that you serve to others that will provide small solutions to their problems, the more likely you are to find that you acquire clients/customers who will pay for your knowledge and services. By developing your employees as thought leaders, you’re also developing advocates for your business both within your industry and your client/customer base.

Provide Creative and Unique Editorials/Content

  • Sometimes reading content will sound much like a boring high school lecture presented by an instructor who has given the speech in so many classes that eventually it all becomes monotone. Your content should not only be original but enlightening. Select something novel, offer some information that perhaps you know that few others do; or at the very least, offer additional information that will likely exceed what the readers are seeking.
  • It’s also wise to back your information with statistics according to studies in whatever industry for which you’re providing information. Although it’s great to look for information with highly reputable institutions, there may be other places to find tidbits of information about which many know nothing. The bottom line is, if you’re able to help someone solve an issue that he or she has struggled with, you’ll become his or her go-to. That’s not easy these days, so it’s something that will require constant development.

Create Visuals In the Minds of Your Readers in Words

  • Assist your readers in creating a vision of success in their minds. If you help your readers see themselves succeeding in solving their dilemma with the use of the information you’re providing, (especially if your solutions work for them), they will not only return to your written offerings often, but they’re likely to share them.
  • Entertain them with the thought that they may soon have the ability to consider their problem solved. Helping in this manner often engages your readers to contact you or your organization directly when they experience their next challenge. Perhaps you will have the ability to assist them with something else, increasing your profitability.

Consider Where You Will Effectively Place Your Content

  • Take the time to research, before writing your content, the digital venues that would best serve you and your current and potential clients/customers. You may not, initially, be aware of where you can publish, but if you do have an idea of your target venue, then you’ll have an opportunity to customize it to the publication’s readers. If you are addressing subjects that provide a more broad-based view, you will want to seek media outlets that are open to more general information.
  • However, if you’re addressing niche businesses that provide information to better a niche industry, it would be beneficial to research publications that reach out specifically to those specialty industries. Determining whether they are business to business (B2B) or business to customer (B2C) for example, will help you know just how much industry “jargon” that would be safe to use. If your writing appeals to business to customer publication, you may choose to create your content from a layman’s viewpoint.

Reach as Much Digital Real Property as Possible

As an editorial/content contributor, as a thought leader, it’s imperative to reach as many readers as possible. This need is part of the reason it’s so important to ensure that your piece is of high quality and highly engaging. Although it’s not always easy to grab a reader’s attention these days, if you take the time to expand your thought processes as well as your digital vocabulary, combining old and new verbiage will tend to extend the age groups willing to consume your information. It’s not necessary to only create blogs and articles that are full of trendy buzzwords.

Thee and thou aren’t necessary, but using words and phrases with which even millennials, middle-agers and older clients and customers were raised; will provide better rapport. Open yourself, and your thoughts and experiences to more age groups that will be interested in how what you teach can help them achieve their goals in today’s digital environment.

Don’t dismiss older readers. Most of them have progressed with the digital age, have Facebook, Instagram, LinkedIn and Twitter accounts and will not only try your advice to solve today’s problems but they will share your blogs and articles with children and grandchildren running businesses today. Get your information into every related digital location possible. Always begin with a selfless message and online presence, the sales will surely follow.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Sales Don’t Always Equal Profit

“I just need to sell more, and I’ll get out of this hole.”

“I just need to sell more, and I can retire in five years.”

“I just need to sell more, and I’ll be able to grow.”

“I just need to sell more and …………”

Ask the typical business owner what he needs to reach his goals, and the answer will be, “More sales.”

However, did you know that many owners are selling their way into a hole, out of business and out of ever being able to retire? In some cases, the more you sell, the more money you lose. It is true because sales and profit are not the same things – sales do not always equal profit.

Let’s follow the money in a simplistic example to get a better idea of how sales may, or may not, put cash in your pocket at the end of the day.

You sell three products – trowels, tomato trellises, and watering cans – from your wholesale catalog. The trowels sell for $1.00 a piece, the tomato trellises for $3.00 and the watering cans for $5.00 each.

A customer buys 1 of each product and gives you $9.00. However, you do not put it into your pocket and call it a profit. You have to subtract all expenses, costs, and taxes for obtaining and selling the products.

The trowel’s total cost to produce is $.50, tomato trellises are $3.50, and a watering can is $3.50. Your total expense for the sale is $7.50, and your profit is $1.50. Sales minus all expenditures equal profit (S – E = P). Your sales revenue was $9.00, but your profit or bottom line was $1.50 for that sale.

However, what if the next customer buys three of your tomato trellises? You lose all of the profit you have just made – $9.00 (1st sale) – $10.50 (2nd sale) = – $1.50. If tomato trellises are your best seller, you can end up with a loss for the day, week and month.

As you can see from this simple example the devil is in the details: tomato trellis profit is negative; trowel and watering can profit are positive. Business owners are continually challenged by how to balance profits, and that is how it is possible for a company to make a high volume of sales and still go out of business. It is also how selling your way out of a hole may not work, and can even make the situation worse.

So, how do you avoid making this mistake?

If the devil is in the details so is an angel. Profit engineering will help you control the numbers, rather than the numbers controlling you. Knowing how to find, document and use hard numbers is vital to making a profit. With hard numbers, you can ask the right questions and come up with the correct answers. Let’s go back to the example.

Tomato trellises – Why is my profit in the negative? How do I fix it – raise prices, lower costs, control waste, buy in bulk, improve productivity and quality? Is it cost effective to fix the problems or should I discontinue them? What percentage of sales do they represent? If the market won’t support an adequate price to produce a profit, can I at least break even on that item, or use it as a loss leader?

Trowels and watering cans” How will I increase the earnings on these products? If tomato trellises cannot be made profitable can or should trowels and watering cans offset the losses? Can they make me the money I want to make? Should I add another product(s)?

Understanding the numbers gives you the opportunity to ask practical questions, make rational decisions and implement reasonable solutions.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

3 Ways to Maintain Long-Term Business Success

Human nature is inescapable, and we all experience its challenges from time to time. We do not mind doing a task that has to be done when it is easy, when we are interested in it, or when it does not get in the way of what we really want to be doing. But, when a task is difficult, out of our comfort zone or not interesting to us, our likelihood of doing it well decreases dramatically. Entrepreneurs are no exception, but in order to attain long-term business success, we must learn how to do the difficult, tedious tasks.

If we are not diligent, we may find ourselves making excuses, denials, and rationalizations instead of doing what we know we should. This can run counter to our own best interests. To quote a famous cartoon, “We have met the enemy, and he is us.” (Pogo, Walt Kelly).

We all know about the high failure rate of start-ups. There is also a high rate of businesses that have had initial success then closing. The owners were unprepared for and unwilling to do the things that a profitable, well-run company requires. They did not understand that early achievement does not guarantee on-going success.

Wins do not always lead to more wins – they can instead, sometimes lead to complacency. Building and maintaining long-term success takes on-going effort and skill. If you want to be better, you have to do better. Here are 3 places to start.

For the following three questions, the answers should all emphatically be “YES,” but you should also be able to back up your assertion with facts.

  1. Do you act like your money matters?
    • This one seems like a no-brainer, but the truth is many owners do not fully know how to read or understand their financials. This means many do not know how to manage, plan or implement change based on numbers rather than guesses and feelings.
    • What are your margins? What is your break even? What does it cost to run your business daily? What is your loaded labor rate? What is your bid to award ratio? What is your cash flow cycle?
  2. Do you act like your employees matter?
    • Most employees need active management. Telling them what to do, walking away and expecting them to do it without training, oversight, and follow-up is not management. Sitting in your office and saying, “They know what to do, why won’t they do it?” is really saying, “I don’t want to do my job. Why won’t they just manage themselves?”
    • What is your utilization rate? What are your turn and churn ratios? What does it cost you to hire and train a new employee? Are your managers managing or are you a fireman, babysitter, and policeman? What is your productivity rate? Again, knowing your numbers is an important aspect to long term business success. 
  3. Do you act like your product and customers matter?
    • You are in business to sell something to someone. Owners can lose sight of that truth, especially when they have met some of their goals. Product and customers become secondary considerations, rather than primary. It is a rare company who can survive a decline in product quality and customer service.
    • What are your rates for waste, scrap, and rework? What are your warranty costs? What is your market absorption? Can you define your demographic? How diversified are you? What do your customers want that you do not sell? Do you know your inventory turns by product line? What are your costs to carry inventory?

If you want to achieve long-term business success, you have to do the work; there are no shortcuts. A business must be built on the firm foundation of good leadership, discipline, and execution. Success is not final; there is always something else just over the next hill. It is there, but you will only see it if you are looking for it.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Ideas to Help Grow Your Small Architecture Firm

Service-based businesses often find that they simply don’t make enough profit no matter how many clients they have or how amazing their staff members are.

Let’s take small architecture firms as an example. You, as the firm’s owner, may look around and feel that everything is running well. You have a great staff; the clients you have currently are happy with the work you’re providing. Your reputation is sterling. So, what’s happening with your profit margins?

Of course, you’re scraping in profits to pay your staff and sustain the business but at what point will the company actually, begin to grow? If you bring on more clients, more money will trickle in with your current staffing situation. However, eventually, you will have to hire more architects, especially if you’ve already reached the capacity at which your present staff can operate, and continue your exemplary work. You’ll be back to square one; therefore, bringing on more clients may not be the answer you’re seeking at this moment.

You may feel as if you have explored all of your options and you only have to hope for the best. We don’t agree, and we have a few ideas that may make a big difference in how you might grow your small firm and increase your profitability.

Architecture Firms Often Experience Different Types of Monetary Leaks Than Most Other Industries:

  • Failure to track the time spent per project– if you look at the time spent on your projects, it’s possible that you’re giving away services and time for which you could be charging.
  • Product Sales– If you’re not stocking a line of fittings and fixtures that you could sell to clients, then you’re leaking money.
  • Additional Services– If you’re giving away services that you could be charging for, you’re leaking money here too.

When you begin the process of providing a quote to your potential clients, consider creating an ‘additional services’ section. It doesn’t have to be extensive, but you know very well that you have talent and expertise that your clients may well need to receive. They will also desire the quality of service you have a reputation for providing. If there is an opportunity for clients to select additional services they will know that they have more control over their needs and you will no longer have to provide ‘all-inclusive’ services every time. This quality added feature alone will allow you the opportunity to improve the services that your clients will select.

You will always have the original tier quality of services that you typically provide. However, pulling back some of the higher end services that you may have been giving away, but should have been considered extra; you will gain the potential to “upsell” them to your clients. At the same time, you will provide your company more income per project.

Consider Rebranding and Marketing to High-Value Clientele ”

  • Should you eventually deduce that the best plan of action would be to find higher paying clientele– You may quickly realize that this is not always easily accomplished. Unless you already have a talented marketing team on staff, you will find that you may need to hire experts in various fields to assist you in the process of moving your firm to the next level.
  • Firm Reestablishment– will most likely require rebranding the firm so that you’ll have the ability to appeal to clients who need to spend a lot more than $10K to receive the competence and services they require to accomplish much larger and more intricate projects. You may realize that (as you submerge yourself in these changes) up until now; you’ve been providing $50,000 worth of services for as little as half their value!

While you’re repositioning the direction of your firm, by all means, be aware of the value of working with branding experts. Developing a branding strategy is of utmost importance, and can be a daunting task. You must decide whether or not to reintroduce yourself into a new and much higher paying market, with finesse and success.

Rethink Your Marketing Strategies – The architecture and design industry has changed significantly. Winning design work on the integrity of a portfolio is in the past. Firms rarely market their services to acquire clientele. With the rise in competition, clients are becoming far more sophisticated in the procurement of architectural services through social media and digital marketing options.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Fundamental Sales Planning

PRELIMINARY CONSIDERATIONS

One of the first considerations is the determination of the sales revenue required by the company to meet its payroll, expenses and desired profit. Are we expecting sales from other revenue streams? Do we have inside sales and outside sales groups? Do we have revenue from areas with no assigned salespeople?

Regardless, a company-wide budget should be drawn up in order to set the company goals. As part of this budget, a separate sales and marketing budget should be determined so that everyone knows the guidelines for spending in these areas as well.

With a budget in place, we must make an accurate determination of the Overhead Recovery Rate since this is the most critical factor in pricing our services. It is hard to sell profitably not knowing your expenses.

Next comes deciding if we will apply the Overhead Recovery Rate to materials and labor or only to labor. In most cases, we choose to charge the Overhead against the labor cost.

The profit desired on every service or bid will most certainly require a qualified estimator or owner of the Company to decide what is the most suitable formula for that particular job once the Cost of Goods and Overhead has been applied.

HIT RATIO

Once the goals have been determined (budget) we then need to discern the steps necessary to reach projected revenue. In other words, how many sales calls do we need to make before someone gives us a Request For a Quote. Then, how many total RFQ’s submitted before we actually obtain an order or a sale.

If we have good records of projects that had been awarded and a history of the number of estimates that were submitted we can calculate a ballpark “hit ratio.” For example, our revenue last year was $1,000,000 if over the course of the year we provided 200 bids and got 20 jobs we have a 10% hit ratio. Our average job was $50,000. If required revenue is $1,500,000, we will need to add 10 more jobs at our customary average and 100 bids to get those jobs. If we have records for more than one year, we can take a historical average of jobs awarded versus the number of bids. We can gather most of the this directly from QuickBooks if that is the system you are using.

If the estimates and the number of jobs are not readily available, then we will need to do some digging. In construction, we need to see how many projects we billed for over the course of the year and how many letters, emails, phone calls were made with quotations where we never got the job. So, if our new projected budget requires 30 total jobs (10 additional), we will need to bid 300 total jobs assuming that we average the same $50,000 per job. If not, we will need to adjust our number of bids up or down based on the value of the awarded jobs. Another factor may be whether we “negotiated” any of these jobs. In other words, did we lower our bid to get the job and take it away from a competitor?

If we are strictly doing direct selling, we need the records of the salesman’s calls and how many were needed before we actually got an order.

The utilizing of these ratios will help set expectations for the salespeople in terms calls needed; daily, weekly and monthly in order to achieve our required revenue.

STRATEGIES

  1. Target Market– What business or project should we go after? Using our previous example, we need to categorize the number of jobs over the $50,000 average and how many were under par, Now, we need to break them down according to profitability. Which size job brought us the most profits? Was there any pattern or was it the job foreman? This may help us to decide which size job we want to pursue. If it is manufacturing we are trying to sell to, we may want to track the types of businesses who buy our products or their size which may help in determining our target market.
  2. NAICS CLASSIFICATION– Once we have settled on a target, we need to have a method for discovering new leads. In construction, it might be word of mouth or invitation. However, also in contracting, or in the seeking of new customers in any industry, you can use the North American Industrial Classification to help find new leads. Every sector is assigned a code number, and depending on the sub-classifications the number may be as much as a 6 digit code classification. These numbers are readily available on the internet under NAICS.
  3. LIBRARY REFERENCE DATABASES– Most libraries use reference databases that can be accessed online using your local library card. Three well-known systems are Hoover’s, Reference USA and Mergent. Most libraries have one or the other. The databases will allow you to locate businesses in geographical areas from cities, counties, and states using the NAIC Code numbers. Generally, it will tell you the ownership, revenue, location, number of employees, etc. This will enable us to identify those businesses that fit our previously determined target market.
  4. MAILINGS/PHONE CALL– Do we have a well thought out means of approaching prospects? Once we have selected companies from the databases, we need to have a plan for “getting our foot in the door.” Some prefer to just show up at the prospect’s door, with the hope to get an appointment. However, there is often a gatekeeper whose job it is to screen all callers and visitors and whom will likely turn you away. Another approach might be to have a company brochure or pamphlet to mail to the appropriate person. One that outlines the services that the company provides and how the target company might use those services. This could be accompanied by a personal letter which mentions companies you have done work for as well as any mutual acquaintances (prior approval of the person). Mail both in a first class envelope so as not to appear to be junk mail. This mailing should then be followed up with a phone call several days later to try and get an appointment to meet with the individual.
  5. THE APPOINTMENT– Once we have the appointment, we need an approach that will accomplish several important things. One methodology of selling your services to the prospect is a question-based selling approach. In some cases, it might be called S.P.I.N. selling ( Situation, Problem, Implication, and Need-payoff), which is often used for projects that may take several months or even years to obtain a sale. Conversely, it might just be questions you ask to foster doubt in the prospect’s mind that he currently is using the best products or services. The object is to put doubt in the prospect’s mind as to why he isn’t using your product or service already. Some tips to get started:
        • Know the prospect’s business inside and out. (see #3 Databases)
        • Don’t waste the prospects time.
        • Explain your company in 1 minute or less.
        • Do ask engaging questions.
        • Do determine nature of the prospect’s customers.
        • Are they experiencing any problems with their current suppliers?
        • What improvements would you like to see from your suppliers?
        • Do your current suppliers provide this service?
        • Do they fill your orders 100%?

SUMMARY

Developing a basic sales plan starts with the formulation of the company budget which incorporates the sales and marketing budget as well. Determine where you need to be. Determine your “hit ratio.” Then research your leads and begin your quest for an appointment.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Experiential Marketing – Don’t Just Explore It, DO IT!

Many small business owners, whether they are just opening their doors or they’ve been in business for awhile, often find themselves lost in the digital noise, face in their hands, repeated sighs, trying to visualize something, anything, to get their businesses the attention and profits they need and deserve.

While researching these issues, the one thing that we’ve concluded is that the BOGO on Veteran’s Day or the President’s Day sale just isn’t going to cut it in 2018. We would like to offer something that appears to be trending in leaps and bounds. Now, it’s not a new concept by any stretch of the imagination. Large corporations with huge budgets have been on top of this for several years now. Small business owners simply didn’t believe they had the budgets. Not so!

We’re happy to inform business owners and your thought leaders that there are infinite ways to implement what is known as Experiential Marketing aka Event Marketing. This form of marketing can be an amazing, positive community experience that won’t only bring in clients and profit, but will create brand ambassadors and word-of-mouth beyond belief, not to mention the ability to enhance your digital marketing opportunities both through your respective marketing persons and departments and your attendees!

Experiential Marketing – is a marketing strategy that engages and therefore connects consumers with brands, live and in-person, up close and personal! As opposed to viewing potential clients/customers as those who will passively receive television/radio/online/newspaper ads, those who choose Live Marketing engage consumers through personal interaction. They bring their experiential marketing efforts live. This strategy will allow potential clients/customers to develop brand connections. These live events assist in the creation of brand loyalty, by engaging all of the senses with those who attend. These marketing strategies are also known as:

  • Participation Marketing
  • Special Event Marketing
  • Engagement Marketing Events
  • On-Ground Marketing Events (to name a few)

Take a Look at These Statistics:

  • According to a study conducted by Bizzabo; in 2017 91% over over-performing businesses have begun to emphasize experiential marketing (live events). Those same companies intend to increase their marketing budgets by at least $4500.00 in 2018 and beyond.
  • The results of a 2017 Event Marketing Institute study, conducted annually with both marketers who arrange their events and those who attend these events have provided the following results:
    • Of all consumers who have attended live events, 65% stated that by attending live events they were provided a better understanding of products and services as opposed to simply viewing TV ads or experiencing other advertising methods.
    • Of all attendees surveyed, 80% said that by attending live demonstrations, receiving free samples, etc., this strategy assisted significantly in their purchasing decisions.
    • An unbelievable 70% of live event attendees become regular clients/customer after attending the event.
    • An astounding 98% of attendees surveyed feel that they are much more inclined to purchase from the business or brand who held the event (becoming brand loyal).
    • 33% of those who attend these events will take pictures and video of the event they are attending.
    • 34% of event consumers will post information regarding their experience with the event they have attended and will place it on their favorite social media venues.

What About Marketers Who Hold These Events?:

  • According to Bizzabo; an amazing 80% of companies who use live event marketing in the U.S., say that these events have proven to be vital to the success of their companies/businesses and…
  • Of all of the marketers surveyed, 95% agree that by holding live events with their brands, they are providing their attendees a chance to step outside of their digital world and form increasingly valuable in-person relationships and connections.
  • According to Statista, 79% of those who market their business with live event marketing are experiencing increased sales.

These are some extremely impressive statistics, and 2018 will be the year for small businesses to step outside of their websites and brick and mortar establishments to use these methods that are likely to increase your sales dramatically, provide you community appearances, and likely make important differences in your local communities. This marketing strategy is in no way confined to video gaming companies or huge corporations with giant marketing budgets. It’s for you! The small business owner and even the entrepreneur wanting to get their businesses off of the ground will benefit from this method of marketing. This marketing style works for all types of businesses from the local non-profit to the Fortune 500 companies and beyond.

If you’re uncertain about how to compliment your marketing efforts, consider experiential marketing as a goal for your business in 2018! Holding one of these events could significantly change the trajectory of the public view and profitability of your business and brand regardless of its size.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Contractors Should Evaluate Their Sales Force Often

Attempting to read the housing market, so far this year has become challenging at best. In 2017 nearly everything driving the housing market teetered on what would remain after the natural disasters and how the political climate would respond. By the time 2017 had come to an end, it was discovered that there was very little about construction in the housing market that had performed as forecasted.
Samantha Sharf quotes Skylar Olsen, a senior economist with the popular home search website Zillow; “We thought there would be some things to take the pressure off,” (Forbes: Housing Outlook) “That did not happen at any impactful level.” The housing industry experts had believed that the housing industry would experience rising interest rates. There would be a moderate increase in price, growth, and of course, construction in general, inside and outside of the housing market. Currently, among various experts in all areas of the housing market, there is cautious optimism that inventory may increase, only slightly. As of January of 2018, Trulia ( a real estate resource for homebuyers and renters) states that only 6% of current U.S. homeowners have indicated that they would be willing to sell their homes in 2018.

According to the Associated Press (Washington); construction is moving away from building apartment complexes to building single-family homes that will be built for ownership. In a more stable market, this would be a positive sign of economic improvement for the construction industry. However, the usual belief is that strong pricing and increased demand would also increase the demand for construction.

So far during this cycle, this is simply not an indication of what is expected.

There are apparent reasons that builders aren’t progressing as planned and those reasons are structural. For example, considering local density regulations, there appears to be an increasing lack of buildable space. The price of land is rising significantly. The demand for higher wages from much needed skilled labor has become increasingly prevalent. And in light of the newly implemented tax laws; there is considerable desire to continue to rent already existing properties, especially in more expensive markets. It’s becoming more expensive to own a home under these new laws. Hesitancy to purchase a newly built home will continue, until there is some degree of comprehension of how the home buying consumer will benefit,
Where Will These Facts Leave Contractors Financially?
With current market conditions, contractors will again need to examine how they may weather any current financial storms or those that may come in 2018. One of the best ways to accomplish this is not only by monitoring misspending and material cost control, but will also lie in educating and arming your company’s employees with your plan to increase sales.

It’s vital to begin this process by understanding the difference between sales and marketing.
It’s critically important to understand the importance of consistent measurement and management of the two.

  • Measurement – will require that you analyze and prepare a projection of what portion of your sales expenditures your company will have to absorb. Remember that to have anything at all to manage; measurement must be the priority.
  • Management – will require some research and analysis so that you may determine whether or not your product would be well positioned in your particular market. If you find that improvements could provide better positioning, the time is right now to conduct the analyses and make these adjustments (accordingly your company will be on track for the best possible success scenario this year and moving forward.

Begin by Implementing the Following:

  • Conduct a marketing study to assess your market’s position.
  • Analyze any trends and track your monthly sales and closings.
  • On a quarterly basis, dispatch your salespersons to visit and provide “shop” reports of any builders who may be competitors in your market.
  • Analyze all social media and advertising results; i.e., what are the results of your company’s paid ad sources for website traffic (per unit)?
  • How many visits is your ad source producing? How many appointments are you setting? How many organic contacts are you receiving as a result of your marketing efforts? How many of these combined contacts and appointments are converting to sales?
  • Evaluate your salespersons’ conversion ratios. Are they asking for and producing sales from referrals?

Pay Attention to Client Services:

  • During peak traffic hours, be certain that you are well staffed. Keep walk-in office hours that are convenient
  • Be certain that your sales team remains attentive to new contacts and the lifecycle marketing aspect of the sales process with every contact and all potential buyers with whom you’ve made contact.

Follow Some Proven Steps to New-Home Sales Conversions:

  • Create an escalating compensation plan for your salespersons to enhance achievements.
  • Home purchases are one of the most emotional purchases buyers will ever make. Before your salesperson meets with the client(s), be certain, that they are emotionally and psychologically prepared to sell.
  • All salespersons should expect a ‘first visit’ sale, or, a conditional sale or an appointment to revisit the possibility of the sale. At the very least your salespersons must acquire permission to recontact the potential client for a follow-up.
  • • All salespersons must be well versed in the art of demonstration, provide convincing client communications and negotiations, the ability to close the sale. Evaluate these aspects often. Rehabilitate if needed, replace if necessary.

Enhance Sales Management:

  • Worry less about hiring “experienced” salespersons. Recognize and hire the visible ‘great potentials’ and mold them to fit your company culture specifically.
  • Always train your salespersons with exceptional sales development skills.
  • Role-play sales scenarios often.
  • Take charge and lead by example with a strong purpose and sense of success and financial well-being for all in mind.

Many exceptional strategies may enhance the profitability of your business. As the market begins to improve and your sales rise, beware of complacency. Every employee, from administrator to the laborer must be trained to consistently self-evaluate to improve their positions and therefore improve the profitability and success of your company.

If you feel that your company may require these steps but are not in a position to perform the analyses alone, you may wish to consider contacting a knowledgeable business consulting firm for assistance in organizing these methods and more, to improve your company’s culture and profitability.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Trend Analysis: Better Understand Your Business

A trend is a pattern in the company’s performance over time. While trend analyses are often used to determine and evaluate financial performance, they may also be utilized to highlight statistical tendencies as well. Trend analysis can be applied at any level for financial measurements and across all disciplines within the company. Typically trend analyses compare year over year performances for a given period using 3 to 5 years of data. Also, when calculating the variances between periods show the dollar amount and percentage rate. The percentage rate provides a better visual impact of the trends.

Financial analyses are the most prevalent. You should be comparing the Income Statements and Balance Sheets for critical trends. For example, if gross margin is trending down, then one of three things has probably occurred:

  1. Price points have eroded.
  2. Customer or product mix has changed substantially, or
  3. Costs have increased.

When analyzing the costs be sure to look at material, labor, and overhead separately. Increased material costs are usually easy to pass through to the customer, but labor and overhead increases often must be offset with cutbacks or improved efficiencies. The same holds true for Operating Income. If it’s down from prior years but gross margin hasn’t declined then SG&A, or some other expense is too high, and spending controls should be implemented.

The balance sheet is another area to analyze trends. Individually: inventory, accounts receivable, and accounts payable are accounts to track because they profoundly influence cash flow. Work to reduce total inventory dollars while increasing inventory turns. For accounts receivable and accounts payable, always make sure the Days Sales Outstanding (DSO) or the average number of days one waits to collect receivables is lower than the Days Payables Outstanding (DPO). Tracking these accounts and working towards a downward trend will improve cash flow and ease day-to-day operations.

Another area that trend analyses are beneficial to, is in sales. In addition to tracking monthly revenue numbers and striving for continued growth, you should also be monitoring product mix, market segments, and customer sales. Each of these can have different margins, and a shift in the mix can negatively affect the bottom line. Tracking them enables you to make necessary adjustments should new trends begin to develop.

Historical data is a gold mine. Take advantage of it and compare it to current performance figures. It’s a management tool that enables you to quickly see where to focus your time and attention. It’s a quick and easy way to identify potential problems before they get out of control.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

SWOT Analysis: Better Understand Your Business

What is a SWOT Analysis? SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The analysis utilizes these headings in a quadrant format (Fig. 1) to list core competencies and other relevant company traits and characteristics. It’s a visual tool to help you see how the company is currently positioned and provides insight on what areas the company should be addressing in the near the future. To maximize the benefit of a SWOT Analysis, you also need to try and understand how your customers, competitors and the market view your company.

It also serves as the baseline for developing a strategic plan. Below are examples of the types of questions that need to be asked when preparing a SWOT Analysis and building a strategic plan.

  • What are the company’s core competencies?
  • How do we make use of them to our advantage in the market?
  • What are our customer’s expectations? Are we meeting those expectations? If not, what should we be doing?
  • Are we covering all applicable market segments?
  • What new services or products should we be offering?
  • Are there new customers or markets we are not covering?
  • What changes need to be made to improve margins and or overall profitability?
  • Is our technology current?
  • Are we as cost-effective as we should be?
  • Are innovations on the horizon that could have a detrimental effect on our business?

Additionally, this methodology can and should also be used on a departmental basis. It can help identify and establish continual improvement process requirements as well as increase overall efficiency.

Lastly, you should complete a SWOT Analysis for all your primary competitors. Knowing and understanding the competition is one of the best available to assist you in defining your strategic plans.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Get to Really Know Your Customer (And Make More Sales)

Ask a business owner what he needs to make his company successful, and most likely he will say “sales.”

Then, using the questions below, ask him about his customers, and most likely he will give you a blank stare. Odd as it seems, in many businesses, there is a disconnect between the idea of needing more sales and the reality of knowing how to sell.

All businesses, no matter the size, need an effective sales plan. A well designed, consistently executed strategy which will generate new customers, as well as retain current ones; a program originating from the customer’s needs and wants. Unfortunately, the majority of companies do not really know who they are trying to sell to and do not have a method to find out.

Owners forget, or do not know, that effective selling requires intuition and science. They ignore the science part and just go with their “gut.” But, feelings are not facts, and good sales plans are a balance of instinct and fact – each dovetailing with the other. You need both the gut and the analytics. If you want to be successful, you cannot afford to ignore the analytics.

So, where do you start?

The first and most important place to start is getting usable, actionable consumer data. Actionable data is information you use to create the “how to” of selling. It tells you the best way to sell to your customer based on the facts you collect about them. You want the who, what, when, where and why of your customer.

Here are some general questions to get you started – add others which are specific to your business.

Who is buying from you? What is their age, average income, sex, occupation?

What are they buying? This query is so simple it often gets overlooked. What products and service lines are selling? What should you focus on and what should you discontinue? Figure out what your clients are purchasing from you, not what you think they should be buying.

When are they buying? Are they buying full price or waiting for promotions/discounts? Is it seasonal? What would they be willing to purchase offseason? When is the best time for you to discount, offer new products, or do a sales push?

Where are they buying? Are they buying at your location, online, at their business or over the phone? Where would they like to buy? Do you need to offer easier, faster purchase options?

Why are they buying from you? What makes you unique (i.e., pricing, quality, product line, location, reputation)? Which products do you provide that meet their needs and wants? What don’t you offer that would meet their needs and wants?

Gathering this information will take time, but there is a reason that “know your customer” is a fundamental sales principle. Once you can answer these questions, you will be able to turn the data into an effective sales plan; a plan focused on retaining and increasing sales to your current customers and finding new ones.

Consider These Big Advertising Changes in 2018

If you own a small or midsize business, whether online or bricks and mortar it’s quite likely that you’re aware of the difficulties directly related to the insane balancing act between running the business and finding the time it takes to bring awareness to the general public that you exist and what value you are offering to them.

As the world of technology continues to evolve, there will always be something new to discover in the world of advertising. It’s still necessary to learn all that you can to remain relevant within the public view without being drowned in the sea of other advertisers vying for your clients’ attention.

No matter who you are, your age or experience in the business world, you’ll find yourself either having to take the time to search for what will grow your business most efficiently or alternatively, hire employees or pay vendors to do the job. Your business exists and appeals to your clients because you fill their specific needs. You will need someone who will be well versed in the implementation of effective advertising to expand the viability of your business.

Determine Where You Are In Your Digital Awareness

Cited from an article located on The Mission, Warren Buffet and Bill Gates, (among others) are devout followers of the “5 Hour Rule”. This rule states that people (to include industry leaders) should spend at least five hours per week learning about subjects that will expand their personal knowledge base.

If you’re entering 2018 with a deficit of knowledge about what you will need to do to expand your place in your niche or market space, it’s time to begin educating yourself. The older generations possess gems of knowledge that the younger generations can learn from and integrate into their technologically savvy experiences; as well, the younger business professionals will undoubtedly have much to offer past generations who wish to continue to thrive in today’s markets.

In 2018 some things will be incredibly valuable to study and implement (by generation E – for everyone). The implementation of your advertising capabilities will be both productive and cost-effective. One of the most exciting ways to improve the coveted numbers that are so closely watched by nearly any business on earth will be by adding attention to “Client Journey Mapping”.

Client Journey Mapping addresses the fact that every business wants to provide the best possible experience for their clients. Client Journey Mapping creates a visual map that will allow a company, from the inception of the client/business relationship, to view and efficiently track the client’s experience. With time, each story will become more complex. This strategy will ensure that your business remains current regarding your client’s experiences and needs in the long term. Members of your business will also assist your business in knowing exactly when it’s time-effective to market new products and services to each [respective] client. Your clients expect that your company will remember who they are, and what their needs have been and will be.

Clients hope for an experience that will be seamless, and they would like to know that you will know when they will require specific products and or services you’re offering. What they do not want is to have to repeat themselves. Your clients expect you to remain well informed about their business needs and be prepared to take them to the necessary levels to bring them even more success and profit.

Should they find they have to take the time to repeat themselves, they may decide that this time could be better spent interviewing other possible providers. After all, your readiness to provide what they desired was why they purchased your product(s)/service(s) in the first place. Client Journey Mapping is sure to alleviate these issues.

MDG Advertising offers some current and noteworthy statistics:

  • Only about 41% of marketers currently map their client’s journey in the buying process.
  • 71% of those who are involved in marketing processes say that it will be important to understand the role that multiple touchpoints will play in their client’s journey and how they will experience your company.
  • 89% of all higher performing firms align their roles to a client journey strategy. Higher performing companies and businesses will be 2.4 times more likely to adopt and align themselves with client journey strategies.
  • If you have a business that is primarily business to business, you would like to know that 65% of your buyers would be willing to change their vendor if the vendor fails to use personalization in their communications. Those who find the right technological tools to maintain meaningful personalization will retain far more of their client base.

Other Profitable Strategy Uses to Consider in 2018:

  • Content Marketing – We all know about this one; the secret with this strategy will be the ability to continue to improve on well written informative content. Combine this strategy with…
  • Micro-Influencer Campaign Marketing – This is an interesting change for 2018 that works closely with social media campaigns involving influencers that have less than one hundred thousand followers. This strategy is found to have become far more effective and attractive, as opposed to high dollar ad prices that include celebrity endorsements or with followers in the hundreds of thousands or millions. The success lies in the affordability, the level of engagement and the level of trust experienced by potential clients.
  • Chatbots – According to a 2017 Hubspot article, there will be two important pieces of information for which any size businesses should be keenly aware. (1.) About 55% of today’s consumers would prefer to interact with a chatbot or messaging application to solve whatever issues they may be experiencing; and (2.) 47% of current consumers will make a purchase through a chatbot application. These numbers are expected to rise during 2018.
  • Artificial Intelligence (AI) – This strategy is expected to have the highest growth rate among those who will market their brands, over most other strategies during the next two year period.
  • Augmented Reality (AR) – Most marketing persons are now ranking AR as one of the most exciting advertising tools to be implemented over the next three year period, globally.

There will always be a place for those who do business face to face. Just keep in mind that with multiple options in place for your clients to utilize; open doors to rich informational sources surrounding your brand and watch your company profits accelerate at a more consistent rate.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Lifecycle Marketing Is Rapidly Taking Center Stage

Lifecycle Marketing – Is rapidly becoming regarded highly as one of the most effective avenues to acquiring and retaining clients/customers and incrementally increasing small business profitability. This strategy, although it has been used effectively for centuries, with new studies and a more structured understanding; will be valid for any business whether they are just opening their doors or are tenured members in their business communities. These efforts can produce long-term sustainable business so long as the company remains consistent in its efforts.
These are the steps each business owner will need to not only become a participant to create positive results, but these steps must become second nature to every person involved in your business:

  • Educate the client/customer about your brand.
  • Convince them to purchase.
  • Provide consistent loyalty rewards, therefore:
  • Convert them into loyal clients/customers and strong advocates for your brand.

As simple as it may sound, however, it will take time. This form of marketing is absolutely one that every business should consider implementing immediately. It’s not simple, and it’s never-ending. However, it’s THE best way to engage and retain long-term, loyal clients/customers and significantly enhance your bottom line year after year.

With this in mind; you must also apply these “old school” methods:

  • Create Trust – Your company/brand must set its sights on becoming the “tried and true”, the safe place in a world that isn’t precisely viewed by most as safe or trustworthy.
  • Consistently Provide Exemplary Client/Customer Service – You must assure your clients/customers that your business exists because they are one of your most important assets. The loss of their loyal business will never be an option.
  • Show Your Gratitude – Your clients/customers will always respond to your gratitude for their loyalty. They want to hear and experience your appreciation; not only from you but also from your representatives.

These back-to-basics actions are the very foundation of creating changes in the client/customer’s purchasing behaviors that will enhance your business’ profitability.

Today there are many examples of this form of marketing. To assist in creating a mindful visual of how successful this can be, consider that grocery store card that you scan each time you purchase your groceries.

Decades ago, grocery stores had begun implementing the discount card program. You would provide your information, and in return, you would instantly have the ability to receive exclusive discounts on your grocery purchases. This strategy has proven to be one of the most lucrative forms of customer lifecycle marketing examples to date. Grocery stores, simply by (and now automatically by) prioritizing customer satisfaction and rewards for their customer’s loyal purchasing behaviors, are incredibly successful with nearly every weekly marketing campaign they create.

Today, with ever-progressive technology, these stores accomplish retaining your loyalty across every device you use by reminding you that they are aware of your preferences and are willing to offer you a discount each week on multiple items that you’ve purchased in the past. Their customer retention abilities have significantly evolved over the years.

With each ‘kind act’ of making your experience more enticing and enjoyable, you are inclined in turn, to return to their store for yet another positive purchasing experience. Mission accomplished day after day, week after week and year after year!

There is absolutely no reason that excellent client/customer service would not provide the same results for your business. This customization is the very definition of client/customer lifecycle marketing. It is only one example of millions of campaigns. However, the foundation of this strategy will work for any business. Exemplary client/customer service combined with your customized campaigns and offerings will significantly enhance all aspects of your business, not only for your clients/customers but for you and your employees as well.

Here are Some Interesting Statistics That Apply To The Landscape of Any Business:

  • Approximately 80% of companies small to large, globally, spend their marketing budget attempting to acquire a volume of new clients/customers.
  • For every 1% of any company’s repeat clients/customers, the company’s revenue is increased by 10%.
  • Harvard Business Review reports that the average company residing within the U.S. will lose 50% of their acquired business over a five-year period.
  • Two-thirds of an average business’s clients/customers state that they don’t return due to poor or inadequate client/customer care practices.
  • If your company, through the simple act of good client/customer services, could reduce your client/customer loss by only 5%, your company profits will increase by anywhere from 25% to 125%. If this grabs your attention, then you should know that 80% of all of your company’s profits that you will acquire in future sales will come from merely 20% of your current client/customer base, according to Kapow.
  • Also, according to Kapow; any company that is willing to significantly prioritize their client/customer’s experiences will likely enjoy an approximate 60% higher profit generation over their competitors.
  • Employee engagement will be an integral component of your lifecycle marketing efforts. Results of a study conducted by Hay Group show that your engaged employees will create revenue growth twice as high as those businesses with lower levels of employee engagement. The same study reveals better customer experiences and increased customer loyalty.

There are myriads of studies and statistics available to prove the staggering benefits of keeping your clients/customers engaged, happy and returning to your business for their needs. These strategies will be the vital component to the success of your business going forward in 2018 and beyond. Although this concept may seem simple, it requires long-term commitment and cultivation. It can be involved and daunting and will require dedication, not only on your part but from your management and employees.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

5 Must Have Traits to Inspire in Your Inside Sales Team

If you want to build a wildly successful inside sales team, here is a list of 5 traits you must inspire in them as a business leader:

1. Focus
2. Confidence
3. Authority
4. Permission
5. Passion*

Focus is a state of being that only occurs when one has the presence of mind to have decided what is truly important. You cannot expect your sales team to have focus until you have given them a mission that they can want to buy into. Focus is the state of being of a single mind. It requires that you give all of your attention to the task at hand. The task at hand is to further the goals of your company. The goal of your company is to provide a needed product or service at a fair price and that gives value for value: a dollar spent, a dollar earned. Focusing on your work happens when you truly believe that the work you are doing is worth doing. You could be fixing a broken HVAC unit. You could be making a precision machined part. You could be designing a bridge to be light and strong and last 500 years. You could be designing a telephone application to help people through storms and save lives. Me, I work on building a brand for a company that exists to bring knowledge and effective tools to small to midsize companies in order to make them more efficient, stronger, and more profitable. Focus requires knowing what is important, and giving it your undivided attention and effort.

Confidence is a quality without which persuasion almost never happens. Why would anyone want to listen to someone who says with their tone of voice that they have no confidence in what they are saying? Confidence comes first from rock solid belief, and secondly from practice. True confidence stems from knowing what you want to say, why you want to say it, and how to say it convincingly. It is worth repeating that confidence results from adequate practice, and is something your sales team should be trained on.

Authority is a quality we develop as we learn. You have to provide the right training and the right learning tools for your staff members to gain the needed insights to speak with authority. These traits that we desire our team members to have are all intertwined. Your prospective clients are bone weary of telemarketers that waste their time. Your sales team has to stand out in a positive way. The best way to achieve this is to hire people who are compatible with your belief system and your mission, and who have a genuine desire to both improve themselves and to move your mission forward. As they learn, they begin to have intelligent conversations with your prospective clients. They become something much more than a “telemarketer.” They become, for a 5 to 15 minute period, a partner in discussing the issues that are of importance to your prospective clients. They leverage the confidence they gain both from study, and from knowing that they are part of something bigger than themselves. They become “authorities” because they know the challenges that other businesses face, and they take the time to learn how those challenges might be addressed.

Permission is something that can be external or internal. When we were children, we needed permission from our parents, from our teachers and from our coaches. As adults, the most important kind of permission is the permission we grant ourselves. I grant myself permission to express my opinion because my opinion comes from education, experience, and a belief in something greater than myself. Once we have established ourselves as confident authorities, it is a short step to grant yourself permission to ask for and expect to receive a business owners time and respect. Only we can grant ourselves permission to become strategic partners, and to command respect, because we know in our hearts we have something worth saying.

Passion is the culmination of all the previous traits. We become genuinely excited about the tools we are offering and confident in our ability to describe and recommend them. We obviously care. You can hear it in the arguments we make, and in our confidence in the value that we offer. None of these traits are expendable, but in my opinion, passion is the most important trait we have yet addressed.

In conclusion, a successful inside sales team has members who confidently focus on leveraging their authority, while giving themselves permission to state passionately and effectively the value of what is brought to the table.

*This blog was inspired by a Thursday morning meeting of the Business Development Coordination group at Cogent Analytics last week. The group was animated, and each member was eager to contribute as Rob Braiman, our managing member, led us through the various points. The purpose of the exercise was to differentiate between a day of lack-luster disappointment and a day of brilliant success.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Do Not Lose Focus on Sales – Ever

You are in business to first, last and always sell something.

This is such a basic tenet of business it deserves a “duh” and head slap. And yet, it is amazing how many business owners do not follow this primary principle. They will not make an effort to understand it, do not practice it, think it does not apply to them or lose sight of it. The owners who do not get it are the rule, not the exception – and there is a reason for that.

The typical owner wants to be self-employed and independent. He gets into business by starting, buying or inheriting a company. The company usually produces a product or service he has an interest in, expert knowledge of and experience with. He feels comfortable and competent producing the product.

But, selling the product is another matter. Selling is often out of the usual owner’s comfort zone and area of expertise. He does not have the knowledge, skill or experience to put together and manage a productive sales team – and no interest in learning how to. He ends up ignoring his sales’ problems by using the excuse that he is too busy to fix them.

Let us understand the lack of logic here. He is too busy producing the product to focus on selling the product. A product he is producing solely for the purpose of selling it. Many owners do not make the connection that they are not in business to produce products; they are in business to create revenue – otherwise, they are just running a charity.

This lack of understanding is one of the main reasons most businesses fail or barely make a profit. The belief that, “all I have to do is put out a good product and the customer will find me” has bankrupted millions of companies. Prioritizing selling is still the only and best way for your product to get to customers.

So, what do you do?

First and foremost, be willing to learn and get out of your comfort zone. This is especially true for the business owner who became self-employed so he “wouldn’t have to do the things I don’t want to do”. Successful and productive owners 1) stop doing things they have to make excuses for and 2) stop making excuses for not doing the things they should be doing.

Secondly, take control and learn how to manage your sales force. The number one reason that sales departments fail is poor oversight. Too often they get away with shoddy performance because the owner puts up with it. Good sales people are not unicorns; they are like any other employee – with proper hiring/firing practices, accountability, and supervision you can create a winning team.

It is human nature to concentrate on what we are good at and like doing. But, this limits our goals, narrows our point of view, lowers our efficiency and restricts our ability to learn. Complacency is not an effective management style. Want to be in business tomorrow? Then focus on selling your product today.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Art of the Forecast

Developing an Accurate Forecast

It has often been said that forecasting is a waste of time. After all, it’s just a guess and as such will only generate inaccurate and unreliable information. Well, forecast accuracy is what you put in it and you can improve it. These best practices will help make the forecast more accurate and reliable.

  1. Prepare a monthly, 3-month rolling forecast by model or product family. Since individual models and product families yield different margins it can have a vast impact on the profitability for a given period.
  2. Utilize historical sales data. Sales history provides the most accurate projections. If possible, analyze 3 years of sales history to determine averages or eliminate highs and lows.
  3. Review outstanding quotes, projects, marketing programs and seasonality. Knowing your conversion ratio (close rate) for open quotes, timelines for large scale projects, ongoing marketing programs and market seasonality can all influence monthly sales. Staying on top of these factors can further enhance sales history data.
  4. Contact your customers for input. Customers can provide valuable insight into what’s in the pipeline. Take advantage of this valuable resource!
  5. Consider external factors that can influence sales. Economic changes, unusual weather conditions or other significant events can impact a monthly forecast.

The Significance of the Forecast

The sales forecast is an effective management tool for improving operational efficiency and increasing profitability. Properly prepared, it provides valuable financial information and insight across other departments that improves the decision-making process.

Weekly cash flow analyses are a management tool used to ensure sufficient cash will be available to sustain day to day operations. Since the forecast is a critical component of the cash flow analysis, it’s essential that the forecast be as accurate as possible. Additionally, the forecast can be used to generate a pro forma P&L Statement. By projecting income and continuously monitoring its progress throughout the period you can better control expenses or make other necessary adjustments to help maximize profitability.

Operations benefits from a solid forecast as well. If utilized it simplifies planning and scheduling, improves material flow, positively affects the supply chain and keeps inventory to a minimum while achieving on time delivery to your customers.

For the sales team, it not only keeps them current with the industry, market and customers, but serves as a Key Performance Indicator for the month.

While the monthly sales forecast requires a lot of time and work to properly prepare, the applications and benefits of it make it time well spent.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

The Difference Between Order Takers and Salespeople

When a small business owner talks about the goals he has for his company “make more sales” is usually high on the list. Not enough sales are an on-going concern, and frustration, for the typical owner. There are many reasons why a company struggles with selling.

One of them is that most have order takers rather than salespeople. This isn’t just a matter of semantics or word play. There is a difference in aptitude, attitude and approach between the two, a difference which can increase or decrease the company’s bottom line.

Salespeople

Aptitude – They know the pros and cons of selling, and chooses to do it. It’s a career rather than a job. They see themselves as a professional and take pride in providing good client service. Also, they believe in the product, understand the benefits it can bring to the customer and is challenged by the process of bringing the two together.

Attitude – Salespeople believe it’s their responsibility to take an active role in finding, helping and selling to people whose companies would benefit from their product. The salesperson and the customer are a team, together they identify problems and find solutions.

Approach – A salesperson enjoys communicating with people, especially customers or prospects. They seek out opportunities to interact (i.e. face to face, email, text, newsletters, trade shows, seminars) with future and existing clients. They keep up on their profession and are open to suggestions on how to improve their performance.

Order takers

Aptitude – Order takers are in the job by default and don’t see it as a career. Usually, order takers “drift” into the job, they don’t seek it out. It’s just a way to pay the bills and there’s little or no personal investment in the products or the customers. There’s a lack of professionalism or pride in their work.

Attitude – At best an order taker sees the job as “OK” and at worst doesn’t like it. They believe their role in the sales process is a passive one – the customer tells them what they want, they put in the order and they’re done. They are often annoyed with the customers, doesn’t handle their problems or concerns well and sees paperwork as the job rather than the selling.

Approach – The order taker spends all day in the office, regularly playing games on their computer, waiting for orders to come in from established lead sources (i.e. RFP, incoming call, referral, web request), rather than any new self-generated ones. They are complacent and resists ideas for getting more sales or improving customer service, especially if it means changing the way they do things.

A company’s sales plan is only as good as the people who execute it. Too many small businesses have order takers rather than salespeople. This is a management issue; most owners haven’t learned how to, or are afraid to, effectively motivate order takers. Don’t let it be this way – selling is too important to be left in the hands of people who are unwilling or unable to do it properly.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Do Not Let Single Customer Dependence Hurt You

Over the years a lot of major industries have had boom and bust cycles – manufacturing, steel, auto, rubber, construction and infrastructure. Some industries have recovered from the bust phase, while others have not. A recent example of this is the oil industry. While it is showing signs of coming back, experts believe it may take years to recover, if it ever does.

These cycles affect everyone up and down the supply chain, both positively and negatively. As a general rule the smaller the company is, the bigger the impact. It is common sense – if the majority of your business is with one customer, you live and die with them.

It is easy to live with single customer dependence when things are going good. There are advantages: you know the client well, billing and accounts receivable are simpler, production and quality are easier to control, there is no need to focus on sales or marketing, cash flow is predicable and staffing requirements are consistent. Small business owners talk about how their lives can be less stressful with one major customer.

However, it is not a smart way to achieve long term success. When the bust cycle comes around the majority of owners find they are unable to recover from it. They have allowed themselves to be lulled into complacency. They have put all their eggs in one basket, which is only sensible so long as you can control what happens to the basket.
It is not possible to control the basket if you are single customer dependent.

Here are some reasons why.

• They have a lot of power over your margins, cash flow, receivables and profit.
• You are stuck with and controlled by their seasonality and volatility.
• Your ability to grow, or scale back, is limited by their budgets and production requirements.
• If you lose them, you probably are out of business.
• It makes your company harder to sell and its value less.

So, what do you do? The answer is to focus on diversifying. Create a strategic plan which focuses on limiting risk and boosting sales.

Here are some places to start.

• Commit to sales and make it a focus of your strategy. Do not wait for a downturn to start selling. You will be in a position of weakness (and possibly desperate), which is a bad time to put together estimates and bid on new contracts.
• Decide on ways to diversify. It can be accomplished in several ways – find new customers, adapt product or service for a different market, expand customer territory and change or add your operations location.
• Figure out where you are the most vulnerable and fix it (i.e. overhead, production, quality, staffing, financials).
• Start slow with smaller contracts. They are easier to sell and will give you the chance to ramp up without making costly mistakes or needing much, if any, growth capital.

Just because the industry you are in has cycles of feast or famine does not mean you have to be held hostage to it. Even modest diversification will help you perform better than your competitors, because chances are they have none. Who knows, you could be the last man standing when the cycle swings up again.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Trade Shows. Can they work for you?

Nearly every business owner at some point in time confronts the decision of participating in a trade show – not as a visitor but as an exhibitor. This decision may seem like a wonderful idea. Or, it may put you in an, all too often, position of saying that “trade shows are for big companies” not one our size.

As a rule, what scares away the small and medium sized business owners is the unknown of what all is involved and how much does it cost. Both are very realistic questions that need to be addressed to determine participation.

Identifying the Convention and Show

Whether you are introducing a new product or service, expanding into new classes of trade or taking on a larger geographical area, you must determine desired outcomes for your potential trade show participation.

Trade shows come in all sizes and offer a variety of opportunities for your specific business goals. There are local, state, regional, national and international shows that take place every month of the year in places from Seattle to Orlando and Palm Springs to Boston. They may have 75 or 100 booths and exhibitors or encompass over two million of net square feet of space like the CES (Consumer Electronic Show) does in Las Vegas each January.

Depending upon your trade show goals and type of products or services that you want to expand, you need to identify shows where your existing customers and potential customers attend. Sometimes a state or even local show is a good place to start but only if your potential customers have a reason to attend that show.

Where, When and Attendees

Seek out and find shows that are in your class of trade. Though not the primary determinant, consider any geographical travel required to attend the show. Most trade show organizations will send you a list of past exhibitors and attendees if you show an interest in being an exhibitor. Sometimes they will send you a partial list of exhibitors and attendees who have signed up for this year. If this show is within your current industry and has retailers, wholesalers or groups of businesses using your products or services then you will readily recognize the list of attendees. Keep in mind that in addition to current customers and prospective customers, your competitors will also be there showing.

What’s The Cost?

The cost to attend a trade show depends upon several components, and there is no real set formula for figuring out the cost. How far away is the show, how many people will you be taking to the show, what type of booth decorations will you need as a backdrop, the lodging, travel and meals, sales materials required, and of course the actual costs for the booth space, set up, storage, etc. All of these costs and more are real and true expenses. To assist in your compilation the following “rule of thumb” formula will give you some idea.

+ Booth space 33% of budget
+ Booth furnishings & graphics 18%
+ Travel & Ent. 18%
+ Show Services…electric, cleaning, storage, etc 12%
+ Shipping 9%
+ Promotion 8%
+ Misc 2%

Using a standard booth size of 20 x 20 and an average square foot price of $21.00 you would have a cost of $8,400.00 which multiplied times “3” would give a rough total cost of $25,200. Square footage pricing does vary depending upon the show.

Do people really go to trade shows?

According to Quora and Skyline, two companies who are heavily involved in national and international trade shows for all industries, over 40 million people attended trade shows in the U.S. in 2015. 38% of these visitors were “first-timers,” and they spent an average time of 9.5 hours in exhibitor’s booths. Over 81% of them had total recall of visiting a specific company’s trade show exhibit and what they were selling.

Summation
Trade shows do work and can be very profitable assuming they are handled properly, and the necessary planning and follow-up is adhered to.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

6 Ideas for Creating Positive Cash Flow

Remember when you were in high school math class and you said, “This stuff is stupid. I’ll never use it in the real world.” Well, as a small business owner, it is time to realize that you were partly wrong. To be profitable and successful you do need some of that math you ignored then, and are still ignoring now. It is time to learn to do the math – poor cash flow management is one of the top 3 reasons small businesses fail.

Understanding how to create and maintain positive cash flow can be one of the biggest challenges owners face, and yet it is overlooked by almost all of them. That is good news for you. The better you are at managing your cash flow the bigger the edge you have over your competitors, and the better your chances are for long term success.

Understand the difference between cash flow and profit – A lot of owners make the fatal mistake of thinking profit and cash flow are the same thing, they are not. These are 2 different symptoms of your company’s financial health. You can make a profit and have cash flow problems. You can have cash flow and not be making a profit. Both are indicators there is a problem in the business.

Build up cash reserves – You will have cash shortfalls, every business does. Cash reserves will help you get through them. How much of a reserve is dependent on a variety of factors. Be realistic about figuring out your requirements, and hard-nosed about not touching the money. It is not a slush fund and should not be used as one.

Negotiate and track receivables – Keep net-60 and net-90 terms to a minimum, and think about offering early payment discounts. Assign someone the job of monitoring receivables, initiating collections and regularly updating you via the cash flow worksheet. At least weekly, although for most businesses daily is best. Do not let customers keep your money in their bank.

Negotiate and track payables – Get the best deal on payables you can for your cash flow. Contracts can often be negotiated to net-60 and net-90 terms. Pay your bills on time – paying late fees is a good indication that your cash management system is not under control.

Keep control of debt – Debt should not “just happen”, you have to manage it. Create a strict, written policy for giving credit and stick to it. Do not over extend, even your best customers will take advantage of a lenient system if allowed to. Credit is not cash until you are paid, until then it is a debt. Remember, you are running a business, not a charity.
Also, keep control over the credit you accrue. Only take on credit you can pay back, not credit you think you can pay back – do the cash flow math and have patience before you take on any debt.

Create and use a cash flow worksheet – This is an important document, one you ought to know by heart. It should tell you, at a glance, your current cash flow situation. Since it is updated and used often the simpler it is the better. There are many worksheet templates available, find one that suits you. If you have an accounting program it will be a part of the package.

Trying to run a business without managing your cash flow is like trying to shoot upstream rapids, alone in a canoe without a paddle or map. You might be able to do it. But, why make it hard, when it can be much easier? There will always be rapids to navigate, but you have a better chance at success if you are going downstream, in a kayak with a paddle and map.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Cross or Up Sell to Add Value to the Customer

At most of the places we shop today, employees often ask customers if they need anything else with their order. It could be the clerk at the deli counter asking you if you would like any cheese with your order, the server at a restaurant asking if you want to start with an appetizer, or the now famous, “would you like fries with that.” Why is this? Business owners have determined that they only have a finite number of customers. Therefore, they must maximize the potential of each customer. Retailers often track the ‘average sale;’ whereas, in the restaurant businesses, managers look at the ‘average check size.’ Managers track that number to be sure they are achieving their sales goals.

Whether you’re in customer service, management or sales, you increase your value to an organization by retaining valuable customers. Research shows that the more products and services your customers use, the more likely they will remain your customers. But how do you sell additional or higher value products or services without feeling pushy?

How do you give more value to customers? Additionally, how do you recognize this is good for them, for you, and for your company? Cross and up selling often provide a win-win situation for everyone. This allows you to work with proven tools to open doors for additional business and learn how to sell without feeling pushy.

You need to develop a plan with your managers on ways to increase each sale. Listed below are the concepts of what this plan should contain.

  • Offer additional items that add value for the customer
  • Convince the customer that you are supporting their original purchases
  • Move the buying decision to a higher level, more valuable solution
  • Create a value map to increase the quantity of the sale
  • Raise the quality of the solution and help customers save time or improve efficiency
  • Follow a consistent system of gathering information, opening the door to the solution, presenting added value, and confirming needs

Now that you read the concepts above, you are probably asking questions on how that can be implemented in your business. Below are some real-world solutions:

  • In a coffee shop a customer asks a clerk, Can I please have a cop of coffee? You ask; a Large? Most likely the customer will say OK. If you responded, a small, medium or large, most likely the customer would have responded with a medium please. In this process you moved the sale up without being pushy.
  • In an auto parts store a customer comes in for parts to replace the brakes on their car. The counterman notices the customer does not ask for any brake fluid. Knowing brake fluid is needed when replacing the brakes, the counterman makes the suggestion. The customer could respond with, I have some at home. Or, most likely the customer will say yes and thank him for the suggestion. Again, not pushy and you are actually offering better customer service because there is nothing worse than starting a job and not having all of the required parts.

Cross or Up Selling is not limited to restaurants, retailers, or wholesalers. Contractors can use the process as well. In most trades, it is very easy to sell a better product than the customer may have requested. Remember in many cases the labor component of the cost would be the same. It could be as easy as showing the value of paying a little more for a roof that has a longer warranty. The same would be true for a plumber installing a new water heater. The point to remember is the cross or up sell must add value to the customer. If they are planning on moving in 5 years they probably don’t want to spend the extra money on longer life products, but those still could be added features when they are selling the home.

Implementing a plan to improve your Cross or Up Selling can easily add ten to fifteen percent to your sales!

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

Getting the Work

As a Regional Vice President for Cogent Analytics, I, have the unique opportunity of meeting with three to four small business owners one-on-one almost every day of the year. I have been in the industry for over 18 years. So, if you were to do the math, I have had the chance to personally meet with over 18,000 small business owners throughout the United States. Enough to populate a small village – Entrepreneursville.

Over that time, I have witnessed first-hand common challenges that almost every entrepreneur encounters. This article will be the first in a series that will discuss key issues most every small business owner faces soon after opening their doors.

Entrepreneurs are a unique breed. No two are exactly alike, yet they each have a common trait – a burning desire to own their own business and call their own shots. Many of them start with a dream and a technical skill, but little knowledge of how to go about growing a business. One of the phenomena I encounter frequently is small business owners stalled out around $1.5 – 3 million in revenue. Many stagnate there or regress, while others grow beyond. Why is that?

When you distill business down to super-simple, there are essentially three hats a budding entrepreneur must wear: 1.) Getting the Work. 2.) Doing the Work. 3.) Tracking the Work. Somewhere around $1.5 – 3 million in revenue (and usually between 10 – 15 employees), an owner encounters the fact that there are not enough hours in a day, or days in a week for him to wear all three hats effectively. At that point, he must get others to wear the hats for him, or remain stuck at that size. A small business owner must move beyond the “mom and pop” model that got him to this initial plateau and adopt a true business model with management, infrastructure, systems and controls if he hopes to grow beyond it.

Let us take a closer look at the first of these three hats – “Getting the Work.”

To propel any small business beyond this initial plateau, an owner must identify someone within the organization to manage the sales effort full-time. Someone whose primary responsibility is to continually drive sales with existing clients, or pursue business with new prospects.

There are many ways to go about it. For example, Cogent Analytics worked with a small landscape contractor in Texas a few years ago. They had been stuck at $3 million in revenue for several years. They had tried many different strategies to grow the company – fancy brochures, radio advertising, trade shows, etc. Try as they might, nothing seemed to get them past that point. While working with the client, our consultant quickly recognized one of the owners did all the bidding and got bogged down dealing with minutia in the office. There was only so much work he could bid during any given day, and he had very little time left over to call on clients. Our solution to grow the business was not another brochure or billboard, rather we promoted an experienced employee to the position of Estimator. We trained him to bid work full time. That freed up the owner’s time to wear his business development hat again. It allowed him to pursue new business with existing clients, plus find new clients. He was then able to diversify into other lucrative markets including landscape maintenance, as well as time & materials work. In one year’s time, the company grew from $3 million to $5 million in revenue. Along with the incremental sales of $2 million the client could achieve a bottom line improvement of $250,000.

At Cogent, we find that it is common for small business owners to be hesitant to let others wear their hats – to give up control. However, in this example, by putting in place a more clearly defined sales system, carefully outlining the new estimator’s role, training them how to bid correctly and installing proper management tools, Cogent could help our client monitor the bidding process without having to be the guy to put the pen to paper. That freed up his time to get back in the field full-time and do what he was good at – selling landscaping services.

Each company is different and this is just one example. However, to effectively grow a company beyond the initial plateau, we typically find owners must start to build a true organizational structure and delegate the responsibility of who wears the hats. In the next article in this series, I will discuss another hat a small business owner must hand off to grow their company to the next level.

At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information:

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