Develop new products and services

This post is a followup to The ride's not over (so get busy). In that post I talked about the fact that this present time provides on opportunity that won't last. This is your opportunity to build a business that is stronger, more resilient, more profitable and more sustainable than ever. Don't wait for the economy to save you, it won't. There's a lot of evidence that suggests things are going to be worse in a year rather than better. Don't settle. Don't go along for the ride. Instead develop new products and services.

Your customer base may need to change or it may have already changed. The number of businesses or consumers that can afford your products and services is almost certainly smaller than it was a year ago and it may be smaller yet in the year to come. That means you have to change your pricing to bring old customers back or you must offer alternative goods and services to attract new customers. At Axiom we felt the pinch when some clients started cutting back on $2,000 and $3,000 monthly consulting and CFO services. We developed a $400 - $600 bookkeeping service available to a much wider audience as a way to capitalize on the market shift.

If you are going to develop new products and services realize that there are only two options. You can:

1. Build things that can be sold to existing customers.
2. Build things to attract new customers and then convert them into "core customers" that look like your existing customer base.

If you are building something that doesn't fit either of these scenarios you are building a new business. That may be OK, but just be careful. Building a new business without realizing it and planning for it will eventually cannibalize your existing business.

When building something that can be sold to existing customers it is imperative that you seek their input during the development phase. Don't build something you think they want. Build something they tell you they want. Not only will you build a better product, you should be able to close a good number of pre-sales that will help cover some of the development cost.

When building something to attract brand new customers you want to make sure that you can map out the progression from new customer to ideal customer. With a plan and a process in place you can more easily and quickly convert these new customers into the types of customers that will sustain your business and capture market share.

For instance, when building our bookkeeping business it was important to understand how a client could progress from basic bookkeeping services to basic financial analysis to broad business planning to strategic consulting to outsourced CFO and executive consulting services. That roadmap allows us to use a new product to feed the core business over time. Everything happens deliberately rather than haphazardly.

Tomorrow we will tackle the issue of cost cutting.

The ride's not over (so get busy)

In two days from two different sources I've heard the same thing. "A year from now the economy is not going to be any better. " These prophetic words came from two individuals I trust and respect a great deal. Both are involved in the financial services industry and both are in touch with small business owners. I don't know whether they are right or not, but I do believe a couple of things.

1. The recent bump in economic stats has more to do with dumping future tax dollars into things like cash for clunkers and TARP than any real, value added economic activity.


2. The so called stabilization in home prices has a LOT to do with a first time home buyer credit and the fact that the first round of foreclosures are growing stale so bargains and money to pay for them are starting to attract buyers.

Unfortunately neither the government funded stimulus nor the first time homebuyer credit are sustainable pillars from which one can build a robust economic recovery. There is also a great deal of anxiety surrounding the 5 year option ARM products that were sold at the very height of the housing boom. Those mortgages won't reset until 2010 and when they do a second round of foreclosures is certain to follow.

But I'm not here to depress you, I'm here to tell you THE ECONOMY WON'T SAVE YOU. If the economy is going to get worse or at best be flat over the next year you need to do something about it. Otherwise you'll experience another year of zero growth and you'll be no better off. I don't know about you, but that's not acceptable.

You can do something about it and over the next three days I'm going to give you some specific suggestions. But first you need to be convinced that it's better to work your way out of a problem than to be lifted out by something or someone else. It's true that a rising tide lifts all boats, but the boat that has not been tended to may just sink.  As a business owner you have a tremendous opportunity to build a stronger business, TODAY. This opportunity won't last. Sooner or later the tide will come in. Rather than wonder whether you'll be able to float why don't you take steps today to make sure you'll not only float, but excel.

Simple = Ingenious

Over a couple of cups of coffee and a liesurely Saturday morning I stumbled across this slideshow from Fast Company.

16 Inventions that Boost Habitats, Humanity, Health and Happiness

My favorite is the Hippo Water Roller. Ingenious solution to a very practical problem.

It's worth a look. Some really cool stuff here. It's fascinating to me that some of the most brilliant ideas are often the simplest. If you have an idea for design or business that people can "GET" instantly it's worth exploring. On the other hand if you have to explain, educate and convince people I've learned that the project will cost more, take longer and usually be less profitable in the long run. Look for the simple solution first.

I've often heard people play down their simple solutions with language like "I'm sure someone else has already thought of that." Maybe they have, but success lies in execution, not conception. 

My 10% theory

I have a theory that goes something like this:

If you start measuring something that you've never measured before you will realize a 10% improvement (or more) during the amount of time it takes you to gather 3 cycles of data. 

Some examples 

1. A medical practice started measuring weekly production and went from an average of $10,000 per day to $12,000+ within three weeks.
2. A restaurant started tracking weekly coupon use as a percentage of covers and went from 5 coupons per 40 covers to 8.5 in three DAYS.
3. A service and repair business started reviewing dispatch and response times and lowered the average time between customer call and service tech arrival from 90 minutes to 75 in three weeks.

There's a saying that what gets measured gets done. The problem is that most people agonize over whether the right things are getting measured and they wind up with measurement paralysis. Start small. Find one or two NON-FINANCIAL numbers in your business and just measure them for a week or three. Don't set goals, don't elaborate expectations or place value judgements on results. Don't force operational changes, but if something obvious comes to your attention go with it. Above all, just measure and let me know how things turn out. I have a hunch I know what is going to happen.

Ten things business owners don't say (and ten things they do)

This is a followup to a previous post where I talked about the difference between business owners and people who are simply their own boss. There IS a difference, and you can often tell which type of person you are dealing with just by listening to the language they use. If you hear any of these comments there's a good chance you're not dealing with a true business owner or entrepreneur. Your simply talking to someone who doesn't want to be told what to do.

Top ten things business owners DON"T say. 

1. That's too much work. True entrepreneurs aren't afraid of work. They understand that a great deal of success comes from outworking the competition. Work smarter definitely, but if you think neurons are a substitute for muscle you're kidding yourself.


2. We can't afford it. Entrepreneurs are keenly aware of the numbers and return on investment, but price is not the deal breaker. If a given investments results in an acceptable ROI they will find a way to beg, barter or steal to get that ROI. "Can't afford it" means someone else took it out of their reach and that just doesn't happen with true business owners.


3. That's not my problem. The buck stops somewhere and true entrepreneurs know that even though it may not have been their fault it definitely IS their problem.


4. Blah, blah, blah, blah, blah. Good business owners listen. If you run into someone who has a talking problem I'll bet good money that person isn't as successful as they want you to believe.


5. Why did you do that? Have you ever asked a three year old why they wet the bed? What a stupid question. It's much better to ask "What do you think you can do so you don't wet the bed tonight?" Asking people WHY they made mistakes focuses on the past, not WHAT can be done to correct it in the future.


6. I don't want to hear it. How many times have you seen an impetuous boss or supervisor blow off employees trying to explain something? If you have this type of attitude it just encourages employees to treat you like the small minded person you are.


7. What if it doesn't work? Entrepreneurs know that it may not work, but they also know that if they spend too much time obsessing over the consequences of failure they may never act. Further, they understand the importance of leaders who focus on potential success, not the likelihood of failure.


8. It may turn around. Entrepreneurs know the difference between persistence and blind hope. They plan for contingencies and make sure that future success isn't determined by the whims of the market. They're more likely to say something like "If it doesn't turn around by next quarter we're moving on."


9. Maybe. Indecision is a killer in small business. You're better off making a call and reversing course if things don't work out. Standing around is death.


10. That's not fair. Life isn't fair. Sometimes there's no good reason why things happen. Get over it. While you're looking for meaning in the world the true leaders are analyzing the situation, making plans and taking action. Don't get caught up in what's fair or unfair.