Archive for May 2011
David F Smallman, Managing Partner of Pathfinder Team Consulting, invited participants in The Inspired Group to ask him any question about business. These are his answers:
Q. What advice would you give someone in their first year of business?
A. Don’t lose the passion. Ever. Not even in your 42nd year.
Q. Is it wise to use an untested business model?
A. No. Get it tested.
Q. How do you make sure a new idea doesn’t get stolen before you develop it?
A. Keep it out of the public domain until you’ve had it patented, trade marked etc. Non disclosure agreements are hard to enforce.
Q. What is the best way to price your services?
A. Price the project according to the value to the customer. This may mean that you charge two very different prices for the same work. Charge 25% up front, then two further instalments of 25% and 50%. In over 40 years in business we’ve never had a significant bad debt or had to waste time chasing money. Cash flow is vitally important and this way, your expenses are covered before you start.
Q. What is the single most important ingredient in creating a successful business?
A. Passion (as above)
Q. What one channel would you choose to market a business?
A. It depends on the type of business:
Manufacturing – distribution / sub contractors
Service Provision – figure out how your customers/clients like to buy and meet them there
Accounting / Financial services – traditional routes are still working
Q. What will the future economic power of the UK be like?
A. Look out for a debate between David and Phil Jones of Excitant Ltd on this topic. David recommends reading The Big Short by Michael Lewis.
Q. If the three essentials of business are producing the product or service, managing and marketing, what time should a business owner spend on each.
A. In a 60 hour week (which most business owners admit to working)
Marketing 55% – 33 hours
Making 35% – 21 hours
Managing 10% - 6 hours
Anyone spending more than 6 hours managing a business needs to streamline or outsource and ask themselves if they using this as an excuse not to do the marketing.
Similarly, when marketing, use the same equation:
Existing customers 55%
Short term prospects 33%
Long term prospects 10%
Q. Should we strive to continuously make our services or products better?
A. Excellence can sometimes be the death of a business. Quality is what is good enough to satisfy the customer.
Q. Is social media providing businesses that use it with an advantage?
A. Many big businesses just haven’t got it yet but many smaller businesses are using Social Media to great advantage so it gives them an edge in engaging, listening and providing what customers want.
There are more questions and answers on the LinkedIn discussion http://lnkd.in/Hw4QVb
Questions that David didn’t have time to answer:
Is there a particular hobby or pastime associated with business success?
Is there a difference between leadership and management? (See http://lnkd.in/xMdyjG for this discussion)
What is the best strategy to cope with a business failure?
This week I got several spammy emails asking me if I was taking on new clients and if so would I accept this invitation to join something called Referral Key.
Referral Key is a web site that “allows you to tap into your contacts’ networks and track referrals to increase reciprocity”
The sub text is that the owners of Referral Key have a never ending supply of punters to sell their membership services to after the first 3 free referrals are used up.
In other words you load all your contacts from Outlook onto the website and send them all the same spammy email and then everyone who accepts the invitation does the same. If you join, you track the referrals you get and score people on how many referrals they’ve sent you compared to how many you’ve sent them (!)
I’ve always had a problem with the idea of referrals and reciprocity or rewards.
Call me simple but if someone I know could do with the services of someone else I know I’ll introduce them. I don’t want or expect any rewards for doing that.
Most of my work comes from referrals but I don’t bribe, browbeat or guilt trip expect or offer to pay directly or indirectly for those referrals. I sometimes send a thank you gift but no-one knows about it except the people involved.
What I don’t do necessarily is reciprocate with a referral unless there is a very, very good match.
Am I being too simplistic? Do you have to think you’re gonna get something back before you send someone a referral? Isn’t it more powerful if there is no coercion involved? Shouldn’t you be able to rely on being bloody good at what you do in order to get referrals or is it all down to “I’ll scratch your back only if you scratch mine”?