Archive for

Getting Business-Owner-Thinking Into the DNA of Every Employee in Your Company

The training I have just spoken about takes time, but here is something you can do right now which will make an immediate difference to the way your team performs.

This is to get your employees, whenever they are faced with a difficult decision, or customer facing situation, to ask the following four questions of themselves.

These questions get right to the heart of business-owner-thinking.

Question 1: What would I do if I was the owner of this business?

This is the first question that every one of your employees must ask themselves. To be able to answer this, they must put themselves in the shoes of a business owner.

When your employees think like a business owner, they very quickly understand that the success of your business is 100% intertwined with your customer.
The constant need to put your customer first is a must, and this is exactly how business owner think.

Business owners are painfully aware of the link between revenue from customers and bottom line profits. Your staff must equally be aware of the link between their salary and the revenue which comes from your customers.

When your employees see themselves as the owner of your business and understand that the success of your company is all about your customer, it’s only natural that they will want to take more pride in their work, go the extra mile and have a new level of urgency, haste and passion. Not what you and I experience in all too many companies, which is complacency, and employees taking customers for granted.

At its heart, business-owner-thinking is about reversing negative, under-productive employee-thinking, and replacing it with positive, results-generating business-owner-thinking.
Let me give you a personal example of business-owner-thinking.

In the past year, I’ve stayed at various four and five star hotels whilst I’ve been writing and have had very mixed experiences.

All the hotels charged a similar amount, but some hotels stood out over and above the others, simply because of the way their employees thought, acted, and made decisions.

Hotels are a great backdrop to explain these four questions, because hotels are service businesses and when you stay in a hotel, you not only expect, but demand superior service in return for your money.

You can be sure – regardless of your own industry – that your customers want the same level of care and attention from you that they would receive at a top five-star hotel. You may not be in the hotel business, but there is much to learn from great service-based hoteliers.

The best experiences I have had in hotels have always been where the employees are proud to work there, and see themselves as the owner of the business.

When people think like business owners, they see business differently. They take ownership and responsibility.

Little jobs that need fixing get fixed. In hotels, pieces of wallpaper which have come unstuck get glued back down, rather than ignored. Annoying creaking doors get oiled. Finished-with ‘room service trays’ get taken away quickly, rather than being left outside the bedroom door. This all happens because the employee is asking the question, ‘If this was my company, what would I expect to be done?’

For sure, unstuck wallpaper, creaking doors and trays left outside a bedroom in an untidy and dangerous position is not something you would expect to happen in your own hotel. And so it should not happen in a hotel you are an employee of.

In your own business, you need your staff to demonstrate this level of ownership and responsibility.

Question 2: What would I expect to be done if I was a customer of this business?

This question requires your employees to put themselves in the shoes of your customer, as it’s your customers who are paying the bills of your company. It’s your customers who are paying the salaries of your employees – and your dividends as the business owner or bonus as a business leader.

All too often though, it is apparent in many companies that instead of putting the needs of customers first, employees put their own needs first.
Let me give you two examples of that.

A while ago I was giving a speech in Birmingham and arrived by train. I decided on the train that I wanted to record the speech before I presented it and so I’d planned to buy a mini-disk recorder. I got off the train at about 5pm and went straight to a large ‘catalogue shop’. I won’t name them, but you may be able to guess who they are!

In the catalogue I saw a mini-disk recorder, but wasn’t sure if it had a line-in jack to plug a microphone in, so I asked the shop assistant if I could first see the product. “I’m sorry Sir,” came back their reply, “we do not let customers see products after 5pm.”

Can you imagine saying this to one of your prospective customers?

Needless to say, I didn’t buy the recorder there, and that shop lost out on a quick £80 sale.

If the shop assistant had asked, “what would I expect to be done if I was a customer of this business?” then I think they’d certainly come to the conclusion that as a customer, they would fully expect to see if the product first met their needs.

In the same ‘catalogue shop’, this time in my home town, I went to order some plastic storage units. After I paid for my goods, I picked them up from the collection desk, only to notice that one of the drawers was clearly broken.

I explained this to the shop assistant who had just served me and asked him to bring me a replacement that wasn’t broken. “Sorry Sir” he said, “You’ll have to go to the back of the queue in the customer service line.”

The queue had about four other people in it, but there was no other way for me to get a set of drawers that weren’t broken. When I eventually got to the customer service desk, I was treated as if I’d taken the drawers home and broken them myself, rather than having just picked them up from the collection desk!

If the people in this store asked the question, ‘What would I expect to be done if I was a customer of this company?’, they would certainly expect the goods they’d just bought not to be broken, and if they were, they wouldn’t want to be sent to the back of the customer service line.

When faced with any decision, your employees must put themselves in the shoes of your customers.

It’s very likely that your own customers have similar examples of poor service they could cite in your company. It may only be small subtle issues, which are irrelevant to your employees, but significant to your customers, and have a major impact on their desire to buy from you, and buy again from you in the future.

Question 3: Given the decision I’m about to make, what impact will this have on my customer’s desire to come back and buy from us again in the future?

We said before that the growth and success of your company comes from customers buying from you many many times, rather than just once. It comes from creating a relationship with your customers, and from repeat purchases.

Every one of your employees must understand that the value of a customer comes from a lifetime of transactions, not just a one-off purchase.

In fact the marketing cost of getting a customer to come to you for just one transaction may wipe out the profit on that first order.

Very few employees really understand this concept of life-time value. If they did they would never let a customer leave your shop, office, premises or let them walk away with a product or service with anything other than having had an outstanding experience – and getting the maximum ‘future value’ from that particular transaction.

Great entrepreneurs and business owners know that you need to get a customer and keep a customer.

Peter Drucker the world famous management writer said, “The purpose of a company is to get a customer”.

After that, it is to sell to that customer over their lifetime. If your employees fail to grasp this basic concept about lifetime value, and think only of one-off sales, rather than repeat purchases, you will forever struggle to grow your company, and you’ll forever be working on chasing new business, rather than developing rich, profitable relationships with existing customers

In order for customers to want to come back and buy from you again, a few things have to happen. First of all, your customers must always have a positive experience. Quite simply, if they leave your business disappointed, it is very unlikely they will come back again.

For customers to come back and buy from you many times, you also have to be relevant to them. Often this means providing new products and services.

Customers can be relatively fickle, and more often than not want the latest and greatest. This requires you to be innovative and creative and adapt and respond to their changing needs.

But ultimately, your customers need to believe in you, and believe that they are getting the greatest value, benefit and result from you in exchange for the money they spend with you.

If your customers are happy and feel they are getting good value, then they’ll go on and buy from you time and time again; if they don’t then they’ll buy from your competitors – and you will again have to invest heavily in attracting new customers through your marketing.

That is why it is much easier, and cheaper, to deliver outstanding products and services in the first place to your existing customers and give them endless reasons to come back and buy from you time and again.

But for that to happen, every member of your staff has to understand the basic concepts of life-time value, which is an inherent part of business-owner-thinking.

Question 4: What can I personally do to ensure my customers recommend my company to their friends, family and business associates?

This question gets your employees to understand the basic principles of growth through referrals and word-of-mouth marketing.
Word-of-mouth marketing leverages the trust which exists between the person making the recommendation and the person receiving the recommendation.

Companies can spend millions of pounds marketing to you, trying to break through the deluge of marketing messages that you are bombarded with every day.

Yet nothing on earth will be as powerful as a simple recommendation from a friend which could be no more than them saying, “You really must go and see the latest Stephen Speilberg movie, it’s outstanding”, or “You should get the latest Nokia mobile phone. It plays movies and the photos are amazing.”

A friend recently recommended to me a family holiday where you stay on a farm in a luxury 3-bedroom ‘nomadic house-tent’. This is something I had never considered before (and it would be very expensive for this farm tent company to reach me through their marketing), but because my friend spoke so highly of it, it’s now something we plan to do in the near future.

You must realise that your customers have opinions about your business and will either be making positive recommendations to their friends, family and business associates, or they will be making negative recommendations (just like I did with the Barman). They might even be telling people to avoid your company at all costs because of the negative experience they have had with you in the past.

In John Maxwell’s book, The Winning Attitude, he suggests that 68% of the reasons customers will quit your company is down to the experience they received as a customer.

Why Customers Quit
Die 1%
Move away 3%
Develop other friendships 5%
For competitive reasons 9%
Because of product dissatisfaction 14%
Quit because of an attitude of 68%
indifference towards customers
by the supplier

More often than not, the reason customers fail to repeat buy or recommend you is down to the negative way they were treated by the employees in your company.

That is precisely why it’s so crucial that every one of your employees sees themselves as business owners and makes decisions like business owners.

Selling a Small Business Boom From Dow Crash

The 9/11 attacks caused a crash in the Dow and this past week has seen the next largest crash since that time.

The Dow lost 7% of its value in one day! It gained some back after that but the losses that are suffered can be permanent.

Thousands and thousands of business owners, part of the baby boomers, will need to sell their businesses in one manner or another over the next ten to fifteen years. Many of them must sell in the next two to three years.

The financial markets have lost confidence from the people. The government has felt it necessary to publicly pass bailout legislation that the public really does not like.

What does all of this bad news mean for the owner trying to sell a business?

There are three things that are actually good news for those selling a business: 1. People are laid off during these times. 2. Banks do not have the cash liquidity to finance transactions 3. Buyers will be looking harder at the fundamentals of a potential business buy.

How are those good things? Well, let’s take a look:

In the late eighties and early nineties, the US economy took a tremendous hit. Compaq Computers and other major companies laid off scores of people. One of the consequences was a boom of new companies being formed and business being acquired as these laid off executives decided to own their own businesses. They took severance packages and cashed in retirement plans to obtain the liquidity to invest in either a new business or a business that was for sale.

The impact of these entrepreneurs entering the marketplace was a dramatic growth of small business. Small business creates more jobs than all of the major companies in the United States. The economic boom that followed was fueled in a major manner by the growth and success of these small businesses, not the major companies.

The effect is buyers in the market place, exactly what the business sellers need to make the transition in their business. Yes, the buyers will be driving a hard bargain and looking for value but business that have adopted the six systems of successful businesses will be investments that will sell based on their fundamental cash flow.

Unsecured debt from banks will dry up for the purchase of business due to a lack of liquidity. Even though bank funding will be absent, the new buyers will tap severance money and retirement money to invest.

Banks, for the most part, are actually not a source for funding to buy a business unless the business has assets, like buildings and land or significant hard inventory, that fits the banks’ need for asset based lending. Due to Federal regulation, banks cannot invest in the stock of companies which restricts lending to buy businesses to either unsecured loans or asset based lending. As a result, loans to finance the sale of a business usually do not come from banks.

The combination of the newly unemployed entrepreneurs with severance and retirement funding plus owner financing gives the liquidity needed to sale of many businesses.

Fundamentals of the businesses on the market will be key to buyers. Businesses that are investments with solid cash flow are always good targets. When a business owner has created an investment by having the six necessary systems in place, the business is an investment and not a job for sale. Implementing the six systems of customer attraction, customer engagement, customer service, customer retention, team accountability, and financial reporting will achieve this goal.

The silver lining of the current financial difficulties is a good market for the sale of a small business. To take advantage of that market, a company must implement the necessary systems to have fundamentals that will attract the new entrepreneur buyers that arise from these troubled times.