10 Strategies to Thrive and Survive in a Recession

1. To avoid losses , cut costs quickly and deeply.... unless there is a planned strategy for growth 
2. Eliminate pay increases, but retain incentives (if affordable).  It is not unheard of for leaders to request the entire company take some degree of pay cut (usually a higher percentage for higher paid employees) with reductions in their own pay leading the way.
3. Accumulate “fruit on the sideboard”  (a cash war chest)
4. Renegotiate their vendor agreements
5. Cash Flow Cash Flow Cash Flow 
6. Watch Accounts Receivable closely, account by account, and politely but crisply cut off customers who don’t pay or chronically late pay. Manage inventory and potentially delay paying creditors. Create a great relationship with your bank and shareholders 
7. Come up with creative new solutions and services, and go to market strategies and marketing campaigns which attract and address the three top concerns of decision-makers: cutting cost, reducing risk and driving Revenue.
8. Spend on demand generation. Invest more, sooner, in marketing and selling in the face of a recession than do the lower performers.
9. Leaders get  out in front of employees, customers and prospects more frequently and visibly. Make a reason to visit the other businesses in your building 
10. Your family and health is most important 

The 4 key drivers of a succesful business

From Brenton Ward 

In order to make serious headway and transform our fledgling business into a successful, profitable enterprise, we realized that we had to learn the precise drivers of a successful business. 

It took some time and research but we eventually worked out that the four key drivers listed below are behind every profitable business — regardless of the industry:

Great advice to scale your accounting practice

Great Advice from Ed Chan from Wize Mentoring  - move from an unscalable “brain surgery business” to a highly scalable “nursing or pharmacy business” - where customers can still feel the personal touch - true for financial planners and mortgage brokers as well 

Hi Ivan,

We’ve received some varying feedback from one of our recent Friday tip emails called "Increasing your prices" so here’s a follow-up email about this topic.

In this email, I explained the difference between a Business versus a Practice and the concepts of "value-based pricing".

To further delve into this topic, let’s break down the 3 types :  

1. "Brain Surgery" type Practice where the owner does the majority of work himself/herself and his/her income is limited to the hours in the day (not scalable) often to earn more, they work very long hours and a slave/prisoner to their Practice, unable to take time off because without him/she doing the work, the work doesn’t get done and his/her income ceases.

An Ordinary model that relies on Extraordinary people who are hard to find and difficult to scale. Often "burnout" is a common complaint. Owner dependent

To earn more money he/she needs to increase their rates and justify it by calling it "Value Pricing". Suited to unique service offerings. Only has a P&L Return and no Balance Sheet/Goodwill value  

2. "Nursing or Pharmacy" type business provides a very personal service but anyone can do it as long as they are trained to give really good personal service. This business model relies on Ordinary people who are abundant to source.

Clients are willing to pay more for that personal touch. Highly scalable and not owner dependent. An Extraordinary model that relies on Ordinary people. Has both a Balance Sheet/Goodwill value and a P&L Returnsince it’s based on Systems and teams to deliver great services  

3. "Supermarket" is a volume business and it's very competitive and competes on price so margins are very low and need to be super-efficient.

The one that makes the most money is the"Nursing or Pharmacy type" because of its ability to scale. Staff are easier to find as it’s not "highly skilled" and clients are willing to pay more for personal service.

In the Nursing/Pharmacy type business, you increase your income by increasing the size of the business versus increasing the size of the fee as in a Practice.

It’s the difference between buying your Medication at the supermarket (no service and low prices) or paying more for your medication from a Pharmacy where you can get advice and personal service.

Or after an operation, you need Nursing services and the patient is willing to pay more for the personal attention, and often the costs are paid for through private health insurance

The Tax Compliance business falls into the "Nursing/Pharmacy type" client because it’s highly scalable and the government drives the business to us since it's illegal not to lodge an annual tax return.

It relies on running the Business efficiently but one has the opportunity to turn it into an investment that pays a passive income without your direct involvement (giving you more choices in life) as long as you have the systems and staff to do the work.

Systems and procedures and formal reporting lines are required.

There are enormous benefits to this:

1. Your income is not limited to the hours in the day. In fact, it's unlimited because its highly scalable
2. You are no longer a prisoner of your practice and you have more choices in life.
3. Tax Compliance is an annuity income stream since it's illegal not to lodge your tax returns. Annuity businesses have both a Balance Sheet/Goodwill value and a P&L return versus Brain Surgery Practices only have a P&L return and no Balance Sheet/Goodwill value
4. If the Business is working hard then the owners do not have to. The harder the owner is working the less the Business is working. Businesses are working at optimum when the owners have zero charges on the clock and the staff is fully chargeable
5. Potential to turn your business into an investment that works without you and pays an EBIT/ROI of 25%pa or more (after Owners wages).

Hope that makes sense.

Ed Chan (bio)
Founder / Chairman (WIZE Mentoring)
Founder / Non-Executive Chairman (Chan & Naylor)
w: www.wizementoring.com
Sydney l Melbourne l Dublin

Business Builders Group: Professional service firms are being rocked to the...

Business Builders Group: Professional service firms are being rocked to the...:   The business model of professional service firms are being disrupted to the core! It's foundations are being rocked. From accounting, ...

It’s all about the Qs

Professor Gary Martin writes a great article in business news about IQ EQ MQ BQ and AQ 

great article in business news

EQ and IQ is being bandied about in all leadership courses 

IQ - intelligent quotient - it’s what you born with - can’t really be taught . It’s how smart you ate ! 

EQ - Emotional Quotient - is how you behave - and understand and manage your emotions and how you behave to and with others 

Professor Gary  Martin shares AQ, MQ and BQ to the mix 

Adaptability quotient / ability to adapt - Grit, resilience, mindset and mental flexibility are all important attributes that underpin an individual’s AQ. ()

Moral quotient (MQ) - knowing right from wrong - and having the ability to take responsibility for one’s action and understand  and accept consequences: 

MQ is  an essential ingredient to succeed at work and in life more generally.

Body quotient - BQ is about how you manage your body or the ability to notice body sensations, listen to them and respond in a way that respects the body’s needs.

I reckon LQ is pretty important - Likability Quotient - tha ability to be liked is a key skill - that can also be learnt!

What other Qs can you think of ? 

! 

Do you have a Service and Confidentiality Agreement?

A great customer relationship is based on trust - and a trusted relationship is based on a foundation of clarity, clear expectations and no surprises.

It’s like a marriage - and a marriage (in Jewish  law is governed by a “Ketuba” which is read in full at the wedding.)

Similarly, your relationship with your customer should be governed by a well-crafted, customer focussed  Service and Confidentiality Agreement (SCA)  which defines what your customer can fairly expect, how you plan to deliver that service - and of course - what you expect  of them 

Your customers have to know that you put them first.

So what is a Service and Confidentiality Agreement an SCA 

Your SCA is an  agreement between you and your customers and makes sure you both have a clear and concise definition of services, responsibilities, timelines, and guarantees.

It will  deliver clear advantages to you and your customers and should be an integral part of your customer onboarding  process.

It should  specify exactly what is (and is not) covered, document roles and responsibilities of both parties, and define service prerequisites that set you up for success. 

When you’re clear on expectations, you’ll be able to measure and manage the user experience in a meaningful way and position yourself as a trusted advisor. 

The better your agreement, the more you and your clients benefit.

Your SCA delivers peace of mind to your customers, who can refer to agreed-upon deliverables, see clearly defined terms of service, and access specific instructions for support and escalation.

Since your SLA is a legal document, you also want to make sure a qualified legal professional who understands the industry and any relevant verticals or regulatory considerations reviews it.

Some of the things  to include 

• Your availability and contact details
• Fees and Payment Schedule
• Taxes
• A clear explanation of your service
• Your brand promise 
•  Inclusions and Exclusions - identify specifically what is and is not covered to avoid confusion on both sides.
• Performance Measurement - Include that you Address concerns immediately, so your customers feel heard Monitor compliance by measuring your progress against SCA goals. Rely on reporting to help you keep customers aware of how you’re meeting and exceeding your SCA  promises. (Regular feedback forms) 
• Your guarantee  
• Incident Management Process and Response Time
• Limitation of Liability
• Service Requirements
• Minimum Standards 
• Confidentiality
• Security
• Reporting. Providing real-time performance to customers through automated reporting provides full transparency into the real status of the agreed upon metrics.

  “If used correctly, the SCA Agreement can be your most effective sales tool and the ultimate source of your profit and protection.”

Regular review of your SCA 

  “It costs approximately six times more to attract a new client than to retain an old one.”

Things change in every relationship, and your relationship with your customer is no different. 

On a pre-established, regular schedule, you should meet with your customer to revisit your SCA and make sure it is still meeting the needs of both parties. If it isn’t, you might need to refresh.

5 reasons why it might be time to refresh your SCA 

You’re offering a new service. Don’t set yourself up for failure by allowing new services— with new requirements—to be governed by an old SCA

Your team is struggling to meet timelines.

If you can’t meet current SCA expectations, especially if it’s because you’re constantly delivering higher quality work, it’s time to renegotiate.

If you’re  losing customers to SCA- related disputes, especially at a higher rate than the industry average, it’s time to make some changes.

It’s confusing. If you’re constantly getting questions about a

particular section of your SLA, rewrite it for clarity.

It isn’t keeping up.

Technology changes fast, and sometimes your

SCA might not reflect the change. Use revision time to update your standards and stay competitive.

It’s all about customer satisfaction 

Your business is only as good as your reputation - and a solid reputation is based on the satisfaction of your customers .

Customer Satisfaction is the key to success

“90% of customers who are satisfied with you  will recommend and refer you to your peers.”

The 7 Paradoxes of Entrepreneurship

A great article written by Tony Nagy - foundation member of our BBG Innovation Forum!

Tobi Talks about the 7 Paradoxes of Entrepreneurship

If you are an entrepreneur - all the power to you....... welcome to club fear!! 

Entrepreneurship is a phenomenon driven by creativity and imagination and can be quite a tricky process for the uninitiated, due to a number of counterintuitive paradoxes that entrepreneurs have to contend with, in order to be successful. Let’s take a look at seven of these paradoxes.

The first paradox is you “lose money to make money”; so, what does that actually mean? Well, a startup enterprise is a blank canvas and a learning environment, and the founder has to try and figure it out, and “experiment”, and collect data, much like a scientist. Naturally, these experiments don’t always work, and they can drain your resources completely, if not managed carefully. For example, you have just launched an online business, but you are not sure about your marketing tactics, so you start experimenting with different things, based on your customer personas. Things such as Facebook, Instagram, SEO, LinkedIn, etc. Some will work and some won’t work depending on how well the entrepreneur has identified their target market and the message they are sending out.  Each experiment will cost money, how much will depend on the entrepreneur’s budget and how they allocate and manage their budget.

The second paradox is you “relinquish wealth to create it”, (the entrepreneur’s or others’). This is simply the capital investment required to start the business. Now, of course, some businesses don’t require a lot of capital to start, but as the business grows it will require some form of finance (such as debt) or investment (equity). For example, the entrepreneur could be required to second-mortgage their property in order to obtain finance from the bank, so all those years of paying off their mortgage, is now handed back to the bank, and furthermore, all those years of wealth creation could actually be lost.

The third paradox is you “experience failure to experience success”. Every seasoned entrepreneur knows this is true. Success is not just a fork in the road; it’s not whether you either succeed, or not, but rather it’s a series of trial and errors until that unique success formula is discovered. The problem with most entrepreneurs is they give up too early, either through disappointment, exhaustion, lack of capital, or marriage breakup. Something to consider here is that the average entrepreneur “fails” or nine or ten times before they succeed. So, if you are wondering if you are a failure, then think again, you may still have a long way to go; there may still be lots of room for your success. As the famous US baseballer Babe Ruth once said, “Every strike brings me closer to a home run”. Probability-wise, this is also correct, try something enough times and you will succeed, (provided one learns something from each failure, and they are able to correct it). So, the development of resilience and persistence is the key here, and a final thought, nothing great comes from doing something easy.

The fourth paradox is “planning the “unplannable”. Anyone that’s ever started a business will know that if you write a business plan, it is pretty much useless, after the first three months. In my experience of starting my own businesses and coaching and mentoring others over the last 28 years, I don’t think I have ever seen a business start and stay the same course over time. Businesses continually pivot, in order to survive, especially at the startup stage, when they are figuring out what to do. This is purely dictated by the market, (the customer’s needs and wants), the industry, and its competitive pressures.

In my first business in the early 90s, I set-up a surf t-shirt manufacturing business, where I spent three months, full-time, writing a business plan, (which I was ever so proud of), and buying all the required equipment to print t-shirts. After, 3 months, one of my customers asked me if I could do snowboard wear. Now, in the early 90s, snowboarding was a “hot” and burgeoning industry, with very little local competition, so I said yes! I was able to completely transform my business into a snowboard garment manufacturing company, almost immediately. Within 2 years, I was already exporting to Switzerland, New Zealand, and Japan. My original business plan completely lost track.

Instead of a business plan, an entrepreneur must be guided by his/her vision, which includes their ideology and core purpose, as these rarely ever change. They should study the market carefully and listen to the customer, and then focus on creating their product/service. Then spend time figuring out strategies to build their market dominant position over time. Now, this will change as the market changes and competitive pressures increase, but will most likely take a lot longer. The tactics, which is what most business plans are built on, can change on a daily basis, hence the likelihood of it quickly being out of date.

Instead of writing a business plan, the entrepreneur should spend that time learning how to get a customer, then create a framework of how they will bring their resources together. Using, tools such as the Business Model Canvas can be very helpful and time-saver. The key here is to be flexible and open to opportunities, as you are learning, but also turning to be focused on building one thing and doing it well, (again another paradox here).

The fifth paradox is “creating chaos to create order”. Now, this is very counterintuitive, however, creativity comes from our imagination, and this is where the "sparks of genius" lie. One also has to acknowledge that there is a fine line between genius and madness. It actually stems from the same point, and this point is often mired in chaos. However, the entrepreneur must be able to take that “chaos”, and bring “order” to it, to be able to execute it. Here is where the “genius” ability emerges; that ability to take that “madness” and put it into some form of “order” that can make sense to the “real” world.

The sixth paradox is “creative thinking “outside the box” for innovation but requiring discipline and focus to execute”. Now, this is linked to the previous paradox and goes without saying, entrepreneurs need to look at something from an imaginative perspective, or some kind of uncontrolled thought, which can often even tinge on “madness” (as this is where genius lies). However, to be successful in execution requires some form of order, including discipline and focus, otherwise, it ends up being chaotic and dysfunctional, which will lead to underperformance, and worst case, failure.

Finally, the seventh paradox is “too much order and you lose creativity” the antithesis of the previous two paradoxes. When there is too much control, it often leads to bureaucracy, which completely kills creativity. In order to remain creative, an organisation must be flat, focused, and nimble, and encourage diversity and tolerance of failure.

So, as you can see there are many paradoxes to contend with, and the most successful entrepreneurs are able to have insight into these paradoxes. They are able to create strategies to overcome these paradoxes via fluid responses, built on flexibility and resilience, but also, they are able to be comfortable with ambiguity and uncertainty. They have a knack for being able to let things go and not get attached to them.

If you can think of any more paradoxes of entrepreneurship, please let me know.

Written by Tobi Nagy