Get the most out of your business deals, negotiate!
We’re all in business to make money, right? And we are therefore in the business of buying and selling products and services. You will probably further agree that most of us are under price pressure from our clients and we impose price pressure on our suppliers. Nothing new there, you think. Here are some of my thoughts on how to help you get more out of a deal whether you are buying or selling by actively negotiating.
When is it time to walk away
How many times have you made a sale at a ridiculous price where you lost money on it from the very start? And if you take a hard look at yourself you most likely knew before the sale was closed that this was not a good deal right from the start. In all sales negotiations you must know the point in price negotiation when it is time to walk away from the deal. This takes courage and conviction. If you prospect does not realise that there is a price where it makes no sense for you to do business then my advice is to walk away. On the other hand learn the skills to better explain your value so that your prospect really understands why you are priced where you are. If your prospect wants a “sweetener” then make a gesture by adding an extra product or service before reducing price. But do remember, there is a price below which you need to walk away.
Timing – when is the right time to close the deal
In order to get the keenest pricing or the most value out of a deal there is an ideal time by when a deal needs to close, both from your clients’ perspective and also your suppliers’ perspective. Let’s take looking at the deal from a prospects perspective. What’s the best time for them to bring in your product? If they are buying a commoditised product, time in its general sense might not be much of an issue, but maybe their existing supplier is a big thorn to them and you are solving a significant problem. In this case timing and your ability to move quickly could have a major impact and therefore your price might not be the biggest factor. If you are buying from a supplier the sales rep might need to meet a quota, they might need a sale to fill a void in their production schedule, they might be selling the end of a line product. There are lots of reasons here but find out the time constraint whether buying or selling.
Who has the power?
The power in any negotiation is of critical importance, and if a negotiation is conducted effectively the power can transfer over and back across the table. The key here is to understand that the power exists and identify early who has it. The power is easily identified as to who is controlling the negotiation, you, your prospect or your supplier. Think of it this way. If you are a retailer and the whole of your town is out of bread but you have a few suppliers who can only sell bread to you, then for your customer you can demand a premium, and your suppliers’ need to keep their price keen. The converse is also true, if you are one of many who has lots of bread to sell you must keep your price competitive and so must your suppliers. In short, understand that there is a power struggle in any negotiation. Find out who has it.
Who really makes the buying decision?
How many times have you been close to making a sale when at the last minute that “someone else” has to be consulted before the final decision is made? This might sound all too familiar if you are selling into medium-large companies. I have found that in most business deals there are four influencers: “The Money Man” – usually the accountant or person controlling the money, “The User” – who will use your product, “The Technologist” – the person in charge of implementing the use of your product and “The Decision Maker” – they make the final purchasing decision. In small deals these can be the one person. In large companies each one can be more than one person. You need to find out who these individuals are because they can kill a deal if you are unaware of their presence during a negotiation.
Summary
Deals are there to be made. Remember there must be money in it for you. Both parties need to feel there is a “win-win” when the deal is concluded. Be aware of the items mentioned above exist in all negotiation and that they can all be used to your advantage.
Ten mistakes often made by start-up businesses and what we can learn from them
Written by Fergus Doyle – The Business TroubleShooter
This is a cute idea
You are the inventor, the creator. It’s your idea and it’s a great one. You are full of passion and enthusiasm. Straight talking here now, the market i.e. your potential customer doesn’t pay for cute ideas. They pay for valuable products and services that solve their problems. If you refuse to listen to the market i.e. is anyone buying my “cute idea”, you may shut down. The most successful start-ups do good market research, make a prototype, and then take their product to market. They engage closely with their first batch of customers and where it makes sense they adjust the product to better meet the market needs. Be prepared to swiftly adapt your product to the needs of your customers.
What’s your plan?
You need a business plan and it needs to be written down. It doesn’t need to be big, lengthy or boring, but it does need to be concise and direct. What do you plan to sell? Who do you plan to sell it to? How are you going to market your product? How much will it cost? How are you going to make and deliver it to your customer? How much cash do you need to live and run the business before you have enough cash flow to sustain business? Might seem a bit obvious but most start-ups head off with an “I’ll figure it out on the way” attitude. Your plan doesn’t have to be long, 1 page is often enough, but you do need one.
It’s good enough – Just start!
One of the biggest things that the inventor of an idea has to get over is that, your product has only got to be good enough, it doesn’t have to be perfect, and you’re going to change it anyway, so just go and sell it. I hear one story after another of how a start-up spent so much money developing the product only for it to need a major makeover once it went into the market. Don’t be precious about your idea. Get something into the market as quickly and as cheaply as possible so you can make some money.
Surround yourself with like minded people
Unless you are a serial entrepreneur you will most likely come from full employment into starting your own business. It’s been my experience that, if so, your circle of friends or network will mostly be employees. It’s often not the best place to be getting advice on how you should start or run a business. Firstly, employees view the world from getting a pay check every week/month. You have decided to become completely commission paid. These are vastly different perspectives of the world. My advice is to get plugged into your business community as soon as possible so you can be supported by other business owners. The world of owning a business is often a lonely one and the more support you can gain from fellow owners the better.
You’re the salesperson – get over it
“….oh no I’m not.””Oh yes you are!!” You’ll most likely be the first employee in your business. For pure survival your business needs sales, and unless you have a bag of money to hire a salesperson, guess what? You’re it! It’s not that bad really but the sooner you accept it and get on with showing people your product the better it gets and the easier it becomes. Your passion and enthusiasm about your product is infectious and the main skill you need to learn is how to get in front of prospects to show your product. A little tip here is to make it your priority to meet 2-3 new prospects every week. Do this every week and you will build a solid business.
You’ll make mistakes – so what, move on
In the employee world we can often be taught that making mistakes is a bad thing. In the world of self-employment you will make plenty of mistakes. The only real mistakes are the ones you repeat. Read lots of books, build a solid group of business owners around so you can get solid advice, learn from their mistakes – they’ll only be too willing to share some war-stories.
Take care of yourself – stay healthy
If you’re like any other serious business owner you will work lots of hours. Starting at 9am and clocking out at 5pm will be a thing of the past. Having order to your day, a fitness schedule, eating the right food at the right time could also fall by the way side. I don’t advocate working 70, 80, 90 hours a week but you will work long hours and you can lose balance to your lifestyle. You must take care of yourself. At the beginning, you are the business. In the early years if you get sick no money comes in, so eat as best as you can, exercise as best you can, try to keep balance. Starting a business is a marathon not a sprint.
Cash is King!
….it really is! Watch every penny. Invest wisely. If you run out of cash you’re business will die. Learn early on that you can be profitable and run out of money, so keep an eye on where your money is, on how much you need to stay solvent in the early days so you can keep your business healthy. A great piece of advice I got very early on is that it takes 3 times as long and 3 times as much money as you think it will to start up a successful business. Wise words.
Be Honest – Where’s your integrity?
Don’t fall into the trap of making false claims about what you have and what it can do. You will want sales, you might even be desperate for a sale. If you tell little white lies to get a sale it will come back to haunt you. If your product does something great, say it. If it doesn’t say it doesn’t. Honesty is the best policy. Don’t put down your competitors, this is bad karma that will come back to bite you. Even if your competitors are complete rubbish it’s not for you to point that out. Let your product or service shine on its own merits.
Re-invest
When your business starts making profits there is a huge temptation to take a big pay-day in recognition of your hard work and efforts. Yes rewards yourself, yes take a pay check, but don’t starve your company of valuable cash. Re-invest in your sales & marketing machine, invest in smarter technology for your admin and operations. Re-invest ‘til you can’t reinvest anymore.
Summary
All of the points above are from personal experience and lessons I’ve learned from other business owners. It’s an exciting time with wonderful prospects. It’s never been a better time to bring a valuable product to the marketplace. Surround yourself with smart people, because smart people make smart decisions.
How To Grow Your Business
The secret to growing a successful business is that there is no secret. That might sound very strange, but the simple fact is that those who create a successful business that grows year-on-year follow a simple set of steps, they do it continuously, they measure their progress, they adjust the plan when needed and they do it relentlessly. The statistics suggest that less than 10% of businesses reach this stage. I have found that the businesses who do not achieve this are missing a few key things. They have no plan. They don’t measure or review their progress. They never adjust their direction. And finally they never ask anyone outside their business for their opinion.
What’s Your Plan?
I’ll bet you’ve had lots of them, they’re put together in your head and almost always stay there, most likely developed when you’re between doing things because you never have time to take a few hours out and develop a really solid plan that might have a chance of success. If you are serious and want to grow your business STOP! Put 2 hours in your diary right now for later this week to start developing the plan. A 1-Pager, anything longer than that will never get put into action. If you’re thinking that you don’t have any time then fine, but stop kidding yourself about growing a business. Having no plan to guide you in growing a business is like driving to somewhere you’ve never been without a map.
Measure, Review, Adjust
So you now have a plan, or you’ve always had a plan. How many times then have you ever taken this mythical plan out to review its’ progress? Having the plan is only the start. You must review your progress on a continuous basis. You will have to adjust the plan, you’ll have to change it, because no plan is never perfect. This requires discipline. All businesses who have successfully mastered this, measure key indicators like sales and costs. They have monthly accounts so they can review their financial performance. They don’t run their business on a cheque book and a bank balance. They know when turnover is up or down, what causes it or they go find answers. They don’t let the economy decide whether they have had a good month/quarter/year. They drive the company bus, they are not a passenger on it.
Be Relentless
You must plan, review, adjust, execute. These are the steps. You must do this continuously. This has to become a habit in running your business. It will become tiring so you will need help along the way, maybe one of your managers, maybe a partner but someone must accompany you on the journey because you will need help, encouragement, a sounding board. The relentless pursuit of your goals will result in a positive outcome, but it won’t be easy and it won’t happen by itself.
Summary
None of the above is easy, but then again having a business that doesn’t produce enough sales or profit isn’t easy either. In fact it’s miserable. You might say “I’ve had plans before and they didn’t work”, and you’d be right. But was it the right plan and did you implement it, were you relentless or did you have help along the way? You now have some of the tools to help grow your company, it’s up to you to use them.
How To Get Your Employees To Embrace Change
I don’t know what point you’re at, maybe you’re just about to start a change program in your company, maybe you’ve tried to introduce change into your organisation many times before and for some reason your employees “never really get it”. Whatever the reason, you are now looking for practical solutions to help you.
It’s been my experience that change does not stick in an organisation only because of a few things – it’s never really committed to by the management (YOU), it’s always “dumped” on the employees, or your employees don’t feel part of the solution. If your employees feel any of the above they won’t move with the change and will resist, the result being things never really change.
Management Are Never Really Committed
As the Owner or Manager bringing the change you need to ask yourself the hard question, “Are you fully committed?”, if yes then great, if no then you could be a large part of the reason change never sticks. If you’re great at coming up with the ideas but poor on the follow through then get someone else to help you with the implementation. But be honest with yourself, if you are not going do things different with your commitment level then don’t expect your employees to believe you, this time.
It’s Always “Dumped” On Us
Most employees believe that ideas hatched in the boardroom (or your office) always end up as their problems to deal with. Whether you agree or disagree with this point, it is their reality. You need to be bought into the change. Where possible you need to lead the change, and always you must follow the new processes or procedures, because if you don’t your employees will be the first to let you know, and once they see you bending the new rules they will say, “if he/she is not following the new stuff, why should we?”
Your Employees Don’t Feel Part Of The Solution
This is probably the most important point. The last people in the business to typically find out about change are the employees, after “MANAGEMENT” have carefully put together the PLAN with no input from them. Once you or your senior team have decided change needs to happen, engage your employees (at the appropriate level) in coming up with the solution. This will guarantee that the solution will be the correct, employees will feel it’s their solution and therefore will support its implementation and will ultimately feel their opinion does count and that they are being listened to.
Summary
Lead from the front, if you can, if you can’t get someone in your organisation that can, but don’t abdicate the change!. Whether you like it or not, your employees need to feel part of the solution. When they do great things happen, when they don’t – change in a business is a mess.
Delegate And Manage (Don’t Abdicate) – Why Small Business Struggle To Grow
Written by Fergus Doyle – The Business Troubleshooter
One of the biggest mistakes business owners make when trying to grow their business is that they hire people expecting them to have a work ethic and performance level similar to themselves, and they expect the new employee to know what to do. New (and all)
employees need direction and managing, because they are employees. If they were like you they’d be business owners. Now that you’ve decided to grow your business you must do the following:
All Employees Need a Job Description
This might seem a bit of a “No Brainer”, or you may think that it’s a waste of time. The single biggest reason employers become frustrated with their employees is that the employee does not do what the owner expects of them. The biggest reason employees (in general) don’t do what is expected of them is that they didn’t know or have never been told what exactly to do. So you must have a clear and unambiguous job description. This serves as a reference point for both you and your employee.
Measure and review
Once expectations have been set, in order to get the best out of an employee, they need feedback – at all levels, from the lowest to the highest position in the Company. “Why even bother to do this” – the simple reason is that if you don’t you will become busier doing more of your employees work, and your business will suffer, and stall, or worse still, retract.
Manage Don’t Abdicate
Most owner managers I come across hire a new employee and ”let them loose”, assuming they will do the right thing. Whether you have 1 or many employees you now need to become a good manager and leader. “That’s not my thing” – fine, but you must have some one in your company whose “thing it is”, or chaos will ensue. Even then “they” the manager must be managed, and that’s part of your function in the Company.
Summary
You need to set the example for your employees’ right from the start. The skills of an Entrepreneur are very different to growing and
managing a team of employees. Generally, when employees are clear on what is expected of them and are told how they are performing they do a fine job. When that’s not the case you end up doing all the bits they don’t, increasing your stress and frustration levels
