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Overcoming 5 Challenges to Keeping Your Head in Tough Times

September 9, 2011 By Leave a Comment

What Goes Up Must Come Down

Sir Isaac Newton statue from Trinity Chapel. Photo by Harlequeen

Sir Isaac Newton proved it. David Clayton-Thomas wrote about it in the “Spinning Wheel” song. BS&T (Blood, Sweat & Tears) and Dame Shirley Bassey covered it in their albums.

Songwriter & singer Dame Shirley Bassey

How many ups and downs has your business experienced? Since we started our business, we have been through seven ups and downs – oil, banking, real estate, savings and loans, dot.com, Wall Street, and now real estate again. It has caused us to refine and redefine our business at least that many times.

If it’s a part life, it does not make sense just to try to survive this one because another wave is coming. If you own a business, the wave that could take you under could be something global like this “Great Recession” or something unique to you and your business. So be watchful; be prepared.

At the Business Success Center, we have identified five potential challenge areas that are always out there:

1. Economic

2. Environmental

3. Political

4. Social

5. Technological

What’s happening now? We are being hit by all of these all at once or so it seems.

What are people doing? Some are giving up and calling it quits. Some are digging in and just trying to survive  —  to just be able to “stay” in business. The successful ones are looking for ways to thrive.

What do you choose? Give up, give in, or stay in?

Keeping Your Head

Rudyard Kipling wrote his poem “If” in 1895 but it was not published until 1910. It’s a litany of actions to take to become a man (or woman). I think it’s also a useful guide on how to have a successful business no matter what is happening in the world outside or inside.

So how do you keep going when others are losing their way and people are blaming you?

It starts with confidence. This makes sense. After all, confidence in you (your product and service solutions, your staff, and how you do things) is the prime reason someone decides to buy something from you. No confidence, no sale — end of story.*

Step One: keep your head no matter what others are doing. Don’t just be confident you can survive, envision yourself as thriving. Pass on this confidence in your ability and skill to overcome any challenge that comes your way. Be confident in staff and customers, too. Confidence is contagious; spread it around.

Can you trust, wait, dream, think?

People buy from you because they trust you will provide them with the level of quality, service and selection they expect. Because you give them what they want not just what they need, they’re willing to pay your price and be glad it’s not more.

Owners who thrive in tough times are what authors Albert Bernstein and Sydney Rozen describe as “Believers” in one of my favorite books, Neanderthals at Work. It is an oldie but a goodie. (Buy it from your favorite local independent bookstore but they will have to order it.) This term does not have to do with a religious faith but in the thought that some people believe there is order, rules that matter and following those will make you successful and proud of it.

How do you demonstrate this?

You trust in yourself. You are willing to wait and see what happens. You think and plan ahead because the world turns and the best will rise again. You dream big and take actions that are counter intuitive to those who are quitters or just survivors.

What do you do, Little Red Hen? While Chicken Little** is saying the sky is falling, do you get out there and “Just Do It” ? Do you keep thinking how to work smarter not harder?

Here are some good “Thriver” choices. Dreaming, thinking and trusting are required.

1. You don’t cut prices or quality. You do contain your costs by setting up processes and systems that make you more effective and efficient. You may even raise your prices and get a better grade of customers.

2. You spend more on marketing. But you do it more efficiently. And, you do seek out alliances with other like-minded businesses and organizations.

3. You don’t cut back on staff. But you do get rid of the dead wood or at least rearrange that wood to light them up and get a roaring fire going instead of just fizzling out.

4. You become more selective in your customers. You go for the platinum and gold customers™ and dump the lead, concrete, and radio active waste customers™.

Risk Takers

“If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;”
(From “If” by Rudyard Kipling)

Banks, the government and non business owners think those of us who own small businesses are too volatile, too much of a risk taker. Just plain crazy.

I can tell you in working with owners of product and service businesses from accounting firms to zoos, we are the most risk adverse group on the planet. Any risk we are willing to take only happens after we have examined the other options and trust we can take an “informed leap of faith”.

If we guess wrong, then we usually start again. You can do that relatively easily in the US and even easier in Texas that is famous for being a “boom and bust state”.

In many parts of the world you “lose face” or even your life if you close your doors. By the way, even in tough times, most small business do not “fail” (close due to nonpayment of bills). They close the doors because the owners give up. They lose their dream, their trust and confidence in themselves, and their will to go on.

In the end, it’s your choice

As Kipling says,

“If you can meet with Triumph and Disaster
And treat those two impostors just the same;”

And

“Or watch the things you gave your life to, broken,
And stoop and build’em up with worn-out tools;”

And

“If you can force your heart and nerve and sinew
To serve your turn long after they are gone,
And so hold on when there is nothing in you
Except the Will which says to them: “Hold on!”

“Yours is the Earth and everything that’s in it,
And — which is more — you’ll be a Man, my son!”

You WILL always be a thriver, not just a survivor.

Author’s Notes:

*In experiments, researchers found they could influence the education outcome by telling the teacher ahead of time that a student was bad or good. Confidence does have consequences good and bad. We are talking here about honestly feeling positive about what you do for customers, your community, and others who count on you.

**If you are interested, the Chicken Licken or Chicken Little story comes from the Jataka Tales of Buddhist folklore not Aesop’s Fables and Little Red Hen is most likely a Russian folktale. I am confident that you will impress others with these bits of trivia and be well on your way to a more successful you.

Here’s to your long lasting success!

How do you thrive in tough times? Share your experiences. They could help the rest of us when we need a little inspiration.

Filed Under: Business Management, Business Process, Leadership, Planning & Vision, Pricing, Sales, Small Business/Entrepreneur History Tagged With: , , , , , , , , , , , , , , , , , , , , , , , , ,

2 Ways Your Business May Be Guilty

July 29, 2011 By Leave a Comment

Franklin was right. Photo by Paul Hudson

In 1789, Benjamin Franklin said in a letter that there are only two things you can be certain of death and taxes.

He was certainly right about the taxes. Especially sales tax. We are hearing from clients and accountant colleagues about the increase in sales tax audits. These are turning out not to be friendly, let’s talk audits but somewhat nasty, prove you’re innocent audits where the assumption is that your business is not paying what it should.

The real issue is not whether you’re paying but whether you’re collecting, then paying. Since that’s what you are really doing. You’re the Sheriff of Nottingham and Prince John wants his due.

We are recommending to our clients that they actually pick up the phone and talk to someone at the Texas Comptroller’s Office. Their mission, should they accept it, is to validate what products and services they offer that are taxable. And, collect and pay the taxes of course.

This is not something you do once and forget. State legislatures in tough times move the goal posts to find “lost” revenue and a smart business owner is right there, ready to go. It’s very likely that what you thought was not taxable is now or at least part of it is. Their position, quoting the Texas Comptroller is “State Sales and Use Tax is imposed on all retail sales, leases and rentals of most goods, as well as taxable services”.

The second guilt for a business is payroll taxes. You are guilty of having employees and needing to pay taxes on them unless you can prove otherwise.

Even though people and bookkeeping software refer to “Contract Labor”, there’s no such thing. There are only employees and contractors.

As I heard every time attorney Tommy Simmons from Texas Workforce Commission spoke at my Street MBA and Owners MBA programs, no one can “sign away” their rights to be classified as an employee. So, don’t think you can ask someone to sign a paper that says they’re not an employee.

Everyone is an employee unless you can prove otherwise and that’s tough. There are 20+ ways to recognize you’ve got employees that are spelled out in a grey way by the IRS and Workforce. They look to see how many of those apply. If enough do, that person is an employee.  In general terms, the IRS says what matters is if the employer has the legal right to control the details of how the work/services are performed.

There is some information on employee vs contractor at the IRS site. We refer owners to Especially for Texas Employers that has a great section on the issue by Simmons who has been a business owner himself. Pay special attention to Appendix D & E which have a test that the IRS and Workforce apply.

So, be wary and prepared.

Have a happy Sales Tax Holiday, August 19-21 when you get a break as a consumer or business from state and local sales taxes on purchases of clothing, footwear, backpacks and school supplies priced at less than $100.

Filed Under: Business Management, Business Process, Financials, Government Legislation Tagged With: , , , , , , , , , , , , , , , ,

How Legacy Pricing™ Works

July 19, 2011 By Leave a Comment

Knowing where you're going is a great legacy. Image by TW Collins

There’s nothing wrong with Cost-plus or Value-based pricing when they are done right. Both are good strategies but incomplete in my opinion.

In the case of Cost-based pricing, basically you look at the costs and then add a percentage for profit on top of that number to arrive at a price.

In my experience, those who set the prices don’t know, forget, or leave out costs that they shouldn’t. Sometimes it is the cost of the salary of the principals or putting in enough for contingencies. Just as often they don’t include all the costs involved in being able to provide this product or service before and after getting customer #1. Then there are the true total costs to support and maintain this customer with this product or service.

Business owners who set or agree to the prices based on costs get overwhelmed and under-price. I have a client who is launching a new product and thought it had cost about $10,000. Once we did the numbers (we did not include lost opportunity costs but real numbers), it was closer to $55,000. It was not even launched yet.

I think Value-based pricing is a better strategy. It incorporates the costs and the value this product or service provides the customer. If all the true total costs are accounted for, then determining what the customer gets out of it, should be relatively simple. Market research, competitive analysis, and usability testing gives you a place to start.

It does depend on identifying the right value for the customer. What most people who use this technique to arrive at pricing don’t do  is spend enough time on identifying the best customer, the most loyal customer who brings the most value to the business.

However, a strategy that does more because it goes beyond both is a new concept, “Legacy Pricing”™.  It doesn’t just look at the past or the present, but really focuses on the future. The future of the company is its legacy and it’s too often forgotten or glossed over when it comes to pricing. Without a legacy, nothing goes beyond day-to-day and the value of the business is reduced even if it survives.

Legacy Pricing™ is a better choice for these times because it’s more complete. It includes cost and value. It includes profit and contingency. It deals with value identification, but it also takes pricing and relates it to a timeline in a meaningful way. The timeline for pricing should make sure the business shows it will maintain its value down the road for any subsequent transfer or expansion.

Using Legacy Pricing™ means using other best practices.

  1. Price for your legacy customer, using what I call a Platinum Profile™ .
    The latest research suggests that about 15% of your customers account for 55-70% of your total sales. Price to keep loyal customers not just any customer and not just to get people calling or coming in the door. My platinum profile™ system lets you really know who to focus on and who to eliminate. It includes demographics, psychographics, risk tolerance, decision-making style, purchase behavior, and the “game” they play. Price for them and you won’t leave money on the table and you won’t exceed their “pricing flinch point”™. (The point at which you can see a physical reaction to the price you name.)
  2. Price for positioning, now and in the future.
    Don’t forget where you’re going and who you want to go with you. One of the biggest dangers of discounts, coupons, etc. is that it ruins the positioning that you have established. No longer are your products and services the best, Why do customers feel like that? Because the best products provide the extra quality and value that takes time and effort. If there’s not enough time to provide this or enough quality staff, then your customers will see you as just “one of the group”. And, worse, not worth they loyalty to you. There is one universal truth: you can’t “steal” a happy customer. Loyalty and feeling special makes them feel like they belong and they will stay.
  3. Make sure the right person does the pricing and determines any exceptions.
    If you have to do the pricing, have someone other than you review it. If you have partners or staff or hate dealing with pricing, have all those who work with the product or service give you input. Then do your market research based on that legacy customer and re-check your numbers. See if it will support the positioning you have and the positioning you want to maintain. Finally, it’s better to still get someone not connected with your business to review what you’ve done and ask the hard questions.

I am proud to be the inaugural speaker for the new San Antonio Business Owners Meetup sponsored by the Business Bank of Texas. I will be talking more about legacy pricing and how to make sure you have a future. The meeting will be held Thursday, July 20, at Pappadeaux Seafood Kitchen, 76 Northeast Loop 410, San Antonio, TX. For more information or to register to attend, please go to http://www.meetup.com/The-San-Antonio-Business-Group/. I hope to see you there and get your insights into the best practices you are using for pricing.

If you have questions about your pricing or comments about legacy pricing™, please comment below.

Filed Under: Business Management, Business Process, Financials, Pricing Tagged With: , , , , , , , , , , , , ,

Want a Mentor? Look around you.

March 2, 2011 By 3 Comments

Business Success Center prospects tell us in their initial meeting they want a “Mentor”  to advise and guide them to solve a specific problem or achieve a specific goal.

I completely understand. I’ve had several wonderful mentors. My godmother, Northwestern University professor Alvina Krause, had “teas”. At these salons, I learned the fine art of  conversation. My grandmother taught me the importance of family. My mother  helped me find my voice and be comfortable being myself. She always said “we grew up together”.  Maybe so, but she was my guide.

There were important male mentors, too. My brother Bill (aka WC Triplett, II) has worked for Presidents and Senators, Tibet and Tiananmen, written best sellers and significant treaties. He showed me how important it is to get involved. Ed Van De Vort  gave me confidence because he believed everyone was capable.

But when it comes to a business mentor, there’s been no one better for thirty years than my husband and partner Daniel Diener. That’s what I told Patricia Rogers when she interviewed me for the Austin Business Journal‘s “Journal Profile” published last December.

As a matter of fact, I met Dan because I needed a mentor for a photography project. He has always been willing to share his time, knowledge and expertise.

A good mentor is a guide, encourager, teacher, strategist, supporter — an exemplary person you want to emulate. That’s Dan.

What have I learned from him?

1. To be entrepreneurial.

Dan was selling papers on a street corner in downtown Chicago at age 10. When he lost his job, he moved south to start again. He landed at PETEX (Petroleum Extension Service at UT) made movies, wrote manuals that were translated into 15 or so languages, and became Special Projects Director. When the bug bit again, he started his own company, Dan Diener Photography. I was not a risk taker. He showed me you can succeed on your own. Dan was and is an innovator. He truly understands what it means to create assets that make financial and marketing sense.

2. To be systems driven

Dan was a teacher in Wisconsin and you never forget that you have to stay ahead of your students. That means being organized and systematic to the Nth degree. With his creativity that meant that he is always looking to improve things without being rigid. I learned from him how business systems can be very creative and rewarding.

3. To know how to fight fairly

In a business, partners don’t always agree. Just ask Marsha Vanhorn, our Client Services Manager, who’s worked with us 12 years. Early on, Dan helped us set rules of engagement. He prepared us for tough times. And, we’ve stuck by them through thick and thin. I think that’s why our business and our relationship has survived and thrived. The funny thing is though, somehow when we disagree, even strongly, he always makes me smile. He has a great sense of humor and it just bubbles out in what he says and how he says it. I also thank him for introducing me to the O’Henry Pun Off, a great Austin, Texas tradition. (Maybe I’ll see you there on May 21.)

There are so many other things I have learned from him: versatility, resourcefulness, staying curious, balance, strength, and comradery. I couldn’t have a better mentor and partner. He means the world to me.

Dan’s birthday is this week. I wish him many happy returns and a big thank you for helping make my personal and business life exciting, rewarding, and very special.

Here’s to you, Daniel.

If you want a mentor, look around you. That person may be closer than you think. Who has helped you learn or progress?

Filed Under: Business Management, Business Process, Planning & Vision, Resources Tagged With: , , , , , , , , , , , , , , , , , , , , , , , , , , , ,