Do Your Customers Fight Like Cats and Dogs?

by Dr Greg Chapman, MBA

One of the most popular articles I have ever written was Are Your Customers Cats or Dogs? In it I warned that businesses can have both Feline (High Value Customers) and Canine (Budget Customers) but you need to ensure that you keep them apart. After all, we know what happens when you put Cats and Dogs together. (I am talking about market segmentation!)

If your segmentation is poor, you find that your customers are looking over the fences and seeing that the grass appears greener on the other side. Perhaps your budget offer might appeal to the customers you previously thought to be premium.

In market segmentation, I often like to compare Qantas and Jetstar. Both, of course are owned by the same company, but one is cheap and cheerful, and the other is focused to the business traveller. While the business traveller is still cost conscious, they want reliability and flexibility. Jetstar does not offer this, with delays far more frequent.

However, within Qantas you have a choice of classes, within which the Jetstar vs Qantas reliability does not exist. Whether you are at the front of the plane or the back of the plane, you arrive at the same time, even though it may take you a bit longer before you are at the taxi rank.

For international flights, this becomes even more difficult to justify in the difference between Business and First Class especially since fierce with competition Business today, is as good as First ten years ago (the margins were very high). About the only reason you would fly First internationally today is because you can’t afford your own private jet (Loser!).

So now we see Qantas is dramatically reducing its first class offer. As a result of competition, the segmentation between First and Business has collapsed and companies find it harder to justify the premium for First except for the very top executives.

How does this relate to small business owners, who are still weighing up the cost of Jetstar vs back of the plane Qantas? In fact it does not just apply to small business.

There was a situation where there was a confrontation between the Australian Government and Bonds on closing down an Australian plant because high union rates of pay had made them unprofitable, and they transferred their production offshore. There was an awkward situation when the minister and the CEO where on the same plane. However, there was no meltdown on the plane, as the minister was seated in first class and the CEO was travelling economy. (Your taxes at work.)

For small business, the message is that if you have both Feline and Canine customers, that they can’t look over the fence. While you have competitors, it is unlikely to be as ruthless as the international aviation industry which is highly subsidised and dysfunctional.

So you can offer both Premium and Economy services, just as long as you can keep the cats and dogs apart.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Breaking the Link between Cost and Price

by Dr Greg Chapman, MBA

Businesses often use simple formulas to calculate their prices. Usually based on some on some mark-up, so in a store all items might be priced with a 60% mark-up on cost with the 60% covering wages, overhead, and hopefully profit.

In a businesses where prices are easy to compare, this practice is rife, but for more complex services or businesses which package their products in ways that can’t be compared, this restraint need no longer apply.

Many years ago in Melbourne, I heard Kevin Dennis, the used car king, being interviewed about how he started in the auto industry when he left school. He always had a passion for cars, and had the opportunity to be interviewed by the principal of two different car dealerships for a job. One was a new car retailer, and the other was a used car dealer.

He found out where they lived and saw that the used car dealer was far wealthier than the principal of the more prestigious new car business. Which is why he went into used cars.

New cars are commodities. Used cars have histories that make them difficult to compare and value, and so the margins are far higher. The used car dealer also gets to bargain twice, when buying and when selling. Quite often a new car dealer can make more money from the trade-in at their associated used car lot than they can from the new car where margins are fixed.

Pricing on value also depends on being able to sell to those who value the utility of the product rather than the cost of supplying it. This is beautifully illustrated in the video below (caution some mildly strong language).



While this is of course exaggerated, a similar shop in a less wealthy area with the items poorly presented would not be making the margins of the store in this video. Environment, presentation and packaging are all important elements in the establishment of value.

These are just some of the steps to take to break the link between cost and price.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

How Do You Charge Your Customers?

by Dr Greg Chapman, MBA

We had just finished a meal at a restaurant, which while quite reasonable, was not otherwise memorable. The bill came to a little over $100. I would have normally left a tip of around 10%.

As we were on holidays I wanted to preserve my cash, so I offered to pay by credit card. It was then I was informed, that yes they did accept credit cards, but there would be an extra 1.5% charge added to the bill.

This restaurant was in a resort area (in Australia), and none of the other establishment we had visited had charged extra for credit cards. For them it was just seen as a cost of doing business, with a recognition that people were more likely to buy something if they did not have to pay cash.

As someone ‘in the game’ I like to look at what is done well, and what is not. If it is done well, I like to recognise it, if not, I like to recognise it.

So I made the point that I would have been happy to have paid a 10% tip, but since they were slapping a 1.5% charge on the bill that no other restaurant did, I did not think any further additions were necessary. So they lost 8.5% by trying to recover 1.5%.

These sort of imposts just annoy customers, especially if you are the only one doing it. Phone companies can do this as all their competitors do it, and their margins are nowhere near the size of those of a restaurant and savings on credit card costs are a significant bottom line addition for them. Further, they offer many other payment options other than just cash. Phone companies even charge you for sending you their invoices, because that is the standard. This leaves the field open to a company that offers a service with no extra charges as a point of difference!

For the restaurant, the equation is different. Do they think that they will save more money by applying this charge than they might lose by turning off customers? If they were concerned about the 1.5% credit card charge, why not just put up their prices by 1.5%? Do you really think that someone would cross the street to another restaurant because their prices were 1.5% dearer? Could they even tell, given that the menu was unlikely to be similar enough to compare prices?

At a restaurant, the meal is meant to be an experience. As you leave in good humour, and perhaps a little light headed after a glass or two of wine, you don’t want to affect the tip because you appearing to be cheap (particularly if your average bill is around $100).

Personally, I am happy to take most credit cards in my business, even Amex with its 3% fees! I want it to be as easy as possible for clients to pay me. (As an aside, I used to accept Diners Club, but only 1 person in 3 years ever used the facility, but boy was he excited to find someone who actually took the card. Perhaps I should have charged extra!) I believe these charges are a small price to pay to complete the sale.

Costs are always important in any business, but the way you charge can affect your image almost as much as what you charge.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Owners Get Lost! And Grow Your Business.

by Dr Greg Chapman, MBA

An Interview with Dr Greg Chapman on taking time off for small business owners. The interviewer was Donna Page of Nett Magazine.

Q. The experts say taking a break is essential for mental well being and family life- how difficult can this be for small business owners?

Most small businesses depend on their owner’s being there- when they are not nothing happens. The staff look to the owner to solve all the problems and the owner brings in the business. So if the owner is away, sales fall and problems requiring the owner’s attention can’t be fixed until they return. That’s why so many businesses close over Christmas- it is the only time the owner can get away, and their staff must take their leave then as well.

Q. Can you please detail some reasons why small business operators don't take breaks?

Most business owners are micro managers- if they give someone else the work, they mess it up, and the owner spends twice as long fixing things. So that get in the habit of doing most things themselves, and anything they give to staff, they have to look over their shoulder to make sure that things are done they way they want. Even if they only go away for a short time, things don’t get done properly.

This is the owners fault as they don’t have systems in their businesses so their staff can run things when the owner is absent.

Q. From your experience, what are the problems associated with small business owners who do not take breaks and do you believe many do take holidays?

If the owners don’t take breaks, they end up burning themselves out. So most do take breaks, but their businesses do suffer when they are away.

Q. What strategies can be put in place by small business owners to ensure breaks are taken?

If owners put in place systems in their business, they can give much of the work they presently do to others. They also need reporting in their businesses to ensure that the work is being done when they are not there. All big businesses already have systems and reporting in place- or else they would still be small.

Q. Is slowing down the business a good strategy?

If you mean slowing down the business so they can take a break, that’s a cost to the business. So while the store is closed for business, you are still paying rent. If you can keep it open, and have staff properly trained in your systems, you can be making money while you take a break. After all staff get paid when they are on holidays, so why not the boss?

Q. If the owner takes a break, how can that help their business?

There is an old saying that owners need to work on their business rather than in it. When they take a break, they are not faced with the day-to-day pressures of their business. This gives them time to think. Not just about their business, but also their life goals. The break will also allow them to re-energise. Owners tend to come back from breaks with a new ideas and a new enthusiasm to implement them.

Q. What are the top 5 ways to make sure you get the break you deserve.

1. Start to delegate as many tasks as you can to your staff
2. Monitor your staff’s performance and provide training to support them
3. Create reporting systems – what gets measured gets done.
4. Have systems for all tasks in your business
5. Take short breaks before trying to take a long break

Q. Any final thoughts?

Don’t be afraid to ask for help. Remember all big businesses started as small businesses facing all the problems about taking leave from their business that you are. Everyone of them would have sort advice at some stage. Yes you will have to work to put all this in place, but then, you can take a holiday!

Learn how to make your business run without you Then you can Get Lost when ever you feel like it.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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A Winning Business Strategy - Losing

by Dr Greg Chapman, MBA

Can you imagine a strategy for your business where you deliberately decided to come last? Does that sound crazy?

Most businesses struggle with strategy. Strategy is poorly understood and even more poorly executed. Strategy is all about positioning and not trying to win, or hit a six on every ball. Sometimes it is about surviving until the right ball comes your way, and then hitting a six.

That’s the strategy that Australian Steven Bradbury adopted in the final of the men’s short track skating in the 2002 Olympics. Australia had never won a gold medal at the Winter Olympics. In the pool we are great, but on the snow, we are like the Jamaican bobsled team in Cool Runnings. Our tallest mountain would be regarded as a foothill in the Swiss Alps, so our winter athletes have none of the natural advantages that the athletes in cooler countries have.

Under these circumstances, reaching the final was a great achievement for Bradbury, but he knew that he would be the slowest in the next race. He knew that on most occasions his competitors could out race him – but he also knew that in this highly aggressive sport, collisions were frequent. He was just hoping that if there was a collision taking out 2 of the skaters, he could pick up a bronze just by staying clear of the collision by holding a position at the back of the pack and waiting for his chance.

In this event, however, four skaters went down, and he was able to skate past all the fallen competitors to pick up the gold!



If this race was held again 10 times, in all likelihood he would not have picked up any medal nine of the times. He knew he could not win in a head-to-head competition with his more experienced rivals in playing their game. He would simply exhaust himself. So he played a different game. Not one that would work every time, but one that would work often enough to make it worthwhile for his more modest and realistic ambitions.

Having seen how the top skaters raced, he identified a weakness that he could exploit by positioning himself. It was not a strategy for the top ranked competitors, but one a competitor with less capacity could adopt.

Do you have a business strategy that allows you to compete with your bigger rivals, that exploits their weaknesses rather than trying to take them where they are strongest? One that does not exhaust your resources while you wait for your chance? If you deplete all your resources playing your larger competitors’ game, you will have none left to play yours.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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How to Get the Best Marketing Advice for Free

by Dr Greg Chapman, MBA

Is there an elephant in your industry? There is usually at least one. They spend $100,000’s on branding, customer surveys, demographic analysis and focus groups. They spend even more on campaign analysis, testing and measuring to work out what works and what doesn’t. If you are a small guy, how can you compete with that?

Well you can. Just become a flea on the elephants back. That is what “Crazy John” Ilhan did. In retail, probably the most costly decision is your location. Go for a low cost location, and you get no traffic. If you go for a high cost location, and it is the wrong sort of traffic, you go out of business. Rather than spending a lot of money on geo-demographic surveys to identify customer shifts, he waited for Telstra or Optus to open a store in a new expanding area, and then open a store opposite and offered every passer-by lower prices.

By being a flea on the elephant’s back, he let the elephant take him to the fertile feeding locations they had spent large sums identifying.

So how might this work for your business? Perhaps you have a motor mechanics business with half a dozen staff. You don't see yourself in competition with BMW, and BMW certainly doesn’t see you as a competitor. You worry about the guy who is about the same size half a kilometre away. So you spend your time checking out what he is doing. This will probably result in a me too strategy, and ultimately the death spiral of a price war.

Alternatively, you could look in another direct. You could pay the same high price marketing company that BMW uses for advice, or you could get that advice for nothing. Drop in to the local BMW service centre and look around. See how clean their service area is. Check out their comfortable waiting rooms. Look at how their staff is presented. BMW spends millions on developing their image.

Now how difficult would it be to give your garage a lick of paint. Supply clean uniforms for your staff. Clean up your waiting room and put in today's paper and a coffee machine? How much do you think that would cost you? Probably $1-2000.

You are still not trying to compete with BMW, just to learn from them. When you start to apply these ideas to your business, the guy down the road won't even be in the game. You will probably even be able to lift your prices! Savvy marketing does not mean high cost marketing.

It is always the little things that make a difference, and you can get all this high price marketing advice for nothing by just opening your eyes and turning your head in the right direction.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Defining Your Customers

by Dr Greg Chapman, MBA

An important part of any small business' marketing is understanding the nature of their customers. Are your customers Cats or Dogs?

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Never Forget Marketing 101

by Dr Greg Chapman, MBA

So Chicago lost the Olympics. What happened? Clearly there was a lot of backroom manoeuvring - offers made, deals done. Then the US President and his wife attended the final IOC pitch to seal the deal. What did they then do? They talked about what getting the deal would mean to them. This was particularly the case for Michelle Obama.

They both forgot rule 101 in Marketing.

It is not about you, it is about your buyer. It is about everyone’s favourite radio station WIIFM.
That is: What’s In It for Me?

Now probably the deal had been done with Rio well before the Obamas arrived in Copenhagen, so the final pitches were just for show and the aggrandisement of the IOC. If that is the case, the Chicago bidding team did not understand the bidding process. If the deal was already lost (and clearly comprehensively lost to be eliminated in the first round) they played their trump card for nothing, and in the end, humiliated the Obamas. Do you think Chicago will get any support for future bids or favours?

The Chicago bidding team were clearly not listening to the signals. They would have been there. You have to remember in any bidding process, the buyer will want the losers to stay in till the end, so they can extract the best deal from the winner, so they would be saying encouraging things even if they knew you had lost. Before they played their biggest ace, the bidding team should have known that they had the deal whether the Obamas were present or not, and their presence was just a payment of respect to the IOC for awarding them the bid.

It appeared, however, the Chicago bidding team must have really believed that great speeches by the Obamas would get Chicago over the line. If the speech was the thing that was going to change people’s mind and win the bid, it was the wrong speech. While the Obamas have a lot of goodwill in the international arena, the IOC still listens to WIIFM. Even the international general goodwill the Obamas have is based on WIIFM.

It is useful for small business owners to remember the lessons that too often the big guys forget. The same rules apply, no matter who you are.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Advertising - Can We Live Without It?

by Dr Greg Chapman, MBA

Imagine you walked into a supermarket, and you recognised almost none of the brands. There was aisle after aisle of goods to purchase, and you had to stop to read every single packet to see whether you would like this cereal or those biscuits.

This could only occur if you had not been exposed to any advertising before you walked into the supermarket. In our current world, of course, that is impossible, as we grow up with advertising around all around us, but yet this has happened to me.

I have encountered this situation a number of times when I have shopped in a supermarket in another country. I had no exposure to the local advertising and was confronted by a large variety of brands which were literally foreign to me. I was overwhelmed by choice. A simple buying decision, which might have only taken me a few minutes at my local supermarket while I located my favourite brands of particular categories, was greatly extended while I tried to determine which of these new brands would satisfy my needs.

Without the advertising, I did not know what the benefits of each brand were. I couldn’t find out the ingredients without lengthy label examinations. In a number of cases I just opted for the cheapest because I didn’t want to waste more time.

This is an interesting experiment you can try if you are travelling internationally, and you are looking after yourself, rather than just living in a hotel where everything is provided. I believe you cannot understand a country if you have not done your weekly shopping in one of its supermarkets.

Without advertising, there would be no range. Most products would become commodities with no points of difference. There would be only the most basic features. There would be no niche products for special needs. We would be unaware of all the benefits. Prices would probably be higher as there would be no competition.

So when your product is discovered on a store shelf, or on your website, can your buyers readily determine the benefits your product provides and for whom and your points of difference? Is your offer clear, and do you have a call to action? Ideally when they have found your product, they will have already been exposed to your advertising, so the final decision is quick and painless unlike the confusing frustrating ones I had to make without the benefit of advertising.

Enjoy this wonderful paean to Advertising – but a strong language warning at around second 6, after which all is ok and very funny.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Making Your Business Run Without You

by Dr Greg Chapman, MBA

Most business owners waste their time doing low value work. They spend dollar time on penny jobs. Find out what brain surgeons do, and then change your business and your life.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Competing with Your Business Owner Customers

by Dr Greg Chapman, MBA

Let’s say your business was to supply landscaping materials to landscapers and then you decided to get in the landscaping business yourself as a side business. What would your landscaper customers think?

For materials may be as much as a third of the cost of a job. So when they see their supplier competing with them, they will believe that they will have a significant cost advantage over them. They would also ask: “Why should I be giving money to a competitor to take business away from me?”

Which is why, most businesses in this situation go out of their way not to compete with their customers, even accidentally, as can happen sometimes. For example, distributors will in most cases refer retail sales to their retail resellers, but sometimes they may end up supplying a retail customer who has had a poor retail experience.

However recently, Google decided to compete with some of its customers, and they are not happy! Fairfax and News, owners of Domain and Realestate.com pay Google millions of dollars for keywords to send searchers to their websites. Now Google wants to provide listings of real estate directly on google maps for free. This will directly undercut the businesses of two of its largest advertisers. Another issue will be poor quality control from this free service on the accuracy of these free listings with out of date information appearing as well as allowing scammers.

A former CEO of REA a competitor of Realestate.com said:

"Google is moving from being a search engine to a portal," he said. "Instead of sending you to other websites - which have paid money to be there on its listings - it is now serving up the end data itself. That then raises the question: why would you need to go to the other sites and why would they then pay Google money [for search key words].”

A Google spokesperson said they have received “great feedback”. I bet they have!

So if Google is giving this service away free, what’s in it for them? It is just one more free service Google offers to make it more difficult for competitor search engines to compete with it. Services such as free email, news, calendar, YouTube, and many others. As it expands, it will inevitably clash with those offering a paid similar service. If they are small, they can just ignore them, but it is more and more finding some hard boundaries and now Google seems to have taken the place of Microsoft in internet demonology and attracting the attention of the regulators.

If you are small like the landscape supplies business, there will be other suppliers who refuse to compete with their customers who will get their business.

There is a saying in business: “Stick to your knitting”. Business history is littered with examples of failures of businesses which tried to take over their customers knitting. While it may appear that the grass looks greener in your customers pastures, inevitably, there are just as many competitors grazing there as in your own paddock, and they will know much more about this paddock than you will.

Respect what your customers do, and help them be successful, and you too will be successful.

What do you think? Remember, the best commenters July 2009 will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Working with Your Business Owner Friends

by Dr Greg Chapman, MBA

While driving around I heard a song on the radio from my youth. I didn’t truly understand it then, but I understand it more today. Although it was not written about business owners, it has a message for us.

The song is about how we need each others’ help to get what we need and want. In business, this means finding others of a like mind who we can work with. For large businesses regulatory competition issues come into play…. and lawyers. Two big businesses can’t combine and work together without getting a lot of unhelpful attention. There are just too many stakeholders – which is code for people who want to tell the business how it should be run for their benefit, but are not so interested in its success as to want to invest in it!

Take the alliance between Coles and Shell, and between Woolworths and Caltex, there have been a lot of complaints by ‘stakeholders’, although not from shareholders! The biggest losers from this arrangement have been the independent supermarkets and petrol stations. Some argue consumers may also have lost, but after scrutiny by the regulators and the government’s ill fated GroceryWatch and FuelWatch schemes, evidence of that has been very difficult to find.

In small business, because we aren’t changing the marketplace, we can be far more creative. You can exchange vouchers with as many business owners as you want to extend your reach. You can work on joint projects and events. You can advertise in each others’ newsletters.

You can create a referral ring. A classic example of that is the wedding mafia. This often consists of a photographer, a printer, a florist, a venue, and an event planner. If any one of them gets a wedding, they all do! This type of arrangement could quadruple a small business’ reach, which is very difficult for big businesses to do in the same way.

These strategies are the most powerful ones available for small businesses. They cost little to organise, although they will take time to find the right partners and time to plan.

Remember a small business owner is never alone and when they work with other owners, they are far more likely to achieve the success they desire.

To be successful in business, all you need is a little help from your business owner friends.

(OK I admit it, this is just a thinly veiled reason for me to post a song that brings back happy memories. Enjoy.)



What do you think? Remember, the best commenters this month will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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How One Business Spends 50 cents to Make $100

by Dr Greg Chapman, MBA

The best earning marketing dollars are spent on your customers rather on advertising where the money goes to some media mogul. Consider this example:

Coles is currently offering to pay the GST on feminine hygiene products under the banner “Why should you be taxed for being a Woman”. Why are they doing this and will it work?

This is a fairly emotional appeal, but as a male I can be objective on this (he says quickly ducking to avoid sharp objects being propelled at him by the females in his life).

Clearly many women feel this is an unjust tax. It was very controversial when first introduced, although the then opposition and now government has done nothing to remove it.

Firstly, by raising this issue, Coles gets far wider coverage than their advertising would otherwise reach. It becomes a topic for talkback radio and newsletters like this.

Secondly, the actual cost for Coles on a typical product of value around $5 will be 50 cents. Given the tight margins in supermarkets, this might be most if not all the gross profit on the item.

Thirdly, it is most unlikely that a woman will visit Coles to buy these products only and go somewhere else to do her weekly shopping. In fact she is likely to get her $100 weekly groceries at the same time as the purchase of these products.

Finally, would someone change where they do their weekly $100 grocery shopping for just 50 cents? If the 50 cents off had been for razor blades or Cornflakes it would just be seen as another special, easily ignored, but in this case, Coles are appealing to women’s feeling of injustice, and some might just change to support the principle.

Will it work? As in all these strategies there is only one way to find out.

Can you think of a way of spending money on your customers to get them to try you?

Will you convert to Coles, or do you just see this as cynical manipulation?

What do you think? Remember, the best commenters this month will receive a $500 printer.

May Your Business Be - As You Plan It.

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Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Hope is Not a Business Strategy

by Dr Greg Chapman, MBA

A record $90 million lottery has been announced for this week. Half the nation are buying tickets. Even my normally very sensible wife has asked me to buy a ticket, against my better judgement (although that is not the first time I have felt I have had to acquiesce to such things in the name of harmony at home, and I am sure it won’t be the last).

As someone who regards themselves as having good analytic skills, I find lotteries are an affront to commonsense. The only way they are commercially sustainable is that everyone on average loses. However with the odd ticket in a major jackpot and our annual flutter on the Melbourne Cup this is just a bit of fun for us. It is not our financial strategy. We are not banking on it to pay for our retirement, and our investment in it is petty cash, annually less than a nice night out.

Unfortunately, all too often, a lottery strategy is the one adopted by many business owners. That is something will turn up. One of their ads draw will draw in a whale customer. That their business gets profiled on a family talk show resulting in a huge surge of business. Maybe one time they do get lucky- but what happens next?

In most cases, not much. They blow their luck (like most lottery winners) and are back to where they started, because they were not prepared for it. They may have been depending on the luck, but didn’t expect it to happen.

Samuel Goldwyn once said to someone who commented that he had a lot of luck in his business “I agree and the harder I worked, the luckier I got”

Now that is the kind of luck upon which you can depend.

Luck starts with a vision, but doesn’t finish there. It must be backed with a plan. A vision without a plan is just a dream. How many of those have come true for you lately?

Your strategy is how you bridge the gap from your current state and your ultimate objective. So write out the key things you want to achieve in your business. This might be more profit or just more time off. Next describe your strategies for bridging these gaps. These would include your Marketing Strategy, your Business Structure or your Operations and People Strategy. If there are gaps you can’t bridge seek advice.

When you add an action plan to these strategies you have what I refer to as the Five Pillars of Guaranteed Business Success.

So with the new Financial Year just commencing, don’t just hope that next year will be better, plan for it.

Or just buy a lottery ticket and hope.

All you need to do now is to Empower yourself and take action ...

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Are Your Customers Cats or Dogs?

by Dr Greg Chapman, MBA

Our dog is not particularly active, suffering as he does from a touch of arthritis, but he loves his food. If you give him fillet steak, or just plain dog food from the can, he eats it with equal gusto. He will eat what our cat doesn’t finish from her bowl. In fact if she throws any of it up, he will eat that too. He is just not that fussy. In fact the only thing we have found he won’t eat is brussels sprouts. (I can’t say that I can blame him.)

Our cat on the other hand is quite fussy. She is rather partial to mince topside- and won’t eat cheap cat food. It has to be the type of food you get from those small containers which are twice the cost of the larger cheap brands. If you put out something she regards as inferior, she will leave it… for our dog. She would never go near the dog’s bowl.

So what are your customers like? Are they cats or dogs? Are they only interested in the premium cuts, or couldn’t tell the difference between topside and reprocessed meat.

The problem many business owners create for themselves is trying to sell a service that only felines will appreciate and pay for to their canine clients and then are upset when they focus on price. There is nothing wrong with having canines as clients, but they will not appreciate and pay for topside.

If you have canine clients (and there are a lot more of them than the felines) make sure that your service is designed to meet their needs rather than your ego.

You can of course have both feline and canine clients but make sure the message you present to each does not confuse.

When you understand if your clients are dogs or cats, you will know what food they will appreciate and pay for and be able to keep them happy and faithful for many years.



All you need to do now is to Empower yourself and take action ...

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Comparing Your Business With Others

by Dr Greg Chapman, MBA

As a small business owner you probably regularly meet with other business owners. (If you don’t, you need to get out more as that is where the opportunities are.) However when you do, are you finding that when you leave an event you end up feeling disenchanted? Everyone seems to be doing so much better than you?

Are you comparing everyone else’s fiction with your own reality?

Think of it this way, if someone’s business was actually not doing so well, and in fact their sales had dropped significantly, do you they would tell everyone they know? Of course not as it would potentially make things worse for them. People don’t want to do business with someone who they think may not be around for long, so the talk is always positive and it is quite likely that many of the people who say things are just fine, are in no better shape than you.

Armed with this information, you can carry on attending such events with a fixed grin hoping that something will turn up from someone who may be even worse off than you, making promises to you that they will not deliver on. You can waste a lot of time at such events hoping for a big opportunity. It can be like someone who can’t swim hoping to be rescued by a drowning man.

Alternatively you can take matters into your own hands. If the things that you are doing are not working, you need to change them. Start to experiment more.
If you don’t know what to do you need to seek some kind of advice.

The Advice Catch 22

When things are going well, people don’t tend to seek advice. They see it as a cost (time & money) and don’t believe they need it. When times are tough, they need it but can’t afford it. Catch 22.

The correct approach is to regularly have a range of different sources of advice, from reading books, attending workshops or coaching. In the good times, you need to be prepared for the tough times. In the tough times, the need for advice is even greater.

While cash might be scarce in the tough times, if the person was convinced that advice they got would work, they would, of course pay for it. So how do you know it will work for you?

Here are some questions to ask:

-Are there others you are aware of that are doing well in your sector?
-Do you believe there is something they might be doing that you are not doing at the moment?
-Do you believe that if you could learn what they are doing, that you could also be successful?

When learning to drive a car, you start off being unconsciously incompetent. You really don’t know how hard it can be. Once you start to drive, you soon learn you need lessons. At this point you are consciously incompetent. If you answered yes to the 3 questions above, this is you. You know there are answers out there, you just don’t know what they are.

At this point you can decide to remain unconsciously incompetent and learn by trial and error (smashing up your car in the process), or you can get advice. People think advice is expensive.

Abraham Lincoln said; “If you think education is expensive, try ignorance.”

Advice is a catalyst to change, and if you change nothing, nothing changes.

What’s your Plan?

Dr Greg Chapman holds regular workshops for small business owners:
Visit www.events.fivepillarsbusinesssuccess.com

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

The Best Salesperson in Your Business

by Dr Greg Chapman, MBA

A common myth in which many small business owners believe is that all they need to do is find a great salesperson to be successful. They already know how to make great widgets, and they are really good at providing their service to their clients, but if they just had someone who is good at door-to-door to bring in new customers, their business would be brilliant!

The problem is to find great salespeople. On average, most sales people are average. By definition, half are below average! You can, of course train a new sales person, but if you are not great at sales, it will be the blind leading the blind.

You may find a great salesperson – they certainly exist. A great salesperson may be good at selling lots of things, but the thing they are best at selling is themselves. They know their value. They know the value of the business they generate.

Unfortunately, many business owners truly don’t understand the value of great salespeople and will not pay for the best. They are expensive. They like to have uncapped commissions. They will probably be the most expensive people in the business. They will also most likely leave you when they realise you need them more than they need you. The really great salespeople work for themselves. The ones that stay are the average ones.

Large businesses with many sales staff know that they must continually invest in sales training and have sales managers to drive performance in an effort to keep them above average. In contrast, small businesses try to hire salespeople with these skills already in place. They try to get them on the cheap. Only the average ones are cheap.

For any business that has been around a number of years, the owner will have developed some sales skills. They are also likely to be the best salesperson in their business. This is as you would expect, as they have the greatest incentive. The profit goes to them. They are also responsible for the training and support of any sales staff, whose skills and motivation will almost certainly be less.

However, some business owners truly dislike the sales process. They would like to be left alone to build their widgets with someone else providing the customers. The only way that they can do this is if they get a job working for another widget maker.

Business owners need to make the choice on whether they want to stay in love with widget making, or fall in love with owning a widget business.

Marketing and sales is part of every business and the owner must take a lead in these areas. This is what differentiates the owner from the employee that just makes widgets.The owner must be prepared to be the best in marketing and sales so they can lead their sales team. This means investing in education and training for themselves if they are unsatisfied with their existing sales results.

In small business, the best salesperson must be the owner. It’s their business. If they can’t sell it to others, who else can?

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Reducing Your Small Business Debt

by Paul Jenkin

Choice has just released a report on managing personal debt in this time of financial stress. For some small business owners this debt may have been exacerbated by debt in their business caused by the slowing economy.

As for personal debt, in business there is good and bad debt. In most businesses some level of debt is necessary, firstly to commence your business, secondly to keep your business operating and thirdly to expand your business.

Business debt can be good as long as it does not get out of control. However, there are numerous reasons why it is not viable for a business to carry high debt levels for too long.

Often business debt can come with a ridiculously high interest rate, thus taking longer to pay and using up valuable cash flow. Carrying too much debt may also make it harder to reinvest when expanding your business or looking to purchase capital equipment.

Increased debt can take away from the quality of your end product or service as you take from your cost centres to meet debt repayments. As the owner of a business, high levels of debt may also cause higher levels of stress, affecting both your personal life and the decisions you make in your business, and once your business decisions become worse your final product suffers, thus affecting your reputation and ability to keep clients.

Debt may also lower the value of your business and make it less attractive to investors. Too much debt can become a cancer in your business and can cause your business to spiral out of control with the ultimate price being bankruptcy of your business and potentially yourself.
If debt does become a problem there are things that you can do.

1. Look at how your debt is structured and what it is secured against. If you can, your debts should be consolidated into one debt and secured against an asset, for example your house, this way you have the ability to finance your debt over a much longer period of time and at a lower interest rate. It should also be remembered that the good thing about business debt is that it is tax deductible so it is usually a good idea to pay off as much private or non deductible debt as you can and examine whether you may be able to just pay interest on your business debt. This also has the benefit of giving you more equity against which to secure your business. Any debt restructuring should always be done in conjunction with your accountant.

2. Look at your life style and take less from your business to prop up your personal life. For example, should you go on an expensive holiday? Do you need an expensive car? Do you need Foxtel? Again look at the Choice report for more tips on managing this.

3. See where your business can cut costs to make debt repayments. In taking this step, extreme care needs to be taken not compromise your quality.

4. Review your business structure with your accountant. This can affect the amount of tax you pay and you ability to defer tax whilst you repay debt. Your business structure will also play a vital role in protecting your personal assets if your worst fears are realised and a debt provider takes action against you.

The most important thing to do is to have a plan, rather than hope the problem will fix itself. It generally doesn’t at this stage of the business cycle.

Over to You. What do You Think? Post Your Comments Below.

Paul Jenkin is a partner with small business accountants Andresen McCarthy Partners

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Business Tip #3: Creating a First Impression

by Dr Greg Chapman, MBA

Many people when they begin in business unconsciously send out signals that scream “Start-up”. No-one wants to buy from a start-up, because they are unproven. They could disappear at any time without a trace. So people learn to recognise the signals- you have a hotmail account. Your address is a post office box. You have printed your business card on your inkjet printer. You only have a mobile phone number on your business card.

You might think that rectifying all these things will cost you a lot of money. There is some investment, but it is small if you understand that people will run in the opposite direction when they see these signals.

Get a proper domain name. (It will cost you less than $50 to set up a domain name with an email account attached.) Get a virtual office address from the many virtual office providers that are around the country. They will even answer the phone for you with your business name and send messages to your mobile. This gives you a proper street address as well as a landline number for people to call you on. (It’s ok to have your mobile on the card, as long as it is not the only number.) All this is cheaper than you think, with some virtual offices as low as $100 per month depending on the services provided. You can top this off with a simple 1 page template website for a few hundred dollars. Internet printers will also provide you professionally printed business cards from under $100.

You can obviously upgrade as your business grows, but with these low cost steps you no longer scream start-up!

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The GFC and the Small Business Advantage

by Dr Greg Chapman, MBA

It seems every week there is news of more layoffs by large businesses. Feed into that announcements of burgeoning deficits and negative growth forecasts and it is no wonder that highly precious, but fragile commodity, business confidence is weakening.

The reaction from businesses when this occurs is to become risk adverse. It’s all very well to attempt to remain positive, but if the fundamentals are rotten, you just become like the Black Knight in Monty Python who has lost all his limbs and still thinks he can beat King Arthur. Therefore expansions are deferred. New projects are put on hold. Upgrades are delayed. With many businesses, the layoffs or liquidation, while directly as a result of the downturn, were often an accident waiting to happen. Decisions avoided until the cash flow pain made those decisions unavoidable. Evidence of this is being seen with the US automakers.

For small businesses, the impact is far less spectacular, however, it is still there. Until a few years ago, 70% of the employment growth came from small business which resulted in unemployment falling below 4%. While there does not appear to be a lot of evidence that small business is laying off staff in significant numbers, it does appear, with the fall in job ads, that they aren’t employing at the same rate.

However, there is reason that there should not be same doom and gloom in the small business sector as for large business. Larger businesses tend to be more highly financially leveraged and have tighter margins. These factors along with their larger market shares, mean they are the first to feel market shrinkage impacting on their bottom lines.

Without these pressures, small businesses are able to be more positive as long as they take steps to address the changes in the economy. This may mean repackaging their offers due to the changed market conditions.

They understand that while there is a lot to be concerned about, there will be oases of opportunity that they can uncover. One advantage of being small is that these oases don’t need to be large. (Small oases are uneconomic for big businesses and big ones are rare in a major downturn.)

While there might be a lot of desert between oases, if a small business can find one they can prosper for a long time while those around them dehydrate. These oases, niches in business-speak, may be different to the ones that exist in the good times, but they can be just as commonplace.

If you have a pre-existing niche, you may find that your oasis is turning to desert. If you stay where you are, you will feel the same pain that larger businesses feel: stranded as their green pastures die off.

Re-examine your strengths and look for the new opportunities that arise as the market place changes. How have people’s needs changed? They may not want to buy new equipment, but may be prepared to lease it. They will certainly need to maintain their existing equipment if they don’t replace it. People eat out less, but they still eat. How has your market changed and how can you respond? Small businesses can do this quickly. That is their advantage.

The oases will always exist and you may need a water diviner to find them, but sitting where you are waiting for an oasis to find you is wasting your advantage.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Business Tip #2: Your Business Name

by Dr Greg Chapman, MBA

What’s in a Business Name?

When starting your business selecting a name can be quite problematic. Should John Smith call his business Smith and Associates? It depends what he wants to do with his business in the future. If he would like to sell it, a business name based on the name of its previous owner will be a handicap. He should also consider, if he wants his business to grow, he may find all the clients want to deal with John Smith rather than some other unnamed associate.

If the name John Smith is well known on the other hand, this may be good for marketing the business, at least in the early stages. Your name might not be well known, but if you intend to make a brand of your name, then this strategy would also be ok.

Whatever name you choose, you will need to check the ASIC website to make sure it has not already been taken. Also check to see if the domain name is available. If it close to another existing domain name, it is not advisable to make just as small change, as people often will type in the wrong name and may not find your website if a similar domain name exists.

Often naming your business after yourself, will only impress one person (and possibly also your mum).

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Business Tip #1: Taking Action

by Dr Greg Chapman, MBA

When people plan some business activity, they, of course, want it to work. However, there is such a thing as overplanning. It is impossible to predict everything that will happen. While we might like to achieve perfection in what we do, this is business, not art! Comprompises must be made. The 80/20 rule should be applied.

After a while, pursuit of perfection just becomes procrastination.

Because we can never be sure how our market will react to what we do, we must, at some point take the plunge. We can always adjust later. So it is:

Ready-Aim-Fire-Adjust your Aim-Fire some more.

If we are unsure, we can always run a pilot, but in the end, it is more important to get it done than get it right.

Completion is more imortant than perfection.

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Discount Price Wars

by Dr Greg Chapman, MBA

When competition is stiff or times are tough, and businesses experience a slump in sales, the natural response of business owners is to reduce their prices. In response to this, they find their competition starts to do the same, and before you know it, you are in a price war.

Price wars are like trench warfare. You may gain a few meters in territory here, whilst the other side gains a few meters from you around your flank. And both sides incur large losses. In this type of battle, it is a war of attrition, and the last person standing wins while bleeding red ink. They also inherit a decimated market landscape with their buyers educated to expect discounts.
A number of negative impacts occur to your business when you discount. The most obvious one is the loss in margin, which you hope to make up with increased sales. In most cases, this does not happen.

The next problem that may occur is that you get a reputation as a discounter, with potential customers waiting for your sales times, particularly if they are seasonal. (I like to buy a new car when dealers are trying to get rid of their last year models from their stock. Major savings are to be had at such times and they are much more willing to negotiate.)

Discounting may also confuse your message to your best buyers, especially if you are attempting to appeal to an up market clientele who are price insensitive. An example of this is the upmarket department store David Jones who when they want to shift old stock, they somewhat snootily declare “As you know David Jones do not have sales, but next month is our annual clearance.” Clearly they do not want to be known to their up market clientele as discounters, but they still want to move their old stock.

Finally, after you finish discounting, how do you lift your prices again? If someone comes in after your sale has finished, and asks you to give him the same 25% discount offer this week as you had last week, it is hard to justify a negative response unless…. you have a clear reason for the sale in the first place. In the case of car dealers, it is to make way for the new model, even if the only difference is a cosmetic facelift. For retailers, it is selling off the last of their summer range before winter.

So if you are discounting, you must have a reason other rather than you are not making as much money as you used to. The reason must be transparent and short term so as not to damage your relationship with your best buyers. Your discounting may indeed attract more buyers, but many may be price shoppers who will not stay loyal to you when your prices do eventually return to normal. These people will be off finding bargains elsewhere, and in the meantime you may have damaged your brand in the eyes of your best buyers.

Most people lose money when they discount. Learn How to Discount Your Way to Higher Profits, by subscribing to The Small Business Achiever. Also in this month’s issue:

• How to Track Your Profits So You Can Drive Them Higher
• Which Online Directories should You Use to Boost Your Google Rankings?

The Small Business Achiever – Business Owner Brief is Your Shortcut to Success and Your Unfair Business Advantage.

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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