Category Archives: ROI

‘Returns On Investment’ and dealing with its evil twin acronym – Risk Of Ignorance

8 Key Ways Innovation Can Help Business Owners Catapult to Success

Posted on by petergwaction

What’s your definition of effective innovation? A clever idea? A novel product or service? As the owner of a business coaching firm, the key word for me is “effective”, and for innovation to be effective, it has to make my company money.

Dreams, wishes – these are all great things, but unless they bring in capital, they’re just air. So, here are some places to start to make innovation work for you!

1. Effective innovation requires the right “pricing” vehicle.

Pricing is tricky. It involves your needs as well as what your customer considers fair. But, either way, innovation will not be effective without the right business model:

* Cost-plus pricing – the easiest, yet sometimes criticized method involves setting the price at what it costs to produce/provide service, including expenses, adding in your target profit margin.

* Target-return pricing- set your price with the goal to get back money invested in the company based upon the projected sales. If you invested $10,000, how many products or services must you sell at what price point to get your money back in a specified time frame?

* Value-based pricing – the most “psychological” of the three involves pricing the product based on its value to a customer. If you’re product saves them 3 hours of productivity a day, for someone who made $50/hour, that’s $150, so you could probably charge $75 or more for it.

* Fair-Value pricing – setting your price at what the market supports. If customers want something badly enough, they’re willing to pay ridiculously high prices for that product. Just look at Tickle Me Elmo that customers were willing to pay $600+ for so their kid could have one for Christmas. But, customers are also saavy shoppers and know what the going rate is for products and services. The challenge is balancing your needs with their willingness to pay.

2. Innovations needs to be re-invented.

Large companies with huge budgets can brand their products and have that branding last for 10, 20, 100+ years, but good ideas are often copied and become common and no longer innovative. We see it in advertising all the time (buttons, badges, “likes” etc.) The irony is, if you become TOO innovative, you’ll lose the “stickiness” necessary for viewers to grow accustomed to seeing your product or service. So, there’s a balance you need to have to even out innovation and previously successful ideas.

3. Innovations come from making concepts “stick” in the minds of your customers.

I will never forget a shaving company’s line that went something like, “Our razors are so safe, even a baby can handle them”. The next image is a bald guy covered in shaving cream with clean razor-track cutting across his scalp. Behind him is a baby holding the foamy razor. Sometimes innovation means coming at your product from a completely different angle. Business coaching has nothing to do with marriage, yet we were able to show parallels between business ownership and getting married in order to sell our services. Again, it all gets back to “what sticks” in your customers’ minds and hearts.

4. Innovation is sometimes driven by going in the “exit” and out the “entrance”.

What if all streets were “one way”? How frustrating and boring would that be? Sometimes going “out” the “in” can be as simple as thinking of your existing product as your competition, and out-do yourself. The reason this is “forward” thinking is that eventually your product or service is going to need some renovating, and if you don’t have a product and/or service to replace or enhance it, you might as well go by way of the Titanic. Think of your product or service like you’re the product or service’s competition. How would you improve upon it? When you’re in a vehicle, you can look out the windshield at where you’re going, or out the back winder at where you’ve been. Turn the car around and you can look out the back window to see where you’re going and out the front window to see where you’ve been. Same vehicle – just a different view.

5. Who says innovation can’t be well thought out?

Of course innovation can be carefully planned. Perhaps the ideas will have to be new and hopefully surprising, but one can still save space for innovation and encourage it within the company. One company I was affiliated with gave incentives for innovative ideas that became part of the company culture in the form of $500 gift cards. Normally, innovation starts with the spark of an idea. Brainstorming often leads to different ways to approach the idea. Then one has to lay out the new idea, test it, and voila, a new concept is born.

6. Innovation that results in changing people’s lives is the crowning touch.

Ask customers what they want and you’ll get as many answers as the number of people asked, and then some. You simply will not be able to please everyone – so quit trying. Improving on something is not creating a new innovation. It’s just creating a derivative on an existing idea. And there’s nothing wrong with that. True innovation is revolutionary. The resulting change is mind-boggling. We’ve seen it all through life. The Pony Express was replaced by a postal system. The horse and buggy was replaced by the automobile. Typewriters were replaced by computers. The list goes on.

7. Innovation requires tough skin.

Sticking to your guns will be hard if everyone is poo-hooing your concept. But, if you don’t believe in it, why should anyone else? Many times you have a vision and are so clear about your idea, but when you try to explain it, you’re faced with blank – or worse, doubtful – looks. Learn the art of explaining things in different ways, remembering that some people are visual, others are auditory, and still others are kinetic processors. Speak their language when trying to share your ideas. Develop a Teflon attitude and let the criticism slide off you. It doesn’t mean you aren’t listening and taking note, but it does mean that you protect yourself and stay true to your ideas.

8. Business Owners have “hire” expectations.

Innovators are your “1st” string players on your team. They are not only full of ideas, but can work independently to execute their plans. “1st” string players require less training and are eager to get things moving forward. “2nd” string players are good at doing what they are told, but often need innovative motivation! “3rd” string players are just what corporations love: the do-as-you-are-told types. A company full of “3rd” sting players will not advance. This last group likes routine and doesn’t favor change. There’s a place for each string, but hiring innovative people might be just what your company needs to excel.

In all . . .innovation is like a planted seed. With the right environment and conditions, innovation can flourish and help your company catapult to success.

How Do You Grow a Business When You’re Low on Cash?

Posted on by petergwaction

Post Image - Raising Profits

Bob Britz – Master Business Coach, ActionCOACH, Walnut Creek, CA 9-13-2011

Many of the businesses I coach as an ActionCOACH are consistently growing in this economy. The challenge of growth itself becomes a burden as many companies struggle to cover such expenses as a new office, new employees or inventory financing. With those challenges, the scrutiny often is focused on whether the business is surviving in this economy, while the real issue should be focused on cash flow and long term financing options to foster planned growth. I suppose you could begin to save a little money each month to cover that new employee and the rent, but the opportunity cost of finding excellent help and inexpensive office space will quickly dissipate before the cash is saved – not a viable option if growth and opportunity exist for the business.

The time to look at financing may be upon us again as coached businesses continue to grow. I find that many owners have self-financed or boot- trapped their businesses through savings, 401k’s and home equity lines these past few years. With those investments running low or becoming uncomfortable it no longer becomes prudent to tap those valuable resources. Commercial banking divisions of banks such as Bank of America, Mechanics Bank and other regional banks are again underwriting small business debt needs. A visit to your banker may feel like a visit to the IRS if you don’t have a relationship yet, but I can assure you, they are in the business of providing money, and it is their business to find out if they can help you for your mutual benefit.

You’ll likely need a couple years of tax returns and a copy of your Profit & Loss, Balance Sheet and Cash Flow Statement from QuickBooks or similar accounting system. A business plan can be easily constructed and reviewed in the process of obtaining a loan to show how you are doing, where you are using the money and how you would be paying it back in a best and worst case scenario. It just makes sense provide that to the institution that is prepared to lend to you, plus they’ll require it. It is prudent to approach several banks, including your own current business bank as underwriting guidelines inside the bank will differ by type of business, loan need and of course interest rate and how the loan is secured.

Lines of credit and loans are different vehicles for managing growth. If you simply need to replace cash gap created by accounts receivables, then a line of credit may be enough, and helps you avoid expensive and addictive Factoring options. The issue with a line of credit is that once per year it needs to be back to a zero balance. For longer term needs like hiring employees who are fixed costs, expanding into a commercial building or other items, financing that spans longer than a year would be needed in the form of a three or five year note that is more like a formal loan that funds the business with capital to manage.

If you thought banks weren’t lending, think again- that is their business and how they make their money. With so many US Banks healthy, they are looking at ways to earn more money in the form of good secured loans. Talk to your ActionCOACH about what your true cash flow issues are, and visit your banker – perhaps together, to find out what is possible, and practical to help you become that Commercial Profitable Enterprise you  desired when you first opened your doors.

Bob Britz - Action Coach Business Coach

Bob Britz

2113 Alice Avenue
Walnut Creek, CA 94596
United States

925-984-6960
925-270-1790

View Website

robertbritz@actioncoach.com

Add Value, Reap Returns

Posted on by petergwaction

Few will argue that building business relationships is essential to a company’s success and growth, yet in today’s turbo-paced, high demand society, one cannot take shortcuts to develop strong connections.

Look back. Our “lessons” about relationships began at home with our parents, our neighborhoods, and literally things we learned in kindergarten. Something borrowed, for instance, was returned promptly, often in better condition than when we received it, or with a thank you gift attached. A borrowed bowl of sugar was returned full, or filled with another sweet treat. A handshake was as good as a promise. The lesson being that if you returned more than you borrowed and if your word was as good as a guarantee, people would want to help you out down the line.
Put simply, adding value was the right thing to do, and it was done with no expectations in return.

Strong business relationships are built on these same philosophies: show respect, trust, and add value to your business connection. Unfortunately, with e-commerce and the ability to reach millions in a click of a button, many business relationships have become less personal. For that very reason, it’s imperative to apply the respect, trust and added value principles now more than ever.

When networking, for instance, if you borrow a favor, whether that be a lead, information, advice, or connections, return a larger favor each chance you get. But how, you might ask in an electronic world, can one “return favors” and keep the connections “real”? One way is through blogs. Certainly one purpose of a blog is to share valued information, as you are hopefully receiving from this article. But another is to link key words or your blog to other helpful resources that can offer customers an added value.

Information, overall, is cheap, but the value one walks away with can be priceless. Other ways to offer added value is through Facebook, Twitter, Linked-In and other social media outlets. Share positive things about your customers and their business. Be the “mouthpiece” for their success.They in turn will no doubt return the favor by being your word-of-mouth marketer.

While social media has drastically changed the way we do business, we must remember that they are simply networking tools, and they cannot replace good old fashioned courtesy, respect, and personal connection.  Don’t get me wrong, these “tools” can help us reach millions that we might never have reached before. Just look at some of these statistics from a recent Kiplinger report:

  • Only 14% of consumers trust ads; 78% trust PEER REVIEWS
  • Visitors on Facebook spend 57% more on products
  • There are upwards of 600 million on Facebook
  • 200 million are on Twitter
  • 61 million view videos (mainly YouTube)

Kiplinger also reported that 8% of small business use email as a means for marketing, 25% are online, 73% are on Facebook and Twitter, and 83% reported profit investing in Social Media, but social media is, in fact, a tool, a means to an end, not an ends to a mean.

It’s also important to remember that “contacts” are not the same as “relationships” – the main difference being that relationships are willing to work with, and many times, for you. A strong, effective business network takes time, resources, and yes—work.  But more importantly, it takes a genuine interest in helping those in your network.  That’s the added value.

Being the busy people we are in an ever changing world, we will undoubtedly change responsibilities, titles, and organizations over and over, but we, at the core, will remain the same, bringing our own personal brand and relationships with us. It’s important, therefore, to keep those true, and real, and to remember that the more we give, the more we will receive.  Building strong relationships takes confidence. It puts your customer first.

Remember, if you are asking your customers and clients to support you, give them something in return – something more than what was given to you.

Pay it forward and just watch what happens.

What are your thoughts? I would appreciate hearing back from you.