Martinka Consulting

425-576-1814 john@johnmartinka.com

When Businesses Don’t Prosper

Posted on by JohnM

The New York Times small business blog on January 18, 2012 had a case study on franchises. A former International Franchise Association executive, now a franchise owner, said, ”In my time at the I.F.A., I learned that the No. 1 reason franchises fail is because their owners fail to market their own business.”

He’s wrong. It’s not just the top reason for franchise business; it’s the top reason for all businesses. I hear repeatedly from business owners, struggling and successful, that if someone who knew marketing bought their business the business would do much better.

Of course, they would like to be paid in advance for the success the buyer may achieve. From one-person professional service firms to $50 million in sales manufacturing businesses the one common factor for success is good marketing. That means it needs to be researched, planned, consistent and constant.

Whatever your business, you have to do all you can to keep your name in front of customers, past customers and prospective customers. Provide value before they become a customer and you’ll increase your chances of success.

My days are twice as long and I have twice as many problems to contend with. But I’m loving it. William Burris, business owner (above) 

Observations from Antigua

Posted on by JohnM

In wrote this while on the island of Antigua in the country of Antigua and Barbuda for our annual Rotary service project. We’re working in the schools installing computer labs, giving all third grade students their own illustrated dictionary, setting up a video teleconferencing system (so the teachers on Barbuda can get proper training). We are also working with a community center and teaching ladies how to sew so they can make school uniforms and support themselves. I say “we” because it’s a team of two-dozen including 14 Bellevue students in the Cisco tech program. It’s the students who set up the computer labs and the video system.

As I’m here it’s hard not to notice the differences between our day-to-day lives and the day-to-day lives here in Antigua. Here are some observations.

  • The day before we left The Seattle Times (February 16, 2012) had an article on the resurgence of manufacturing jobs. While only 10% of jobs in the US, manufacturing is leading the recovery. Here they wish they had 10% of their economy in manufacturing; it is a true service based economy with an emphasis on tourism. A few years ago I asked how much of their food is grown here (there is some very fertile land). The answer was maybe 30% because too many people think working in agriculture is beneath them.
  • We’re in the middle of a hullabaloo over church, state and birth control. In Antigua there is very little separation of church and state. It’s a very religious country (overwhelmingly Christian but many varieties of churches). Even secular events will be held in a church or in conjunction with a church service.
  • There truly is “Island time.” Meeting times are pretty loose. A couple years ago I asked a restaurant owner how this affected her business. She said it was annoying at best and caused lost income at worst. A 7:00 pm reservation for eight may mean two people at 7:10 and the rest filtering in over the next 45 minutes. This would drive most of us nuts. Especially those of us who feel compelled to make a courtesy call when we’re running a few minutes late. In Philadelphia it would cause angst. My “Partner” On-Call associate told me that in Philly, “When you arrive on time you’re late.”
  • We have educational issues in the US. A crisis in some places, mediocrity in others and fantastic schools elsewhere. Here, it’s a struggle, which is why we’ve been working in the schools for five years. As with the US we’ve seen some very dedicated and hard-working teachers (and administrators). We’ve also seen teachers who considered it an imposition to come in and give their students dictionaries (because, in one case, it interrupted the teacher’s reading of a romance novel). They struggle with kids skipping school, especially on Friday, and the parental involvement (from what I’ve heard) often makes our parental involvement seem fantastic.
  • The people here are very hard working. It’s just that there isn’t the same level of opportunity that we have. We’ve been inundated with the 1% and 99% slogans. Here there truly is a big difference in economic conditions. We deal with the local Rotarians and society here has recognized it is an honor and privilege to be asked to join an organization like Rotary. This ties back to my first point; those who have got out of the tourism service job cycle have substantially improved their lives (and do a lot to give back).
  • Finally, everybody is very appreciative. We’ve been stopped in public places every year as people thank us for what we’re doing (we’re on TV every year as this project is a huge deal). In Antigua, the Rotary clubs are the big fish in a small pond.

 

Top Three Strategies for Business Growth

Posted on by JohnM

The “You’re the Boss” blog in the January 18 New York Times featured “How to Diagnose What’s Wrong With Your Business” by Jay Goltz. Mr. Goltz said to concentrate on 10 issues in three categories:

  • Marketing
  • Management
  • Accounting and Finance

I wrote a comment on this blog saying that I agree with these three points. In fact, I tell business owners thinking of exiting that the above three areas are the three most important things they can work on in their business. My advice, in simplified form, is:

Do some marketing. Before starting, do your homework and document everything you do. Be able to show the actions taken and the results achieved (your metrics of success).

I use the phrase, “Have systems and processes” and this really means management. Manage the people, processes and systems and how your people fit into your systems

Have good accounting systems, monitor your accounts for accuracy, use quality management reports and have a budget and projections. Doing this puts you in the front of the crowd.

The strategies for business aren’t that complicated. It’s the implementation that trips up people.

“Coming together is a beginning. Keeping together is progress. Working together is success.” Henry Ford

Do You Know Your Customers?

Posted on by JohnM

I recently participated in a focus group for a company with which I have a business referral relationship. They received tremendous value from the session and I walked away with some good insights.

One of my top lessons from this was realizing that we all take for granted what our clients and customers think of us, the value we provide and the way we do business. I remember reading about a study where employees ranked what they felt their customers thought was important about the firm’s products and services. The company then had a market research go to the customers with the same question(s). The customers’ impression was almost 180o different than that of the employees.

This session reinforced that none of us should assume what people want. When we stop talking and ask questions we find out the true wants and needs. If we don’t ask we run the risk of hitting the bulls-eye but having it be on the wrong target.

“The secret to being boring is to say everything.” Voltaire

Getting Business is All Attitude

Posted on by JohnM

While watching the TV show, “Bar Rescue” the other day the host told the owners of a bar/restaurant (who wanted to increase their business from tourists) that the best thing they could do was attract and please the locals because the word will spread and the locals will refer the visitors to their favorite places.

On a conference call the other day the following was said, “Make getting referrals as much a part of your day as returning phone calls.”

A speaker recently had a slide that said when it comes to getting customers, “We are relentless.”

The bottom line is whether a consulting firm like mine, a restaurant, a manufacturer, training firm, store or anything else our number one priority has to be to get new customers. We do that by providing exceptional value so that our customers will send us their friends and family. We also can’t be afraid to ask for whom we can help.

Business Sellers & their Pent Up Demand

Posted on by JohnM

The December 22, 2011 New York Times had an article titled, “Why Some Business Owners Think Now Is the Time to Sell.” The first example was about an owner whom wished she had sold in 2008 although she wasn’t emotionally ready at that time. Her business dived and is just now back to 2008 sales levels. One reason it’s back is that she purchased another company.

According to this article, “There is a pent-up pipeline of owners who have had to put off selling in recent years because of the economy. And now that many of these companies have at least one year of profits on the books, they are more attractive to potential investors.”

There are three categories of businesses that have put off selling. They are:

  1. Companies where the owner believes the wave of economic recovery will let their business rise with all the others (they are probably mistaken; there’s a new norm).
  2. Businesses that have streamlined their operations and have grown revenues organically and by acquisition (so they are in a position of strength).
  3. Companies that weren’t affected by the recession; in my world this was primarily service businesses.

If you know of anybody even thinking of selling in the next few years recommend to them that they need to start now on doing the things necessary to stand out from the competition as there are going to be a lot of businesses on the market in the next 5-10 years.

“Many owners, especially the leading edge of the baby boomers, wanted to sell in 2008, 2009 or 2010 and would have sold in those three years had the economy stayed strong.” John Emory Jr.

Economic Indicators are All Around Us

Posted on by JohnM

My wife works as a doula, it’s an ancient Greek work meaning “female caregiver.” The role of a doula is to coach, consult and help women having babies or who have just had babies (her website is www.janmartinka.com).

During the economic upswing of the late 1990′s and the first eight years of the last decade business was booming. She was as busy as she wanted to be and, because of her experience and skill level, was able to charge more than the vast majority of other doulas. When the Great Recession started in 2008 this totally changed.

You see, her services are often considered a luxury and a discretionary item. She ran into weak demand, price competition that meant lower rates and one of the banes of too many businesses, insufficient marketing (especially when times were good).

Lately she’s been busy, has a lot of referrals and her fees are back where they were. To me, this means there is a lot more confidence in the economy and where it’s heading. You can look at all the major economic indicators, charts and graphs and sometimes it’s the little things we are closest to that tell us which direction (people think) the economy is going.

“Hope is tomorrow’s veneer over today’s disappointment.” Evan Esar

Is your Company Fit?

Posted on by JohnM

“Keeping Boomers Fit for Work” was the headline of the lead article in theWall Street Journal’s Marketplace section on December 28, 2011. The focus company was Harley-Davidson, which represented what is going on at a lot of companies. The key points made were that these firms have:

  • An older, more fragile workforce
  • These workers have hard to replace skills (ask anybody who owns a machine shop about their aging workforce and hard-to-find younger replacement workers)
  • Jobs where it takes years of training for many of these jobs
  • Implemented exercise routines for employees that are specific to their jobs

Are you doing the same for your company?

These companies are putting a lot into their human capital, i.e. their employees. Are you (or your clients) putting that same kind of investment into your business and its people? In other words, are you keeping your business fit? Let’s look at three areas.

What about your leadership structure? Is it too top heavy with you, the owner, a major part of everything? It might be time to start implementing a delegation strategy. Are there generational issues you must deal with? This could be a family member in the business or just the great differences between workers of different generations.

For example, a couple of my clients have stated that their younger workers are not motivated by bonuses for a job well done. They are often more interested in non-financial rewards. This is often hard for owners and more senior managers to understand but it must be dealt with.

And then there’s marketing. Always a subject that brings a look of confusion to many faces; it’s become even more confusing and faster paced with social media. My last CEO/owner group meeting was on the topic of social media and Internet marketing. There wasn’t one person in the room (myself included) who felt they were up to speed on it, in control of it and at the same time most realized they have to be doing something in this area. If for no other reason than in a few years it will be a necessity. As younger buyers take over within their customer organizations the same old-same old ways of reaching them and communicating won’t apply.

Ask yourself, is your marketing as fit as the Harley workers mentioned above?

Finally, there’s the issue of balance. As the pace of life quickens with social media, instant communications and just in time everything it becomes more and more important for owners and their employees to not sacrifice quality for speed. There is an old saying in business that the customer can have two of the following three: the best quality, the best service, and the best price. But it’s impossible to have all three at the same time.

You don’t want to sacrifice quality or service because you’re moving so fast you’re out of control. You must pay attention to the fitness level of your business. It’s hard to have long-term success and fitness if you’re not in-tune with what your people need (and you need).

Conclusion
 
To address the above issues I have a new program I called, ”Buy Your Own Business tm - again.” A few years ago a sales manager thanked me for helping my client buy the company she worked for. She said he was a, “Breath of Fresh Air” to the business. It was a good solid company and at the same time the employees felt constrained because the owner was content with the status quo and the employees had lots of (good) ideas that he wouldn’t implement.

It hit me that there are a lot of businesses that need a Breath of Fresh Air. If you know of anybody who wants to make a good business even better, let me know. This program can really help spur growth and innovation.

Staying out of bad deals, avoiding bad customers, bad loans and just bad business in general should be on the top of all of our lists.

Are you “Open for Business”

Posted on by JohnM

The January 2012 issue of The Rotarian magazine (sent to Rotary Club members) has an article titled, “Open for business.” The focus of the article is about a Rotary Club in Rochester, NY that encourages members to do business with each other (which is often not encouraged at clubs).This makes sense and follows Pareto’s Principle, also known as the 80-20 rule. I know that the vast majority of my referrals come from a small pool of the people I know. On the flip side, the majority of the referrals I give are to people who stay in touch with me and get to know me better (and for me to know them).

We all go to association meetings, networking events or meet one-on-one because we like to do business with people we like. There’s got to be a very compelling reason to do business with someone we don’t like.

People also like to help others. I regularly tell my clients to ask friends for help and advice. When they say that it might be intruding I simply ask them if they feel imposed upon when asked for advice or counsel. Of course they don’t; they feel honored to be asked.

“The secret to being boring is to say everything.” Voltaire

Business Buying Rules – Search

Posted on by JohnM

Searching for a business is sales; it’s the same as a business prospecting for customers. Have a proven search plan and implement it properly.

The vast majority of business buyers would fire any salesperson working for them if that salesperson approached the generation of customers with the same intensity, focus and process the business buyer uses to find companies for sale. In other words, most business buyers don’t follow a plan, don’t put out the proper effort and then wonder why they aren’t finding enough (mature and profitable) companies for sale.

Searching for a business to buy is exactly like looking for customers. You must:

  1. Do what you can to find as many (businesses) willing to talk to you about selling.
  2. Build a relationship with the owner; finding out what is motivating them to even talk with you.
  3. Nurture the relationship, all along demonstrating your competence. Because, bottom line, as a qualified buyer you are the best solution to their problem (of wanting to exit, get paid for the business and see  his or her “baby” continue to thrive.

If you’re a buyer, friend of a buyer or advisor to a buyer one of the best things you can do for him or her is to make sure he or she understands the importance of the search component and the effort and smarts that must go into it.