There are two very important assets of your business that your balance sheet does not show – these are your reputation as an entrepreneur and the reputation of your business. There are chances of your incurring losses because of practices or incidents that are perceived as dishonest, disrespectful, or unethical. The term, “reputational risk” is used to describe the risk of a serious loss of confidence in an organization. The entrepreneur therefore must make relentless efforts to build and sustain his own as also his organizational reputation at any cost.
Here’s what Warren Buffet,an American business magnate and investor, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
According to my personal belief – the entire art and science of business can be summarized as – creating value, communicating value, and delivering value to all the stakeholders of the entrepreneur’s business. Somehow, I always found this definition of a business to be the best. Alternatively, we may say that the purpose of any business is to create value (through work), sell or trade it to customers, and capture some of that value as monetary surplus that results in profits for the entrepreneur.
Here’s what Robin Sharma,a Canadian writer and leadership expert, best known for his The Monk Who Sold His Ferrari book series, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
“Marketing is not only much broader than selling; it is not a specialized activity at all. It encompasses the entire business. It is the whole business seen from the point of view of its result, that is, from the customers’ point of view. Concern and responsibility for marketing must, therefore, permeate all areas of the enterprise.” – Peter Drucker.
Marketing and Sales are somewhat intertwined whenever we think of a business enterprise. We all know well that for a business to achieve great sales, it needs to have a high level of marketing. When marketing and sales work together – the business can easily achieve its profit goals.
Have a look on the righthand side of any firm’s Profit & Loss Account – you see the Rupee Value of Sales. All the expenses on the left-hand side are deducted from this sales revenue and we arrive at Gross Profit (EBIDTA). This is the magic of sales. Increase your sales volumes, realise an attractive unit price for your product, you have a handsome sales revenue. And the more the sales revenue, the more will be your profit.
Price is the most important element in the Marketing Mix
PRICE
PRODUCT
PLACE
PROMOTION
We all know the concept of the marketing mix. The marketing mix comprises 4Ps, namely, Product, Price, Place and Promotion. Of these, Price is the most important component because it relates to selling and obtaining profits. The other three Ps (Product, Place and Promotion) are indicative of expenditure in product creation, distribution, advertising, and promotion.
Marketing & Sales are not the same:
Whereas we generally use the word marketing and sales interchangeably, there is a big difference between these two concepts. Marketing creates an environment where the customers/prospects get interested in the product. Excellent marketing can potentially negate the need for sale. If marketing is strong, lesser sales efforts may be required. We see many examples in this category like several branded products from famous companies like Phillips, Apple, Samsung, and others. On the other hand, if marketing efforts are average, more efforts may be required for selling the product as is the case with many non-branded products from micro, small, and medium enterprises.
Whereas sale is linear, marketing is exponential. Whereas sale is immediate, marketing is long-term. Whereas sale relates to asking questions, marketing relates to telling stories. Another important point – while marketing focuses on the customer and the product, all the focus of sales is on the skills of the salesperson.
The Way Forward:
We can conclude from the foregoing that marketing and sales together contribute a great deal to the success and the profitability of any organization. Let us now discuss, how we can make the best use of our knowledge about marketing and sales to effectively manage our business operation and achieve sustainable profits. As explained above, a well-developed marketing plan and situation-specific marketing strategies will go a long way in generating excellent sales leads. We should also work appropriately on brand development and positioning aspects. It is said and believed that marketing is the battle of customers’ perception of the product. And therefore, we must work hard to create a positive image of the product in our customers’ minds.
Along with effective marketing interventions, we must focus our attention on the following to effectively handle and manage the sales function:
Educating and training our salesforce on product knowledge, presentation, and negotiation skills, handling objections, and closing sales.
Initiating steps to improve sales team performance.
Streamlining incentives and rewards.
Developing sales processes and flow charts, documenting, and uploading these on the company’s intranet.
Taking necessary steps for grooming of salespersons; developing suitable dress codes.
Providing sales team members with necessary marketing collaterals, catalogues, order forms, etc.
Creating a database of old customers, current customers, and our prospects to ensure our regular interaction with them.
Taking adequate initiatives for up-selling and cross-selling of our product/offerings.
Obtaining continuous feedback and referrals from our customers (and consumers).
Ensuring that our current customers remain happy and satisfied. They can later become our loyal customers and do advocacy towards our products.
We must try to find reasons as to why our past customers stopped patronizing us.
Carefully identifying our target audience, their needs, wants and pain points.
Recently, I attended an interesting seminar on “Business Freedom,” which included an engaging module on sales and marketing. Immediately after the conclusion of the seminar, I was inspired to write this post on the importance of sales in business.
We all know the adage that change is the only constant in life. Before accepting and implementing change, we must consider the tangible impacts of change including the impact on people who will be affected and their journey towards working and behaving in new ways to support the change. Approaches to managing change vary widely, from organization to organization and from project to project. Many consultants and experts are available who provide toolkits, checklists, and outline plans to manage changes successfully.
Here’s what Kent Beck,an American software engineer and the creator of “extreme programming”, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
Building a customer-centric organization will comprise: mapping the customer journey and life cycle; incorporating customer feedback into processes and behaviours of our marketing and sales team personnel; refining operating model to enable customer centricity; aligning technologies and processes to support and drive customer engagement, integrating contrasting business unit cultures; and transforming culture from top to bottom.
Here’s what Howard D. Schultz, chairman and CEO of Starbucks, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
The person who holds the steering wheel may not be the owner of the business. In fact, anyone, who is responsible for day-to-day business operations and controls all crucial aspects of business, should be positioned as the CEO.
Have you ever experienced driving a car or a four-wheeler? As the driver who is controlling the car – you must hold the steering wheel in your own hands and then decide where you want to go and what speed you take. There can be others sitting in the car either on the backseat or by your side but these people can only assist you with the road map, maybe guide you with directions; they cannot hold the steering wheel along with you.
Likewise, in any endeavour in your personal or professional life – like managing a small event or a project, managing a family, managing a small or medium enterprise, or a large corporation – let there be only one person at the helm – who manages and controls the business with the functional assistance, guidance, and support from other team members. So, who gets to hold the steering wheel?
Given below are certain guidelines to help in steering your business effectively so that your organization makes sustainable profits and makes all its stakeholders happy.
The Business Head
You may own a business or a company but may have no interest in operating it on a day-to-day basis. In such a scenario, you may assign a paid CEO who may be running and controlling your business. Whosoever takes the lead (let us call him/her as the Business Head) in handling business operations should be accepted and positioned as the leader.
Every other member in the organization must abide by, comply, and follow the directions (or suggestions) coming from the Business Head. Proper organizational arrangements should be instituted to create clear responsibility, authority, and accountability lines in the organizations.
Top-down and bottom-up communication
The Business Head will be exercising his/her authority and directing (communicating, coordinating, guiding, motivating, and inspiring) all members of the organization to attend to various activities and functions. He/she can also call upon organizational members either individually or in groups to obtain their advice, inputs, and suggestions on certain important aspects. This way, the Business Head will make use of the group decision-making style to seek opinions from everyone and build consensus on matters of crucial interest to the business.
In the above arrangement, all information, ideas, knowledge, and suggestions from various organizational members flow UPWARDS to the Head who gets the benefit of knowledge and wisdom from everyone to make his own best decisions and get these executed in the best interest of the business. We call this BOTTOM-UP COMMUNICATION. However, everyone in the organization gets commands, or instructions from the Business Head only and this communication is strictly DOWNWARDS. We call this TOP-DOWN COMMUNICATION.
Unity of Command
Further – no one other than the designated Business Head can pass on any command or instruction to anyone in the organization We call this rule: “UNITY OF COMMAND.” Enforcing unity of command helps in ensuring that no member gets multiple commands from different superiors or seniors only to create confusion and chaos.
Organizational Structure
Next, we must make suitable provision so that the Business Head can identify few dependable persons from his larger team who can be given responsibilities for certain major functions or group of functions. These members can be designated as Heads of the respective departments or functions – like Head (Manufacturing), Head (Marketing), Head (Finance) and so on. These Heads can also be provided necessary support staff and physical facilities. They should also be given commensurate authority (matching to their responsibility) in terms of the delegation given to them by the Business Head.
Best Practices for effective steering!
The aspects discussed above are the main guidelines but there are many more principles to abide by. I have listed them in the box below. These can be used to your advantage if you want to steer your organization towards success.
Formulating vision, mission, goals, and objectives for the organization.
Effective Value Chain Management: creating, communicating, and delivering value to all stakeholders.
Building Sustained Competitive Advantage – through cost leadership, product/service differentiation, and focus strategies.
Effective execution of all events and projects without any time overrun and cost escalation.
Striving to achieve 5 operational performance criteria: cost of production, product and process quality, speed of performance (ensuring fast and prompt deliveries), building flexibility and dependability in our dealing with customers.
Building world-class processes
Instituting effective risk management.
Strong marketing and sales network.
Effective monitoring, Control, and MIS.
Being customer-centric – taking good care of customers, looking after their specific needs, and keeping our commitments and promises to them.
Your intention is the most important trigger in what all you do or plan to do in your personal or professional life. It helps you set a vision for your distant future and then put all your energies, passion, and resources into it to ensure that you realise your dream.
Here’s what Steve Jobs, a co-founder of Apple Inc., has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
In all my business and management sessions with students and entrepreneurs – I am always particular about sensitizing participants to the critical needs of identifying, managing, and mitigating risk in business. There is no business or any such money-making endeavour in the world where one will not find RISK. As an effective entrepreneur – you must take a calculated risk to cross/overcome many hurdles, dangers, and uncertainties in your pathway of planning, executing and operating your business. Remember that taking a risk cannot be avoided but then you can always have effective risk management to mitigate risks.
Here’s what Mark Zuckerberg, an American media magnate and co-founder of Facebook, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
If you want to earn profits from your business, you must focus on a few essential things.
Do effective Value Chain Management:
To start with – examine your total business value chain from beginning to end. Identify various primary and support activities in the chain and explore how you can transform each activity into a value-creating activity. Also, look for the cost drivers and product/service differentiators in the value chain.
Remember that unless you create value, communicate value, and deliver value to your customers and all other stakeholders – you are not going to make profits from your business.
Cost-leader or Product Differentiator:
You can work on two different perspectives — Either take the position of a cost leader or a product/services differentiator.
If you take the position of a cost leader, you make cost savings through economies of scale, better supplier relationships, and process efficiencies. In this strategy, you offer your products at much lower prices to your customers and still make profits. But if you take the other position of a product/services differentiator – you can charge a premium price from your customers for offering them an exclusive product. To attain this status, you will have to invest in technology, R & D, and intellectual capital.
Creating and Delivering Value to Stakeholders:
Irrespective of the fact whether you take the position of a cost leader or a product differentiator – you must create, communicate, and deliver value to your customers, employees, and other stakeholders as explained earlier. Let me explain this with a few examples. Can you improve the inbound and outbound logistics to enhance the experience and satisfaction of your customers and suppliers – and reducing the cost of these operations at the same time. Can you introduce certain changes in your manufacturing processes, systems, and shop floor practices so that the effectiveness and efficiency of your operations are enhanced. Can you do something to deliver more value to your customers for their money? Have you thought of strategies like attractive cuts, discounts, and freebies, high product quality, better delivery schedules, reliability, and flexibility in your services?
What is your customer-value proposition? Deliver more value to your customers for their money!
Cut Frills & Control Expenditure:
As a financially frugal/prudent entrepreneur, you must keep an eye on all avoidable expense items – particularly sales promotion, advertising, and interest costs. These may adversely impact and/or erode your profitability if not provided for judiciously.
Initiate proactive measures to cut frills and avoid all unnecessary expenditure — particularly expenses with respect to sales promotion, advertising and interest costs.
While there is nothing wrong in spending more on promotion and advertising if your business plan justifies the same – decision to indulge in such expenses must always be supported by proper cost-benefit analysis. By the same logic, an entrepreneur must try to minimize the interest burden on his/her borrowings. An entrepreneur should avoid the temptation to raise all kinds of secured and unsecured loans unless the same is necessary.
Salaries and wages once started cannot be discontinued. It will therefore be necessary to build the organizational team in stages. Unless and until the enterprise can afford a full-fledged salary and wages bill, one should try to manage with retainers, part-timers, and outsourcing options.
Strengthen your Marketing Organization:
You should also do an internal audit of your marketing and selling functions. This will help you in identifying areas where you can cut expenses and add value. Engage with good agents, distributors and dealers who are resourceful, have an incredible track record, good payment history and are reasonably honest in day-to-day dealings. If you selected dealers with good life values and principles (like honesty, integrity) then the rest is easy. You can always train your dealers in your line of business, but you can never teach life values and honesty to them if they are inheriting a dishonest and fraudulent culture.
Remember that your dealers are your business partners, and they must be chosen with all possible care.
Product pricing policies, margins allowed to channel partners, agency commissions, the pricing structure for distributors, dealers, whole-sellers, semi-whole sellers, and retailers are also crucial as these can improve or erode the bottom line significantly. Abundant care must be exercised while working out policy details with regards to volume bonuses, cash discounts, prompt payment discounts, goods return policies.
Customer Centricity:
Another important aspect in marketing will be customer-centricity.
Any unsatisfied customers should be compensated to ensure they will still consider you for future business. Happy customers are everything.
Purchase decisions almost always come down to value as explained earlier. Effectively providing value is integral to the long-term success of your company; not only does it assist in retaining your current customers, but also provides the highest-quality referrals you can ask for when attempting to gain new business.
Dear Entrepreneur – after you have completed the implementation of your business idea/plan – you wear a different hat. You are now a business owner and should work towards profits and wealth creation by creating, communicating, and delivering value to all your stakeholders. Leave no stone unturned to ensure that you deliver an excellent operation performance on these 5 operational performance criteria, namely, controlling the cost of production, ensuring that you attain the best product and process quality, enhancing the speed of performance (ensuring fast and prompt deliveries), building flexibility and dependability in our dealing with customers. Take good care of your customers, look after their specific needs, and fulfil your commitments and promises to them.
Here’s what Michael Porter, an American academic, has to say:
WHAT DO YOU THINK?
Let me know in the comments section.
In this ongoing series #GreatMinds on my blog, I am shining a spotlight on the important ideas that some very successful people keep talking about in their public life.
