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  • Vision Building Exercise Apr 29, 2012

    Purpose of this exercise
    A clear, shared vision for the business is essential. It informs strategic decision-making, underpins performance of the management team and is the basis of effective communication to employees and staff.
    This exercise helps you and your colleagues describe your vision for the business in a semi-standardised way. This will allow you to compare different perspectives as a team and so come to a common vision.
    Instructions
    Appoint someone to keep track of time.
    Read the guidelines below then write down your vision for the business. Check back against the guidelines to see that you have incorporated them as far as possible. Read it out to the rest of the team and discuss.
    Guidelines - what makes a good Vision Statement?
    - It must be motivating for you. It must be something that you think is worth achieving and which matches your values and beliefs
    - It should describe a particular point in time. This might be when you plan to exit or when you plan to achieve “success” as you see it. It should have a date
    - It should describe what the business will be in concrete terms – how large, what it will be known for, what it will be able to do
    - It should have a personal goal that describes how you will be spending your life. This might include your working life or your personal life or the options you would have by then
    - It should have some concrete financial dimension – usually sale value, turnover or profit
    Discussion
    Appoint someone to take notes on a whiteboard or flipchart.
    As each person’s vision is explained, look for areas of commonality and difference. Are the differences fundamental or simply differences of degree? Where are people’s values appearing?
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  • Is Business Growth Optional? Mar 30, 2012

    A significant proportion of owner-managers are averse to growing their business. Often the reasons put forward are lifestyle choice, reluctance to employ more staff or fear that quality will suffer.
    They of course have a choice – but here are some reasons why growth is necessary for an owner-managed business:
    - Sub-scale businesses suffer from “feast and famine”. Even relatively modest wins can overload the organisation whilst a slight downturn in sales can be life-threatening
    - A resilient client base implies a large number of clients and the ability to replace them. It is less risky to be bigger
    - Clients, particularly big important clients, are intolerant of suppliers who are unable or unwilling to grow to meet their demands
    - There is a minimum size at which a business becomes self-sustaining; that is, where the organisation survives the loss of any individual or client and the capability to survive and thrive is proceduralised within the business processes
    - To be compelling for staff an organisation has to have a vision of something bigger than just the people involved. They want to be on a meaningful journey that allows them to achieve their potential
    - An organisation has to adapt, evolve and learn in order to survive in a changing environment. Whilst smaller organisations may be more agile they struggle to carry the overhead of this development capability
    - The bigger members of a species generally get the most food and their pick of mates. Business is an ecosystem and, all other things being equal, smaller businesses lose out to larger ones as the latter improve margins through economies of scale and spend more on marketing, product development and so forth
    - Even if you have a unique advantage over your competition it is advisable to sell more, invest in developing that advantage and so exclude competition from that space - or risk losing the advantage. In this way, a behaviour aimed at survival leads to growth
    - Research shows that survival rates improve with business size, particularly where this is combined with a wider range of products*
    So growth may or may not be an end in itself but is a by-product of survival - and in turn makes businesses more likely to survive. Being too small is not a sustainable position.

    *“When is more better? The impact of business scale and scope on long-term business survival, while controlling for profitability”, Bercovitz & Mitchell, 2007

    For further reading go to www.nickbettes.co.uk
  • Why do you need a sales commission scheme? Jan 9, 2012

    The underlying assumption is that rewarding salespeople financially for performance will encourage them to work harder and sell more in pursuit of those rewards. This view is not borne out by academic research but in practice sales commission schemes are almost universally used. A carefully-designed commission scheme when implemented on top of good management practices and a solid sales process is a useful management tool – but it is not a substitute for these things.

    How to design a sales commission scheme



    - Commission schemes are usually implemented at individual level



    - Ensure that the rewards incentivise the behaviour you want. You may want different behaviours from an account manager and a sales representative



    - Think carefully about the balance between basic salary and commission. The two combined form the OTE (on-target earnings) and the balance will have a strong impact on the motivation and behaviour of the salesperson:



    o The lower the proportion of basic salary the higher the OTE, since you are transferring risk to the salesperson



    o A high basic may mean that salespeople do not need any sales to achieve their minimum acceptable income



    o A low basic may result in aggressive sales behaviours or high staff turnover



    - Decide whether the scheme should be based on sales revenue or gross margin:



    o Revenue is relatively easy to measure but may result in unwanted price discounting



    o Gross margin supports prices but is more difficult to measure and can be open to manipulation



    - Implement appropriate controls on the sales process:



    o A pricing model or pricelist



    o Sign-offs



    o Commission payments only after contracts are signed



    - Understand that every commission scheme will have unwanted side-effects:



    o If a salesperson feels they are not going to achieve targets they will hold back new opportunities to the next year



    o Individual targets will prevent salespeople working as a team or spending time on anything that does not contribute to the current target



    o Salespeople will go after the easiest opportunities, which might not be the ones that matter most strategically



    - Check that you can afford all possible outcomes and that better performance against the commission scheme results in improved net margins for the business under all circumstances



    - Make sure that commission targets in total exceed the sales income budget – assume a conservative proportion of target sales will actually be achieved



    - The overall commission scheme rules should be published annually and each salesperson should have a written copy of their own targets and rewards, signed by them and their manager



    - Review performance with each salesperson monthly


    Find out more about our business advice, business coaching and business consultancy for buusiness owners in Reading, Berkshire on our website.
  • Follow up for sales! Nov 28, 2011

    Sales is all about moving an opportunity through a process that takes it from the first contact through to sale and beyond. Two things are implied: Firstly, you have to have a process (that is a repeatable series of steps from first contact through to close – a pipeline) and secondly, you have to do something to move an opportunity through the pipeline – the follow-up.
    The follow-up is therefore a defined and repeatable action that kicks-in whenever an opportunity needs to be moved through the pipeline. For instance, when you meet someone at a networking event your follow-up might be a) send an email saying how much you enjoyed your conversation about topic x and b) add them to your database for future newsletters.

    If someone subscribes on your website your follow-up might be an automatic email with latest offers.


    If you finish a job for a client your follow-up might be a phone call three months later to discuss any other requirements.

    An effective follow-up will be:

    - Consistent and controlled rather than left to chance or whim
    - Persistent (without being irritating)
    - Personalised, even if automated
    - Related to the prospect’s needs, not your product’s features
    - Designed to move the opportunity on in a specific way. For a suspect, say, to establish whether they do in fact have a need for your service. For a prospect, to establish whether they have the money – and so forth
    - A call to action
    - Intriguing and original
    - Via an appropriate medium, or mixture of media
    - Recorded, analysed and the results fed back into the design of the process


    A CRM (Customer Relationship Management) system will help you define and control this process – but you can do it quite simply without one. What you can’t do without is a documented sales process and a bit of organisation.

    Get more great business tips at http://www.nickbettes.co.uk.
  • Does incentivisation work? Oct 17, 2011

    The IoD Berkshire branch had an interesting discussion on this topic recently. Here's my take on the subject:


    The underlying assumption is that rewarding employees for achievement (usually financially) will encourage them to work harder and achieve more in pursuit of those rewards. This view is not borne out by academic research but in practice bonus schemes are widely used. A carefully-designed bonus scheme when implemented on top of good management practices in a well-run business is a useful management tool – but it is not a substitute for these things.


    How to design an incentivisation scheme

    - Incentivisation schemes can be implemented at individual, team or organisation level or use a combination of these

    - Ensure that the rewards incentivise the behaviour you want, are tied to outcomes the employees can affect and match the motivations of the employees concerned (which may not be financial). For some staff it will not be possible to link performance directly to financial outcomes (for example a customer support desk)

    - Understand that as circumstances change every incentivisation scheme will have unexpected and often unwanted side-effects

    - Check that you can afford all possible outcomes

    - The maximum bonus should be enough to recognise over-performance but restricted in terms of total earnings - a maximum of 50% of basic salary, usually far less

    - Tie individual bonuses to overall company performance ie an overall profitability hurdle must be achieved before individual departmental performance related pay kicks in. The downside of this is the fact that good performers might not get what they deserve but at least it avoids the situation where you can’t afford to pay

    - Bonus payments must be self-funding within the bonusable period; that is; they must be more than covered by the improved profit delivered by the over-achievement which triggers the bonus payment

    - Make sure that base and bonus targets match the business plan and budget

    - Link bonus payments to profit not turnover – and cap them

    - Bonus payments should be at the absolute discretion of management

    - You might want to add other desirable outcomes to the scheme. For instance, you could make “100% of department having a job description and appraisal” or “Complete project X” bonus targets

    General

    - The overall bonus scheme rules should be published and each individual should have a written copy of their own targets and rewards, signed by them and their manager

    - Bonus targets should be agreed as part of the business planning cycle and before the start of the year concerned

    - Performance against targets should be reviewed as part of the appraisal and performance management process immediately after year-end

    - If in doubt, keep it simple


    Find out more about our business advice, business coaching and business consultancy for buusiness owners in Reading, Berkshire on our website.
  • Can an SME develop a brand? Oct 10, 2011

    What is a brand?


    -It is the shared reaction that it evokes in the people that matter to your business – customers, prospects, employees, suppliers



    oIt is what they say about you when you aren’t there



    oIt is the way they have come to expect you to behave



    oIt is their assessment of your values and beliefs



    oIt is the feelings they associate with their interaction with you



    oIt is the stories they tell about you



    -It is the things you do to support the reaction



    oThe kind of people you employ and the way they behave



    oThe kind of customers you target and why



    oThe values and beliefs that you run your company by



    oThe processes you use and how well they deliver the kind of product or service your brand promises



    oYour style – of communications, dress, language and premises



    -It is the collection of artefacts that represent your business and trigger the reaction



    oLogos



    oWebsite



    oCompany or product names



    What are the benefits of having a brand?



    -You will be at the top of their list (or the front of their mind) when a prospect thinks about buying what you sell



    -It reduces perceived risk in the mind of the prospect – “No-one ever got fired for buying from IBM.”



    -It multiplies your marketing – people find it easier to relate, and relate to, stories about feelings and a strong brand is shorthand for shared feelings about a company



    -It makes you more referable if you have a widely-accepted positive reputation – there is less risk in recommending you



    How can an SME develop a brand?



    -As with all marketing, a brand is only of any use if you know what your target market and value proposition are



    -You cannot buy a brand – you have to live it and demonstrate it first so that your customers and employees develop the brand through what they say and do



    -It’s about coherence and congruence – be clear on who you serve, why and how; be clear about the values and beliefs that are important to you, your staff and your customers



    -Make sure that this comes through in everything you say and do, from marketing to invoicing, from the website to the way customer services answer the phone



    -Ask the people who matter (employees, customers, prospects, suppliers) why they chose you and what they think about your company. This is your brand.
  • 8 ways to a winning proposition Aug 26, 2011

    Price
    -This can be low price if you have a unique process or advantage that will always keep your costs below the competition’s. If not then competing solely on price is suicide

    -This could be high price if you have a luxury product which is in demand by people who want to be seen as able to afford exclusivity

    Speed
    -This can be fast (for example food or deliveries) as long as you have a process which always delivers faster than anyone else

    -This could be slow (for example fine dining or whisky) as long as the wait is seen as part of the pay-off for the buyer.

    Newness
    -In the technology or gadget market some people buy things simply because they are new. Some businesses compete on performance (for example computers or phones) so they need innovation from their suppliers

    -Oldness can also be a selling point – think antiques, or retro, or reliability

    Convenience
    -Petrol stations can charge more for essential items than supermarkets because they are next to the road and have parking. Convenience could also mean opening hours or home delivery or anything else that makes it easier for the customer

    -Being a one-stop shop

    Range
    -Both breadth of range and numbers stocked can be a powerful USP. If a customer is pushed for time or in a fix they look for the place that always has what they need on the shelf.

    Expertise or specialism
    -The ultimate is to be seen as a specialist in a field of one. This is really what defining a niche is about; making yourself a specialist.

    Quality and Service
    -Never the word “quality” or “service” but a deep understanding of what attributes represent quality and service in your market and a proposition which not only delivers on these but uses these terms to resonate with the customer.

    Reliability
    -This is about understanding your prospects deepest fears about your product and addressing them through a unique guarantee, your longevity or testimonials

    Find out how to get more great business tips here

    Find out more about increasing the value of your business here
  • How to build a great team Jul 14, 2011

    As a business leader it is your role to get the most from your staff. You must become the team coach, not the centre-forward. You must create the conditions for your team to succeed whilst striving to remove any dependency on your own efforts or technical knowledge. Here are some guidelines for creating a successful team.


    - Define a shared, clear, worthwhile purpose for the team – and continue to reinforce this

    o Define clear boundaries for the team and empower every member to question things within those boundaries (not only in their own area of responsibility)

    o Define the desired outcomes. Make these challenging but not demoralisingly difficult

    o Make sure there is regular, objective, actionable feedback on team performance

    o Make improved team functioning, or dynamics, one of the desired outcomes

    - Create wholesome team dynamics*

    o The foundation for any high-performing team is trust amongst the members. People must feel able to be open about fears and failings and to give and receive honest feedback

    o Trust enables constructive conflict, which is necessary to surface and explore options and arrive at optimum decisions

    o Constructive conflict, where everyone has had their opinions heard and debated, allows buy-in from all members to the agreed team goals and decisions and their part in delivering them

    o Because individuals have bought in to the team goals and decisions, individuals are prepared to be held responsible for delivering their elements of the plan and to hold fellow team-members accountable in turn

    o Shared goals and mutual accountability means that the team is focused on results

    - Build in diversity amongst the members

    o Don’t allow superstars to rule the roost. Everyone, including them, puts the team first. If your star performers can’t understand and deliver this then drop them from the team

    o Make sure everyone recognises their own strengths and weaknesses and those of their colleagues. Make sure they understand that great teams are made up of individuals with complementary abilities

    o Respect amongst members starts with individuals having self-respect. Make sure everyone understands how their contribution is valued and inculcate a sense of belonging and feeling of achievement in all team members

    - Create pride within the team

    o Look for opportunities to build the team’s respect and reputation in the wider organisation and beyond

    o Create opportunities to build team coherence beyond the task – perhaps through social bonds

    o Acknowledge and reward their achievements




    *Based on “The Five Dysfunctions of a Team”, Patrick Lencioni
  • Business modelling tool for SMEs Jul 4, 2011

    Is there a model for improving SME performance? Certainly there are lots of business models out there beloved of management consultants and business advisors. The former tend to use models developed by academics for the corporate world which can be thought of as "tools for thought"; the latter tend to use models developed primarily as sales tools: "If we could show you how to increase your turnover by 10%, your margin by 10%..." and so forth.


    Both can be useful for an SME owner but both have drawbacks. Corporate models often assume a complexity in the organisation and market, an intellectual curiosity in the client and a depth of implementation resource that do not exist. The less sophisticated tools on the other hand are often based on a few financial ratios that are assumed to be new to the business owner and which provide only a limited platform for real long-term improvement of the business.


    What is needed to augment these tools is something that bridges the gap. A tool rooted in the daily realities of the SME owner that also makes bigger canvases accessible. A tool which can deliver simple, practical, high-return changes quickly but also provide a platform for continuing dialogue and development. A tool which is supported by the advisor but controlled by the business owner and applied as appropriate to their starting point and progress.


    If you'd like to know more about this tool and how we use it to help SME owners then take a look at our website.
  • 26% of UK SMEs plan to riase funding in 2011 Feb 7, 2011

    What are the other 74% going to be doing?


    This was one of the questions raised by a recent presentation by Baker Tilly to Thames Valley IGT. the figures were based on the company's recent YouGov survey of 500 SMEs.


    The survey also highlighted that business owners were more positive about their own business than their sector or region as a whole - so we're all above average!


    The key objectives for the surveyed companes were top-line growth - in particular, developing new products and markets and organic growth. This strategy on the face of it makes the low level of planned investment even more surprising.


    If you're one of the businesses looking for investment during 2011 then you are much more likely to succeed if you are well-prepared. Nick Bettes Consulting specialises in helping business owners put their business on a more manageable, professional and scalable footing.
  • Organisational structure for SMEs Dec 21, 2010

    Why is structure important in a small business?


    - Employees need to know where they and others fit in an organisation. Lack of clarity can be confusing and de-motivating
    - Growing and changing the business will be simpler if you already have a disciplined and open approach to reporting lines and responsibilities
    - The process of formalising an appropriate structure will force you to address inconsistencies, gaps and duplications – and to consider how effective your people and processes really are


    How do you decide on an appropriate structure?


    - There are some basic principles that you need to embody in your structure


    o Single reporting line – every employee should report to one and only supervisor. (Do not confuse reporting lines with providing a shared service; for instance an administrator can support several managers but should only report to one person for pay and rations issues). Avoid dotted-line reporting lines
    o Division of labour or specialisation – group similar activities and skills together in departments or sections
    o Each post should have clear responsibility for outputs or results which is matched with appropriate authority over the resources necessary to achieve this
    o Span of control – no more than eight direct reports to each position
    o Lean organisation – keep the total number of levels including the leader and the front line to a minimum – in most SMEs this will be between two and four


    - Start at the second level with three main responsibilities


    o Winning business
    o Delivering the product or service
    o Getting paid and admin tasks


    - There should be one position responsible for each of these roles (but this may not be three separate people in a small business)
    - Almost all small businesses should use this functional structure. Larger business may adopt a divisional or matrix structure
    - Do not design a structure to cope with or work around individual inadequacies or historical accidents – deal with them
    - Generally, but not always, a superior should be better rewarded than their employees. It is worth questioning why if this is not the case


    Implementing the structure


    - As with all HR-related activities, the process is as important as the result
    - It is an opportunity to communicate with (ie listen to) your employees. Effective consultation will achieve a better result and more buy-in
    - It should be done in conjunction with job descriptions and, if relevant, the incentivisation scheme
    - The structure should be published as an organisation chart and kept up-to-date


    My workshop programme covers this and every other key part of running a business, from strategy through to invoicing. For more details of this comprehensive and affordable course visit my business advice website.


    If you'd like a free white paper on boosting the value of your company then complete this simple business value calculator
  • Are you serious? Nov 29, 2010

    Yet another dicsussion on LinkedIn over whether businesses should have to grow or not (see the NRG-Networks group)




    It's simple. There are two different types of business owner. Those who think it's their job to produce widgets (or build websites, or fit boilers, or sell insurance...) and those who think it's their job to build a business.




    The first type are really just self-employed. The second type are the true business owners. They are focused on driving their business forward. They spend time thinking about how they get to the next step. They invest in their company and themselves so that they can achieve that next step - because they know that it will take a bigger strategy, a better plan, a tighter operation and more teamwork.


    These business owners will spend time planning for when they come to sell their business. Or maybe they're wondering about getting money from a venture capitalist, business angel, government agency or bank to fund growth plans. They recognise when they reach the point where they and their management team become the limitation on the company's growth and they need to step back and change the way the busines operates. Success in any of these scenarios requires them to raise their game.


    If you're one of the second type (true business owners) then you recognise the value of getting expert help. You will probably want to click here for your free copy of the white paper "Raising Your Game" which addresses the challenges you'll face.
  • Manage Your Time, Grow Your Profits Nov 1, 2010

    As a business owner or director your available time limits the growth and performance of your business unless you manage it properly.

    How can you manage your time better?

    - Schedule a weekly review with yourself. Set aside the same 15 minutes at the start or end of each week to write down the things that were achieved/missed in the past week and the things to be achieved in the next week
    - Don’t just react to the latest stimulus. When a task or interruption appears, train yourself to decide what is urgent, what is important, what is both and what is neither and prioritise accordingly
    - Start each day with a written list of things you are going to achieve that day and review the list at the end of the day
    - Time-box your day - have targets for the next hour, by lunchtime, before I have a coffee...
    - Set aside a time each day when you will accept NO distractions
    - Have a schedule for everything that happens regularly - and stick to it
    - Delegate everything unless there is a compelling reason not to. Aim to deskill tasks and process them using the lowest-cost resource. Taking responsibility for the things that distract you may well enrich the role of someone more junior
    - Fix things for the long term. If you do have to break-off to deal with an unplanned issue don’t deal only with today’s interruption or distraction – understand the root cause and remove it, look at the trend and educate the people involved, set up simple processes, scripts, forms or rules to handle similar events in future
    - Turn email alerts off. If you have an assistant, set them up with access to your email and get them to deal with everything they can, delete the junk and just leave the important stuff that you have to do yourself
    - Set aside a time each day to deal with email – don’t look at it before that time and stop dealing with emails at the end of that period
    - Make sure that every day you have done something to make the business less reliant upon you.

    My workshop programme covers this and every other key part of running a business, from strategy through to invoicing. For more details of this comprehensive and affordable course visit my website.
  • How to deliver great customer service Oct 18, 2010

    Why is customer service so important?
    - In the long run, good customer service is the only way to grow a successful business. Satisfied customers come back to buy more and also tell other potential customers about your service
    - Good customer service forms a virtuous circle with employee satisfaction. People like to work for a business that they can be proud of and they like being able to make customers happy
    - Poor service will produce the opposite effects and eventually destroy a business
    What are the key elements in good customer service?
    - Communication
    o Understand your customer categories and the benefits they seek
    o Engage customers in product development and service improvements
    o Respond quickly and effectively to enquiries via the people who can provide the best solution to their need
    o Agree with each client up-front what is to be delivered and how success will be measured
    o Be accessible to customers at all their preferred times and using all their preferred channels
    o Measure customer satisfaction regularly, publish the results and make sure the results provide a basis for action – then take it
    - Culture
    o Make explicit your values that tell everyone the customer is the top priority
    o Train all employees in customer service and your values and then empower them to do what it takes to deliver great customer service
    o Have an accessible complaints procedure focused on resolving the issue for all customers and all time
    o Measure customer service and reward or acknowledge individuals who excel
    o Do not tolerate poor customer service
    - Processes and outcomes
    o Define how you measure good customer service in your business and what key performance indicators (KPIs) are relevant for controlling the end-to-end process
    o Include targets for these measures for all staff and review performance monthly and annually. Include them in your incentivisation scheme if you run one
    o Publish actual performance figures against target
    o Carry out regular and post-project reviews. Learn from mistakes and successes and capture improvements in revised processes
    o Benchmark against the best performers inside and outside your industry

    My workshop programme covers this and every other key part of running a business, from strategy through to invoicing. For more details of this comprehensive and affordable course visit my website.

    If you'd like a free white paper on boosting the value of your company then complete this simple business value calculator.
  • How resilient is your turnover? Oct 4, 2010

    Not all revenue is equally certain. A business which relies on winning a small number of large contracts each year may well earn the same revenue and profit as a business that gets its income from a large volume of contracted subscriptions and a third company that gets all its income from ad-hoc repair and maintenance across a moderate number of existing customers

    o In theory, the riskier nature of the project business should result in higher profit margins (returns to the shareholders) and the stable nature of the subscription business, lower - but this is not always the case in practice
    o Don’t confuse spreading payments for a project with spreading both the cost and the income by using a different business model. The first impacts cash flow and actually increases risk – so should require an even higher return.

    All other things being equal, businesses should strive for as much locked-in recurring revenue as possible

    How can you translate one-off into recurring revenue? Some examples of spreading payments are

    o A photocopier which is paid for by charging a small amount for every copy made
    o Mobile phones, where the phone is given free in return for a fixed term monthly contract

    Each of these relies on a higher total income over the life of the contract to cover the cash flow hit and the risk of default. It is also necessary to build in a compelling proposition to renew the contract before it expires in order to build revenue resilience
    Some examples of additional recurring revenue are

    o Software license maintenance
    o Membership of a user group
    o Subscription services
    o Service and maintenance contracts

    An alternative way of looking at this is separating future income from resource or asset limitations

    o Translate a single consultant’s time into a course to be sold online in perpetuity
    What is the proposition for the customer? Possible benefits that would induce a customer to sign up for a long-term contract are
    o Access to a continuous stream of new content
    o Access to special offers and discounts
    o A known fixed charge covering all repairs (a form of insurance)
    o The right to free future upgrades
    o Continuous tuning & maintenance of the original product

    One final source of revenue risk is over-reliance on a single or a few customers (high customer concentration) – avoid this.