What You Need To Know As A Business Owner?

As the CEO of your company, part of your responsibility is to know your business, your industry, your competitors and your customers. Frank De Raffele shared 4 things a CEO must know about his business in his article, “Four “Knows” to being a great small business CEO”

1       Know What is Happening in Your Industry Now

 Having this knowledge will help you determine how events in the industry will affect your business over time, as well as preparing your business for the future. You need to know what is trending and how it is relevant to your business. Not only do you need to know where the industry will be but you need to know how it is going to transition into the future.  

Don’t wait until everyone knows what needs to be done before you, else you will be playing ‘catch up’ or ‘keep up’ and that will be hard when they have a bigger budget than you do. Being current earns you customers trust and builds your credibility in the industry. Adapting is easier when changes occur in small than in big business.

2.     Know That Technology is Your Friend. 

A recent study showed that over 70% of small business owners are yet to adopt technology in their businesses. Successful businesses are leveraging on the huge benefits of technology to lower cost of operation, and at the same time, reach-out to more actual and potential customers.

Technology, whether in form of new software, smart phones, websites, internet marketing, gizmos, gadgets etc. If it can help you market, sell, run or manage your business more effectively then you need to know about it and use it even if it means engaging someone to keep you up-to-date on the newest trends in technology in your business.

3.     Know When Your Target Market Shifts.

 Do you know the demographics of your customers? Market characteristics are changing very fast. The set of target market you had maybe 10 years ago has changed. Even if they are the same people, their style of decision may have changed and even the factors that influenced them to buy years back may not be the same today. Make efforts to identify changing variables within your customer base. You must be strategic in your thinking and your decision making. Don’t always rely on yesterday’s sales record; know when the customers are moving.

4.     Know and be the leader that is needed.

Don’t just be “a” leader, be “the” leader that is needed.  As businesses grow, shrink, struggle and thrive, your employees are watching to know how you react to crisis.  

 As a leader, your employees will respond to situations in the business as you respond. Show them that you are capable of handling crisis, and that you can lead them out. The more respect, confidence and trust they have in you, the more influence
you will have with them. Be the leader that they need, not just who you think you should be. As the CEO it is important to know the pulse of what is going on with your people.

Culled from:

Four “Knows” to being a great small business CEO by Frank De Raffele.

March 7, 2011 Hudson Valley BUSINESS JOURNAL

Consumer's Need Still Drives Business

"From the start, our entire business, from design to manufacturing and sales ... was oriented around listening to the customer, responding to the customer and delivering what the customer wanted." Michael Dell

Every lost customer is an opportunity to learn more about how your company handles its customers' need.

Some businesses have been punished at one time or the other for neglecting core needs of the consumer while focusing on other distracting factors like profitability, quality of product, competitors activities etc. As a business grows, often, there is a tendency to change from dealing with customers' needs to reducing cost of operation and making profit.

While it is important to ensure that you operate your business at the most profitable level, keep the competitors from your market, its also necessary not to sacrifice customers need for that. Every customer has a reason for choosing to go with your product, and that choice should always be considered as a favour, and must be respected.

Companies like Dell were successful because of the direct customer contact business model they operated. They gained information through regular interaction with customers and designed their products to match each customers need and expectation. As long as it maintained this philosophy, there was no problem however, the moment Micheal Dell stepped down, and Dell changed its focused to profitability, customers complaint increased and the company lost its market leadership. It took the coming back of Micheal Dell to put the business in the right perspective.

 In the case of IBM, they were too confident that their customers will definitely remain with them irrespective of what the competitors are doing. When Gerstner took over as IBM's CEO in 1993, he identified that IBM's focus had shifted from customers to other activities aimed at increasing efficiency of the product, and reducing cost of operation. At the same time customer tastes were shifting from big mainframes toward networks of smaller desktops.

It is good to be confident of your product or service, and even improve on it, but only the customer defines what quality product or service is. Needs change with time, and consumers will not continue to stick to a product that doesn't meet their current need. Imagine that IBM detected the need from Mainframe computers to desktop computers, they may still continue to lead the market.

How about Coca Cola and Pepsi, sometimes focusing on the activities of the competitors can be very detrimental to your business. Coke wanted to change the taste of its flagship product because they felt that Pepsi was taking the market from them. But the outcry from the consumers showed that the original taste was still preferable. 

No matter how big or small your business is, if customers need is not the driving force, you are heading for a crash.

Loyalty Programs Don't Make Loyal Customers

Loyalty programs are designed to reward customer experiences when they patronize your business or store. But are these rewards programs really worth it? Although they are free to join, they cost the customer more money once the decide to change their buying behaviour because of the reward. 

 As good as this program may look, studies have shown that it has a little effect on customer loyalty and retention. Although businesses engage in this reward program to change consumer behaviour,  Byron Sharp, professor of marketing science from UniSA, noted that such programs don't change people's buying behaviour because they will end up buying such product anyway,  reward or no reward. So consumers are not really buying because of the reward but for other factors.

Consumers choose where to buy based on a few dominant factors like store location, parking, product range, familiarity with layout, adjacent stores and pricing, while loyalty programs have the least influence on consumer choice.

Money cannot buy loyalty, and even when it does, it is only for a short time. Consumers want to maximize pleasure, and no amount of loyalty programs will do that. True loyalty from your customers is a function of your relationship with them and their needs.

Loyalty means mutual commitment -- a willingness to give up alternatives. Loyalty is given when customers expect to realize compelling benefits from their choices - Marketing Magazine, 2013

Lessons from Brazil’s Family Businesses

Brazil is one of the nations expected to pioneer the next set of developed countries. Everything looks set, and as country with 85% small and family businesses in its economy, there are few things entrepreneurs can learn from their family businesses.

You have to establish a proper leadership structure.

To run your business successfully, you will need to put up a leadership structure or hierarchy whether you have employees or not. Take yourself as the first employee, and act like you have a boss that you are answerable to. This will help you to maintain an organizational structure such that as you grow and bring in more people, they can easily fit into their positions. A well-defined hierarchy is essential; otherwise your efforts may become a mess

Be more Adaptable

One great advantage family businesses have is that they can easily adapt in a crisis compared to a company managed by a board, where you have to consult other people and get approvals for everything.

Being adaptable means you are more focused on long term growth of your business than short-term. You are quick to change as situations change.

Technology is key

You cannot leave aside technology improvements in your company. Look for latest technology that your industry is adopting and follow suit.

Maintaining traditions

Business growth is always a goal, as long as the tradition that brought the business to where it is maintained. Sometime there may be pressure by other stakeholders on your business, however, remember that you don’t change a winning formula until it stops wining.

Conflict

Don’t run your business on emotions. Always get the best hands to advice or work for you. Don’t hire someone because they are family members. Bring someone on board because there is a value they will add to the business.

Succession issue

Always have in mind that your business is going concern, it is expected to continue as long as positive.

These are few tips some family businesses have practiced in growing their company.

Culled from BBC Business News