A whistle blows to mark the end of the four minutes allocated for each introduction and there is a scramble to find a new contact and sell yourself all over again.
It’s a format that will be familiar to anyone who has signed up for speed dating. This, however, is about a different kind of relationship.
With speed dating, the evening guarantees a large of introductions in a short space of time. It is one of the newest ways to meet a partner and has revolutionised the dating game.
However, at an exclusive club in Liverpool, it is not romance that nearly 30 participants are looking for, but developing valuable business contacts. And the organisers believe that speed networking for business will become as big as the speed dating idea that spawned it.
After being invited to see it for myself in the bar of the Racquets Club in Liverpool, beforehand a few people introduced themselves. Some had been before and acknowledged old acquaintances, but for many it was a step into the unknown.
In a large, upstairs room, everyone was seated while the master of ceremonies made the introductions.
Then, with the simple rules clearly outlined – find someone to talk to on the blast of the whistle; four minutes later, when another whistle blows, stop talking and meet someone new – it was off to do a bit of rapid networking.
The idea is not to hard-sell, but that didn’t stop one of my contacts from trying to flog me a deal to cut the price of my phone and utility bills. He was, however, the exception.
Overall, the evening is not about selling, but more about cultivating business contacts, though there are always a few who try.
To be fair, it was not a one-way street. Many were genuinely interested in what I did and were happy to talk about their own business. Four minutes is just enough to make the most cursory summary of each other, but everyone carried business cards to hand out after each session.
It was a fairly intense event, and a good idea in principle, although there were too many ‘suppliers’ eager to sell their products to other networkers who were not ‘buyers’ – an equal mix of buyers to sellers would have been ideal.
This brand of networking came about when Glenn Robertson was talking to a friend who had been on a speed dating evening. They realised the technique could be adapted, and 18 months ago the idea was born.
Unfortunately for them, with any innovative idea, it is not long before others catch on. They hold evenings once a month in both Liverpool and Chester, but similar events are being held nationwide as others follow the lead.
The speed networking is incorporated into a membership package offering online networking lead generation, which lets members know quickly about suitable business opportunities.
If somebody types in their business needs, then they are put in touch with providers via email and text messages. It has cost tens of thousands pounds to get the technology up and running, but it can be seen as a useful way forward for businesses.
Friday, 27 November 2009
Thursday, 12 November 2009
How To Use Word Of Mouth Advertising
Recently I flew with the Dutch airline KLM, and I had the worst flight I’ve ever had.
Halfway through the flight it came to light that behind us was sitting three Interpol agents who were extraditing a felon back to Ecuador. I cannot begin to tell you want is wrong with this scenario – especially when they gave him metal cutlery with his in-flight meal!
This was one in a long line of shortcomings which I haven’t got enough time to go into here.
Why am I telling you all this? Because this is a lesson that all firms – including KLM – should learn: that good old word of mouth advertising is still the best advertisement any business can generate even in this day of high technology.
Literally billions of pounds are spent by the huge corporations getting brands established in the public eye. Yet when all is said and done, a simple recommendation from a good friend or acquaintance will count for far more than any glitzy advertising campaign ever will.
Put simply, word of mouth advertising is the most powerful advertising medium any business can harness. In a world full of advertising noise and hype we become quite immune to the continual bombardment of the senses by the big spending companies and mostly ignore the message they are delivering.
This is why so much money is thrown at advertising by all business just to get themselves heard.
Did you know a full 80 to 90 percent of many company start-up budgets are directed into advertising? Spectacular failures have been witnessed in recent times as many Dotcom companies have failed to live up to the hype and glamour projected by the advertising agencies.
Often the collapse occurred after many millions of unwitting shareholders’ money was wasted.
In a conventional system of manufacturing and retailing the company produces the product for a known figure. Say the company is a vehicle manufacturer and a car they sell through a dealer is sold for (not worth) £10,000.
The manufacturer of that car would produce it for around £4,000 net cost which would include them making a profit from the car when sold to a dealer.
However this is just the start of the costs. To establish a strong position in the market place they then allocate perhaps 50% of the cost of manufacturing the car to advertising. So they have to make £6,000 to break even. On top of this they also have many hidden costs of running and maintaining expensive machinery and research and development projects.
This is all before the car even leaves the factory floor. So by the time the car is shipped to a dealer the actual price has been increased by a staggering 100 percent.
Then to top it all off, the dealer does their advertising so they can compete with all the other dealers vying for the customer. In all, 60 percent or more of the retail price of a car can be eaten up in distribution and marketing costs.
How much do you think a can of Coke would cost to manufacture? If you answered 5p or less you are close to the mark. It is somewhere under 5p to produce.
Yet that same can of coke after everyone has had a slice of the profits is sold to the public for about a pound. Now if someone tells someone else about this “great drink” do they get paid for it? Not on your life!!! The advertising agencies account for a great slice of the profit and the retailer makes the rest.
To harness the power of word of mouth is really the key for success in business nowadays, considering that consumers believe more about what other consumers advise than anything else.
Halfway through the flight it came to light that behind us was sitting three Interpol agents who were extraditing a felon back to Ecuador. I cannot begin to tell you want is wrong with this scenario – especially when they gave him metal cutlery with his in-flight meal!
This was one in a long line of shortcomings which I haven’t got enough time to go into here.
Why am I telling you all this? Because this is a lesson that all firms – including KLM – should learn: that good old word of mouth advertising is still the best advertisement any business can generate even in this day of high technology.
Literally billions of pounds are spent by the huge corporations getting brands established in the public eye. Yet when all is said and done, a simple recommendation from a good friend or acquaintance will count for far more than any glitzy advertising campaign ever will.
Put simply, word of mouth advertising is the most powerful advertising medium any business can harness. In a world full of advertising noise and hype we become quite immune to the continual bombardment of the senses by the big spending companies and mostly ignore the message they are delivering.
This is why so much money is thrown at advertising by all business just to get themselves heard.
Did you know a full 80 to 90 percent of many company start-up budgets are directed into advertising? Spectacular failures have been witnessed in recent times as many Dotcom companies have failed to live up to the hype and glamour projected by the advertising agencies.
Often the collapse occurred after many millions of unwitting shareholders’ money was wasted.
In a conventional system of manufacturing and retailing the company produces the product for a known figure. Say the company is a vehicle manufacturer and a car they sell through a dealer is sold for (not worth) £10,000.
The manufacturer of that car would produce it for around £4,000 net cost which would include them making a profit from the car when sold to a dealer.
However this is just the start of the costs. To establish a strong position in the market place they then allocate perhaps 50% of the cost of manufacturing the car to advertising. So they have to make £6,000 to break even. On top of this they also have many hidden costs of running and maintaining expensive machinery and research and development projects.
This is all before the car even leaves the factory floor. So by the time the car is shipped to a dealer the actual price has been increased by a staggering 100 percent.
Then to top it all off, the dealer does their advertising so they can compete with all the other dealers vying for the customer. In all, 60 percent or more of the retail price of a car can be eaten up in distribution and marketing costs.
How much do you think a can of Coke would cost to manufacture? If you answered 5p or less you are close to the mark. It is somewhere under 5p to produce.
Yet that same can of coke after everyone has had a slice of the profits is sold to the public for about a pound. Now if someone tells someone else about this “great drink” do they get paid for it? Not on your life!!! The advertising agencies account for a great slice of the profit and the retailer makes the rest.
To harness the power of word of mouth is really the key for success in business nowadays, considering that consumers believe more about what other consumers advise than anything else.
Thursday, 29 October 2009
How To Turn Business Goodwill Into Cash
Setting-up a company is usually a relatively easy process; but now closing it down again is likely to prove much more troublesome and expensive.
First there is the administration. You have to notify suppliers and customers. Apart from that there are the tax challenges: in short, there are tax reliefs available that ease the way for the self-employed to incorporate, but there are no comparable tax reliefs to assist disincorporation.
Instead, there are additional potential tax liabilities that may be generated as a result of the merry-go-round of setting up and closing down a company.
The most costly of these is the possible treatment of business goodwill. For example, say you have a fairly typical small firm, which might be regarded as having goodwill worth £50,000.
The ‘goodwill value’, which will often need to be agreed with the Inland Revenue, is generally calculated on the basis of a multiple of prior years’ profits (three years in many sectors).
As part of the assistance provided to incorporation, a ‘tax election’ can be made by the sole trader under which no tax is paid on the gift of the transfer of goodwill, which would otherwise be deemed as transferred at market value.
But the situation is horribly different on disincorporation. The business’s goodwill might by now have increased to £60,000, but there is no equivalent tax election available for the company. This means that tax is payable, at 19 per cent, on the full £60,000 transferred goodwill.
Additionally, the individual would be treated as if they were paid a dividend of the £60,000 – generating personal tax on the entire sum.
And any property transferred to a company on incorporation could generate a similar tax penalty of that of goodwill on disincorporation. The situation is less clear with IT equipment and cars given to a company, where the tax treatment will depend on circumstance.
If all this sounds complicated, that’s because it is. Indeed, it is doubtful many businesses would become incorporated if they knew all of the complicated hassle involved should they decide to shut up shop.
This in turn leads to the situation where many one-person companies are likely to opt to quietly ditch the company, unaware of the risks involved. Some may omit to close the company bank account or continue to use company stationery, making it difficult to claim that they are not still trading as a company.
People who are trading on the basis of their own name might be regarded as having, de facto, taken the goodwill out of the company, generating the type of tax bill which I’ve outlined above.
It will be very easy for the Revenue to ask questions about what has happened to the company, aware of the likely tax liability arising from the goodwill treatment. If many small businesses opt to disincorporate, the tax generated for the Revenue could be significant.
There may be a slight glimmer of hope for some businesses recently incorporated, and which now want to disincorporate. Recent asset transfers may not have yet been assessed by the Inland Revenue and there could be scope for negotiation on the goodwill valuation.
Many sole traders who have converted into companies will find their best option is accepting that disincorporation has more penalties than benefits.
But it is important to put the issue of goodwill into perspective. Many companies will have valued goodwill when they incorporated, and will indeed need to be careful if they wish to disincorporate.
Companies which exist to market one person’s services, however, will often own no goodwill, because what goodwill there is attaches to the director personally: so for many of the very small companies that will now wish to return to unincorporated status, there should be no goodwill problem.
For the rest of us, however, less of minefield in this area would be greatly appreciated.
First there is the administration. You have to notify suppliers and customers. Apart from that there are the tax challenges: in short, there are tax reliefs available that ease the way for the self-employed to incorporate, but there are no comparable tax reliefs to assist disincorporation.
Instead, there are additional potential tax liabilities that may be generated as a result of the merry-go-round of setting up and closing down a company.
The most costly of these is the possible treatment of business goodwill. For example, say you have a fairly typical small firm, which might be regarded as having goodwill worth £50,000.
The ‘goodwill value’, which will often need to be agreed with the Inland Revenue, is generally calculated on the basis of a multiple of prior years’ profits (three years in many sectors).
As part of the assistance provided to incorporation, a ‘tax election’ can be made by the sole trader under which no tax is paid on the gift of the transfer of goodwill, which would otherwise be deemed as transferred at market value.
But the situation is horribly different on disincorporation. The business’s goodwill might by now have increased to £60,000, but there is no equivalent tax election available for the company. This means that tax is payable, at 19 per cent, on the full £60,000 transferred goodwill.
Additionally, the individual would be treated as if they were paid a dividend of the £60,000 – generating personal tax on the entire sum.
And any property transferred to a company on incorporation could generate a similar tax penalty of that of goodwill on disincorporation. The situation is less clear with IT equipment and cars given to a company, where the tax treatment will depend on circumstance.
If all this sounds complicated, that’s because it is. Indeed, it is doubtful many businesses would become incorporated if they knew all of the complicated hassle involved should they decide to shut up shop.
This in turn leads to the situation where many one-person companies are likely to opt to quietly ditch the company, unaware of the risks involved. Some may omit to close the company bank account or continue to use company stationery, making it difficult to claim that they are not still trading as a company.
People who are trading on the basis of their own name might be regarded as having, de facto, taken the goodwill out of the company, generating the type of tax bill which I’ve outlined above.
It will be very easy for the Revenue to ask questions about what has happened to the company, aware of the likely tax liability arising from the goodwill treatment. If many small businesses opt to disincorporate, the tax generated for the Revenue could be significant.
There may be a slight glimmer of hope for some businesses recently incorporated, and which now want to disincorporate. Recent asset transfers may not have yet been assessed by the Inland Revenue and there could be scope for negotiation on the goodwill valuation.
Many sole traders who have converted into companies will find their best option is accepting that disincorporation has more penalties than benefits.
But it is important to put the issue of goodwill into perspective. Many companies will have valued goodwill when they incorporated, and will indeed need to be careful if they wish to disincorporate.
Companies which exist to market one person’s services, however, will often own no goodwill, because what goodwill there is attaches to the director personally: so for many of the very small companies that will now wish to return to unincorporated status, there should be no goodwill problem.
For the rest of us, however, less of minefield in this area would be greatly appreciated.
Thursday, 15 October 2009
How To Start Trading Online
For many businesses technology means cutting costs, improving process efficiency and getting close to your customers and suppliers.
The internet has without doubt helped in achieving these goals, whether through online trading or extranets and intranets.
It is no longer a question of “can I afford to use technology?” Now, it is “can I afford not to?” It is not simply online access, which offers small businesses significant new revenue and cost saving benefits, but also integrating technology throughout the business.
So, assuming you want to embark upon implementing a technology strategy (if you have not done so already) where do you start?... how do you start?... how much will it cost?... what legal and security issues are involved?... how do you integrate it with the rest of your marketing and business strategy?
But not every business necessarily needs to trade online to remain competitive: however, presence on the worldwide web is becoming increasingly important.
Those companies who keep their heads in the sand and say: “I’ve been fine until now without the web, so why change?” forget the fact that, with every day that passes, their web-wise competitors will be eating away at their market share. There is no such thing as a local or regional market anymore.
You can buy whatever you want on the internet from businesses at the other end of the country, or even overseas. In addition the resulting cost reductions and improved partner and customer satisfaction which results form a successful e-business solution is immeasurable.
Before setting up your website, you need to establish what your objectives are for having a site, how it will fit in with your overall business objectives and how it will work as an integrated part of your business plan. You also need to ensure you have sufficient resources to meet any new demand you generate from your customers or suppliers.
There is no one way to put a website together. Many are simple ‘brochureware’ sites, where companies have simply scanned in their corporate brochure to give them a presence on the web. Some go a stage further. These are more dynamic, perhaps with some interesting graphics. There is a menu bar showing how you can get more information on the company’s history, products and services and the company goes to the trouble of updating the site regularly.
Then, there are sites which really mean business and allow you to buy goods and services online. The most sophisticated ones may even have a ‘virtual’ salesperson who will answer frequently-asked questions (called FAQs) or connect you through to a real salesperson.
Which one is right for you? That depends entirely on what you want to achieve with your website, your budget (of course) and how the website fits in with your overall business and marketing strategies.
Your site is your shop window - not just to the people who pass by your premises every day, but to the entire world. Think hard about the words you use: consider how you would normally talk to your customer base and adopt that tone of voice. For some businesses, this will be professional, even formal, whereas other businesses can afford to be more relaxed - even casual.
Do not use too many words as no one really wants to spend hours wading through text. So keep it brief and to the point. If you do have something which really needs lots of words, such as your corporate brochure it is best to make it available as a downloadable facility.
As the saying goes, pictures say more than a thousand words, but too many will take ages to download. Internet users are impatient people and quickly give up. Therefore, pictures should be very small in the digital sense of the word, making them fast to download whatever the connection speed.
If you have overseas customers, or are looking to expand your overseas business, you need to make sure that you are fully prepared for handling this. There are many international implications to bear in mind, including dealing in foreign currencies, local customs, foreign trade laws and cultural differences.
Also, depending on how many customers you have in each country and the importance of the country in your overall business strategy and objectives, you may want to consider making some or all of the pages available in different languages.
Ensure your site is easy to navigate, with a clear menu bar on the side of each page taking you to any part of the site at any time and with high-visibility contact details. Complicated sites, which take ages to get to the information wanted, can exasperate users and make them give up.
Make sure your homepage - the first one people see - really works for you. Big, well-known companies can perhaps afford to just have their name and a click-to-enter icon. But anyone trawling through a series of websites, looking for a specific product or service, wants to know quickly what you do or do not sell.
The internet has without doubt helped in achieving these goals, whether through online trading or extranets and intranets.
It is no longer a question of “can I afford to use technology?” Now, it is “can I afford not to?” It is not simply online access, which offers small businesses significant new revenue and cost saving benefits, but also integrating technology throughout the business.
So, assuming you want to embark upon implementing a technology strategy (if you have not done so already) where do you start?... how do you start?... how much will it cost?... what legal and security issues are involved?... how do you integrate it with the rest of your marketing and business strategy?
But not every business necessarily needs to trade online to remain competitive: however, presence on the worldwide web is becoming increasingly important.
Those companies who keep their heads in the sand and say: “I’ve been fine until now without the web, so why change?” forget the fact that, with every day that passes, their web-wise competitors will be eating away at their market share. There is no such thing as a local or regional market anymore.
You can buy whatever you want on the internet from businesses at the other end of the country, or even overseas. In addition the resulting cost reductions and improved partner and customer satisfaction which results form a successful e-business solution is immeasurable.
Before setting up your website, you need to establish what your objectives are for having a site, how it will fit in with your overall business objectives and how it will work as an integrated part of your business plan. You also need to ensure you have sufficient resources to meet any new demand you generate from your customers or suppliers.
There is no one way to put a website together. Many are simple ‘brochureware’ sites, where companies have simply scanned in their corporate brochure to give them a presence on the web. Some go a stage further. These are more dynamic, perhaps with some interesting graphics. There is a menu bar showing how you can get more information on the company’s history, products and services and the company goes to the trouble of updating the site regularly.
Then, there are sites which really mean business and allow you to buy goods and services online. The most sophisticated ones may even have a ‘virtual’ salesperson who will answer frequently-asked questions (called FAQs) or connect you through to a real salesperson.
Which one is right for you? That depends entirely on what you want to achieve with your website, your budget (of course) and how the website fits in with your overall business and marketing strategies.
Your site is your shop window - not just to the people who pass by your premises every day, but to the entire world. Think hard about the words you use: consider how you would normally talk to your customer base and adopt that tone of voice. For some businesses, this will be professional, even formal, whereas other businesses can afford to be more relaxed - even casual.
Do not use too many words as no one really wants to spend hours wading through text. So keep it brief and to the point. If you do have something which really needs lots of words, such as your corporate brochure it is best to make it available as a downloadable facility.
As the saying goes, pictures say more than a thousand words, but too many will take ages to download. Internet users are impatient people and quickly give up. Therefore, pictures should be very small in the digital sense of the word, making them fast to download whatever the connection speed.
If you have overseas customers, or are looking to expand your overseas business, you need to make sure that you are fully prepared for handling this. There are many international implications to bear in mind, including dealing in foreign currencies, local customs, foreign trade laws and cultural differences.
Also, depending on how many customers you have in each country and the importance of the country in your overall business strategy and objectives, you may want to consider making some or all of the pages available in different languages.
Ensure your site is easy to navigate, with a clear menu bar on the side of each page taking you to any part of the site at any time and with high-visibility contact details. Complicated sites, which take ages to get to the information wanted, can exasperate users and make them give up.
Make sure your homepage - the first one people see - really works for you. Big, well-known companies can perhaps afford to just have their name and a click-to-enter icon. But anyone trawling through a series of websites, looking for a specific product or service, wants to know quickly what you do or do not sell.
Thursday, 1 October 2009
The Importance Of Rebranding Your Business
The vagaries of public taste can be the curse of many small businesses but one company has shown that a little marketing savvy can go a long way and help turn an out-of-fashion product into a desirable consumer foodstuff. Forget the humble pilchard. In its place is now the Cornish sardine.
Now down in the west of England they know full well that the pilchard and the sardine are one and the same. However, to the average consumer the idea of a pilchard conjures up images of ring-pull tins and tomato sauce. The sardine on the other hand evokes memories of Spanish and Portuguese holidays and barbeques in the sun.
How the pilchard came to be transformed into the Cornish sardine and its subsequent pride of place on supermarket fresh fish counters owes something to a bit of luck, allied to a slice of ingenuity. It also provides a classic example for SMEs everywhere of how marketing can make a huge difference to a company's fortunes. Though, in fairness, the success of the Newlyn-based Pilchard Works is exceptional by anyone's standards.
Big budgets can turn around products. Marketing gurus point to the success of Burberry in turning a staid tartan fabric into a must-have fashion accessory and television watchers everywhere will have been amused by the adverts for Skoda cars and how they have been transformed from cheap and nasty to rather desirable.
However, throwing large sums at rebranding exercises can often backfire. The launches of Consignia and the torch-carrying logo of BT swallowed up millions of pounds and were deemed failures.
The success of Pilchard Works offers a valuable example to other SMEs. I consider marketing to be delivering value to the customer. Often the publicity around rebranding doesn’t help. The idea of the Cornish sardines is a lovely story, and it shows how a small company has identified a gap between what is being delivered and what the customer wants.
The pilchard conjures up a negative image in people's minds, while the sardine is associated with sunshine, heat and happy times on holidays. Small business can take heart from this example. It is about being close to the customer and identifying what value can be delivered. And that can pretty much apply to anything.
A simple gap exercise to look at what a company is offering and what the customer wants, and how great or otherwise is the gulf between the two, is a valuable one for any SME and doesn’t need to be linked to rebranding.
The Pilchard Works experience highlights some of the key rules SMEs need to adhere to when promoting their products. It also, of course, shows the massive impact a successful strategy can have on the sales of a small company. Too many smaller companies tend to be similar to other companies within their areas rather than standing out.
SMEs can sometimes have an advantage over larger companies with bigger budgets. They can be more flexible and concentrate on one product and a niche customer market, while larger rivals may have a range of products and a varied customer base.
What the pilchard producer has done is understand a target group of customers and aim their product so that it appeals. And that is a valuable lesson whether selling sardines or whatever. They have used a rebranding exercise, but there are other ways of getting a message across, such as redesigning the packaging or using a particular distribution partner.
An example is a drink producer called Innocent Drinks. They produce an expensive, yoghurt-based smooth drink and have identified a niche, premium market. The drink is seen as healthy and organic and has appealed to the snack lunchtime market. A tie up with Starbucks that has got it onto the shelves of the coffee house has been a further boost.
Whether a yoghurt drink or a sardine, the rules are the same: you can change your image without access to a large PR campaign.
Now down in the west of England they know full well that the pilchard and the sardine are one and the same. However, to the average consumer the idea of a pilchard conjures up images of ring-pull tins and tomato sauce. The sardine on the other hand evokes memories of Spanish and Portuguese holidays and barbeques in the sun.
How the pilchard came to be transformed into the Cornish sardine and its subsequent pride of place on supermarket fresh fish counters owes something to a bit of luck, allied to a slice of ingenuity. It also provides a classic example for SMEs everywhere of how marketing can make a huge difference to a company's fortunes. Though, in fairness, the success of the Newlyn-based Pilchard Works is exceptional by anyone's standards.
Big budgets can turn around products. Marketing gurus point to the success of Burberry in turning a staid tartan fabric into a must-have fashion accessory and television watchers everywhere will have been amused by the adverts for Skoda cars and how they have been transformed from cheap and nasty to rather desirable.
However, throwing large sums at rebranding exercises can often backfire. The launches of Consignia and the torch-carrying logo of BT swallowed up millions of pounds and were deemed failures.
The success of Pilchard Works offers a valuable example to other SMEs. I consider marketing to be delivering value to the customer. Often the publicity around rebranding doesn’t help. The idea of the Cornish sardines is a lovely story, and it shows how a small company has identified a gap between what is being delivered and what the customer wants.
The pilchard conjures up a negative image in people's minds, while the sardine is associated with sunshine, heat and happy times on holidays. Small business can take heart from this example. It is about being close to the customer and identifying what value can be delivered. And that can pretty much apply to anything.
A simple gap exercise to look at what a company is offering and what the customer wants, and how great or otherwise is the gulf between the two, is a valuable one for any SME and doesn’t need to be linked to rebranding.
The Pilchard Works experience highlights some of the key rules SMEs need to adhere to when promoting their products. It also, of course, shows the massive impact a successful strategy can have on the sales of a small company. Too many smaller companies tend to be similar to other companies within their areas rather than standing out.
SMEs can sometimes have an advantage over larger companies with bigger budgets. They can be more flexible and concentrate on one product and a niche customer market, while larger rivals may have a range of products and a varied customer base.
What the pilchard producer has done is understand a target group of customers and aim their product so that it appeals. And that is a valuable lesson whether selling sardines or whatever. They have used a rebranding exercise, but there are other ways of getting a message across, such as redesigning the packaging or using a particular distribution partner.
An example is a drink producer called Innocent Drinks. They produce an expensive, yoghurt-based smooth drink and have identified a niche, premium market. The drink is seen as healthy and organic and has appealed to the snack lunchtime market. A tie up with Starbucks that has got it onto the shelves of the coffee house has been a further boost.
Whether a yoghurt drink or a sardine, the rules are the same: you can change your image without access to a large PR campaign.
Friday, 18 September 2009
How To Devise Your Business Strategy
It is widely accepted that after their defeat in World War II, the Japanese were the first to embrace the ideal of ‘business is war’. This means that business uses the ideas of the battlefield and applies them to the world of business.
And it certainly worked for Japan: today, Japan is a major or dominant power in almost every world strategic industry including finance, communications, mass-transit, semi-conductors, motor vehicles, and popular entertainment.
The world’s largest banks are all Japanese. The largest record company in America is Japanese, and two of the three biggest movie / entertainment companies in America are Japanese. Many big companies in the US like Loews Theatres, Firestone Tires and 7/11 stores are also Japanese. In fact, 7 of the 10 largest companies in the world are Japanese.
Furthermore, Japan today is the world’s biggest manufacturer of cars, having surpassed the United States in the mid 1980’s. These all used to be American dominated industries 25 years ago.
Believe it or not, this phenomenal success can be traced back to ancient China, in particular a great military general named Sun Tzu. It is reckoned that he lived from around 544 BC to 496 BC in the ancient state of Ch’i.
Sun Tzu wrote the earliest – and still the most revered – military strategy book in the world. This masterpiece is best known to most of us as ‘The Art of War’ and can be found on the shelves of most good bookshops. Since naming a written work after its author was customary in ancient China, the text was originally referred to as simply ‘Sun Tzu’.
Considering the countless texts lost or destroyed throughout China’s history, the remarkable survival and relevancy of Sun Tzu’s ‘The Art of War’ to this very day attest to its immeasurable value.
This fact was not lost on the Japanese. Sun Tzu was first introduced to Japan as early as 400 A.D. Japan’s leaders earnestly applied Sun Tzu to warfare: the samurai would peruse its contents before each battle. They were among the most diligent practitioners of the book’s concepts, and came up with their own term to encapsulate its meaning: Sonshi.
I’m sure your business would like to one day be the same size as your average keiretsu (almost all the significant companies in Japan are aligned into one of about 6 keiretsu or business ‘groupings’. These are loosely linked ‘super-corporations’ for lack of a better term. Most of the Japanese companies whose brands we know and love are in these keiretsus. Several of these keiretsus have been around a very long time (before WWII) dating back to feudal-like family-run trading houses. Mitsubishi and Mitsui are two of the more famous ones. Famous companies like Nissan, Toshiba, and Sumitomo Bank are all in keiretsus). If you want to win your own war, then you need to look at your business strategy.
The word ‘strategy’ is used a lot and when there is a particularly big problem, then organisations will say that they are drawing up a ‘detailed strategy’ in order to deal with it. In reality, however, strategies should never be detailed: a strategy should be simple, it’s the way that the objectives of the strategy are achieved – the tactics – that are usually the complicated and imaginative part.
Strategy is almost always long-term planning. It involves all those things which you’ll need to worry about for a long time. Formulating your strategy must have as its final goal your total and unquestionable ‘victory’. If not, then the strategy is incomplete.
With this ultimate goal in mind, you must ask yourself the question: “What stands in my way?”
From this, your plan should be simple and flexible enough to encompass most probable outcomes (possible alliances, definite enemies, highly contested and less contested territories, etc) and lead you to victory. This plan, in brief, is your strategy.
And it certainly worked for Japan: today, Japan is a major or dominant power in almost every world strategic industry including finance, communications, mass-transit, semi-conductors, motor vehicles, and popular entertainment.
The world’s largest banks are all Japanese. The largest record company in America is Japanese, and two of the three biggest movie / entertainment companies in America are Japanese. Many big companies in the US like Loews Theatres, Firestone Tires and 7/11 stores are also Japanese. In fact, 7 of the 10 largest companies in the world are Japanese.
Furthermore, Japan today is the world’s biggest manufacturer of cars, having surpassed the United States in the mid 1980’s. These all used to be American dominated industries 25 years ago.
Believe it or not, this phenomenal success can be traced back to ancient China, in particular a great military general named Sun Tzu. It is reckoned that he lived from around 544 BC to 496 BC in the ancient state of Ch’i.
Sun Tzu wrote the earliest – and still the most revered – military strategy book in the world. This masterpiece is best known to most of us as ‘The Art of War’ and can be found on the shelves of most good bookshops. Since naming a written work after its author was customary in ancient China, the text was originally referred to as simply ‘Sun Tzu’.
Considering the countless texts lost or destroyed throughout China’s history, the remarkable survival and relevancy of Sun Tzu’s ‘The Art of War’ to this very day attest to its immeasurable value.
This fact was not lost on the Japanese. Sun Tzu was first introduced to Japan as early as 400 A.D. Japan’s leaders earnestly applied Sun Tzu to warfare: the samurai would peruse its contents before each battle. They were among the most diligent practitioners of the book’s concepts, and came up with their own term to encapsulate its meaning: Sonshi.
I’m sure your business would like to one day be the same size as your average keiretsu (almost all the significant companies in Japan are aligned into one of about 6 keiretsu or business ‘groupings’. These are loosely linked ‘super-corporations’ for lack of a better term. Most of the Japanese companies whose brands we know and love are in these keiretsus. Several of these keiretsus have been around a very long time (before WWII) dating back to feudal-like family-run trading houses. Mitsubishi and Mitsui are two of the more famous ones. Famous companies like Nissan, Toshiba, and Sumitomo Bank are all in keiretsus). If you want to win your own war, then you need to look at your business strategy.
The word ‘strategy’ is used a lot and when there is a particularly big problem, then organisations will say that they are drawing up a ‘detailed strategy’ in order to deal with it. In reality, however, strategies should never be detailed: a strategy should be simple, it’s the way that the objectives of the strategy are achieved – the tactics – that are usually the complicated and imaginative part.
Strategy is almost always long-term planning. It involves all those things which you’ll need to worry about for a long time. Formulating your strategy must have as its final goal your total and unquestionable ‘victory’. If not, then the strategy is incomplete.
With this ultimate goal in mind, you must ask yourself the question: “What stands in my way?”
From this, your plan should be simple and flexible enough to encompass most probable outcomes (possible alliances, definite enemies, highly contested and less contested territories, etc) and lead you to victory. This plan, in brief, is your strategy.
Friday, 4 September 2009
How To Set The Business Agenda
We often hear the phrase bandied about to ‘set the agenda’ for certain issues. These are usually issues that you what you want to be debated, a debate which, as an authority figure, you can lead!
If you can be seen as an authority figure on certain issues, then the ability to set an agenda can be a powerful business tool.
The term ‘agenda-setting’ was first used in a study by Maxwell E. McCombs and Donald L. Shaw published in 1972. In the study, the researchers interviewed 100 undecided voters in Chapel Hill, North Carolina and asked them what issues they were most concerned about in the coming (1968) election.
After determining the five issues the voters deemed most important, the researchers evaluated the media serving Chapel Hill (both print and broadcast) for the content of their stories. McCombs and Shaw found an almost perfect correlation between the types of stories that were covered most often and the voters’ concern for the same issues.
McCombs and Shaw’s research into agenda-setting was not the first foray into the subject (although it was the first to coin the term ‘agenda setting’), and it would not be the last. Several studies are done each year within the various disciplines of agenda-setting research.
Generally, the studies seem mostly to confirm that agenda-setting does in fact take place, and that media attention toward stories is the most important factor involved in shaping the public’s view of the stories’ relative importance.
In fact, studies have shown that the mere number of times a story is repeated in the news will affect peoples’ perception of the story’s importance, regardless of what is said about the topic.
There are three types of agenda: the media agenda (print and broadcast), the public agenda (what the ‘word on the street’ is), and the policy agenda (usually to do with government policies). Each one tends to affect the other, but the media agenda undoubtedly wields the most power when trying to drum up a debate.
But if you think agenda-setting is achieved simply by getting stories in the media, then, I’m afraid, you’ll have to think again, and this is due in no small part to the US Presidential Election of 1940. This is when the academics Lazarsfeld, Berelson and Gaudet conducted the first full-scale investigation of the effects of political mass communication.
Their research was originally based on the simplistic ‘hypodermic needle’ model of media influence, where it was assumed that a message would be transmitted from the mass media to a ‘mass audience’, who would absorb the message, like an arm would absorb whatever was pumped into it by a hypodermic needle.
However, their investigations suggested that media effects were minimal, that the idea of a ‘mass audience’ was inadequate and misguided because social influences had a major effect on the process of opinion formation and sharply limited the media’s effect.
The study concluded that only 5% of people changed their voting behaviour as a result of media messages! Their exposure to election broadcasts turned out to be a relatively poor predictor of their voting behaviour, particularly when compared with other factors such as their communication with friends, union members, business colleagues and the political tradition they had grown up in.
No ‘opinion leader’ is an opinion leader in all aspects of life. For example, the car mechanic in your local pub may not use the media much at all because he’s always working late. Nevertheless, he knows a lot about cars and so what the rest of those in the pub ‘know’ from the media about different makes of car will be influenced by his views.
This was recognized by the Nazi party in its gradual rise to power during the 1920s and 1930s. Nazi agitation and propaganda became increasingly successful at forcing themselves onto the front pages of newspapers, thus becoming an everyday topic of conversation. They were particularly keen to capitalise on that attention, directing it in the right direction through influencing the leading members of the various small associations which were spread throughout German communities.
Where local leaders, enjoying respectability and influence, were won over, further converts often rapidly followed. In the relatively homogeneous villages in Schleswig-Holstein, where feelings about the ‘Weimar system’ were running high on account of the agrarian crisis, the push from one or two farmers’ leaders could result in a local landslide to the Nazi Party.
You should never underestimate the importance of gaining credible, heavyweight endorsement from opinion leaders, and getting them to add their weight to media agenda-setting.
If you can be seen as an authority figure on certain issues, then the ability to set an agenda can be a powerful business tool.
The term ‘agenda-setting’ was first used in a study by Maxwell E. McCombs and Donald L. Shaw published in 1972. In the study, the researchers interviewed 100 undecided voters in Chapel Hill, North Carolina and asked them what issues they were most concerned about in the coming (1968) election.
After determining the five issues the voters deemed most important, the researchers evaluated the media serving Chapel Hill (both print and broadcast) for the content of their stories. McCombs and Shaw found an almost perfect correlation between the types of stories that were covered most often and the voters’ concern for the same issues.
McCombs and Shaw’s research into agenda-setting was not the first foray into the subject (although it was the first to coin the term ‘agenda setting’), and it would not be the last. Several studies are done each year within the various disciplines of agenda-setting research.
Generally, the studies seem mostly to confirm that agenda-setting does in fact take place, and that media attention toward stories is the most important factor involved in shaping the public’s view of the stories’ relative importance.
In fact, studies have shown that the mere number of times a story is repeated in the news will affect peoples’ perception of the story’s importance, regardless of what is said about the topic.
There are three types of agenda: the media agenda (print and broadcast), the public agenda (what the ‘word on the street’ is), and the policy agenda (usually to do with government policies). Each one tends to affect the other, but the media agenda undoubtedly wields the most power when trying to drum up a debate.
But if you think agenda-setting is achieved simply by getting stories in the media, then, I’m afraid, you’ll have to think again, and this is due in no small part to the US Presidential Election of 1940. This is when the academics Lazarsfeld, Berelson and Gaudet conducted the first full-scale investigation of the effects of political mass communication.
Their research was originally based on the simplistic ‘hypodermic needle’ model of media influence, where it was assumed that a message would be transmitted from the mass media to a ‘mass audience’, who would absorb the message, like an arm would absorb whatever was pumped into it by a hypodermic needle.
However, their investigations suggested that media effects were minimal, that the idea of a ‘mass audience’ was inadequate and misguided because social influences had a major effect on the process of opinion formation and sharply limited the media’s effect.
The study concluded that only 5% of people changed their voting behaviour as a result of media messages! Their exposure to election broadcasts turned out to be a relatively poor predictor of their voting behaviour, particularly when compared with other factors such as their communication with friends, union members, business colleagues and the political tradition they had grown up in.
No ‘opinion leader’ is an opinion leader in all aspects of life. For example, the car mechanic in your local pub may not use the media much at all because he’s always working late. Nevertheless, he knows a lot about cars and so what the rest of those in the pub ‘know’ from the media about different makes of car will be influenced by his views.
This was recognized by the Nazi party in its gradual rise to power during the 1920s and 1930s. Nazi agitation and propaganda became increasingly successful at forcing themselves onto the front pages of newspapers, thus becoming an everyday topic of conversation. They were particularly keen to capitalise on that attention, directing it in the right direction through influencing the leading members of the various small associations which were spread throughout German communities.
Where local leaders, enjoying respectability and influence, were won over, further converts often rapidly followed. In the relatively homogeneous villages in Schleswig-Holstein, where feelings about the ‘Weimar system’ were running high on account of the agrarian crisis, the push from one or two farmers’ leaders could result in a local landslide to the Nazi Party.
You should never underestimate the importance of gaining credible, heavyweight endorsement from opinion leaders, and getting them to add their weight to media agenda-setting.
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