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Learning: steps to becoming a passionate lifelong learner is Russell’s second book. In it, he explains eight specific steps that will teach you how to become a passionate lifelong learner.
Learning: steps to becoming a passionate lifelong learner
If you want to be on the top of an organization, you must understand basic finance. Finance is critical in the successful running of an organization. The U.S. Small Business Administration organization reports that 50% of small businesses fail within the first five years of operation. In the book, “Small Business Management,” Michael Ames lists a number of reasons for these failures. Half of the reasons cited are related to finance, namely:
Since business survival depends so much on the understanding of financial issues, it is imperative that business leaders have a good grasp of financial concepts. A lack of understanding can lead to poor decision-making with regards to money, which may ultimately lead to the untimely demise of a business.
Finance Basics
At a very basic level, there are two income flows within your business. One is revenue (money coming in), and the other is cost (money going out). Revenue should not be confused with profit. Profit is the money that your business makes when you deduct cost from revenue. Revenue and profit are not one in the same. To achieve a profit, revenue must always exceed cost. Good business leaders will always be asking themselves the following three questions:
How can I increase revenue?
Increasing revenue be achieved in a number of ways. For example, raising the price of a product or service is one method of bringing in more revenue. Businesses considering taking this approach need to be sure that their customers will be willing to pay the new price before raising the current price. Another common business approach is to raise Average Revenue Per Unit (ARPU). A unit is a customer, so the idea behind this approach is to increase the amount of products or services that you are selling to each customer. This is a popular method because it is usually cheaper to sell to existing customers than to find new ones.
How can I decrease cost?
Decreasing cost can be accomplished by either cutting back or improving efficiency. To cut costs, you may choose to reduce staff, spend less on marketing, or slash the company’s training budget among other options. When you decrease costs by cutting back in any area, you need to be sure that you can continue to offer your customer a product or service that they will be happy with. Cutting back and losing customers at the same time is not the goal. On the other hand, improving efficiency is a great way of decreasing cost. By looking at efficiency, you may find that you only need two people instead of three to achieve the same goal. Often, this entails having employees work in a new, more efficient way.
How can I improve cash flow?
Improving cash flow is all about optimizing the time when you take money into the business and when you pay it out. Good finance managers know that most bills can be paid up to ninety days without incurring penalties, and so they will pay at ninety days in order to gain as much interest as possible on the funds. Conversely, they will chase clients to get money coming in much earlier than ninety days. The goal is to keep money in your account for as long as possible so that interest accrues.
Examples
Here is what we have covered in top level with you earlier today:
P&L Statement
The Profit and Loss Statement shows funds coming in (revenues) and those leaving the business (costs). In this example, there are two main revenue streams – that of tuition and those associated with other related items such as course materials (books).
Costs are broken down into different sections. There are costs associated directly with providing the service. These costs include instructor fees, printing of course materials, renting of a classroom, and provision of food and accommodation to clients. Other costs include marketing and sales, salaries, utilities bills and more.
Cutting price has long been considered an excellent technique for increasing sales, but in many cases, especially for smaller companies, this is not the best strategy to pursue. This is because larger companies can undercut smaller ones more easily through their strength in size. Cutting price is an approach that you may want to have your staff avoid. Here are the top 7 reason why sales people cut price and how you can prevent them from doing this:
1. Because they can
All too often, companies give their salespeople a free reign with prices. The staff is empowered to discount items without having all of the information that they need to make calculated and prudent pricing decisions. There are commonly two problems with this. One is that the salesperson may lack the knowledge and skills to understand optimum pricing. The second, ironically, is that they may also lack the discipline to do so effectively. Instead of giving sweeping control over prices to untrained staff, companies should provide training and policy guidelines for price cuts.
2. Fear
Fear can be terribly inhibiting. Salespeople may cut prices due to the fear of losing a deal or losing a customer. Fear may also be generated through the sense that the customer is somehow being “gouged.” This fear usually springs from the sense that the value of the product or service is lower than the price charged for it. A lack of understanding of your customer’s business and the full value that your solution adds may also cause this fear. If you believe that your solution is genuinely not worth the money being asked, you can indeed cut price, but you might also tackle the problem by adding value to your offering.
3. Lack of Confidence
A lack of belief in the solution offered is another common cause of price-cutting. The source of this problem usually lies in a limited knowledge of other products or services available on the market. An analysis of the competition including its strengths and flaws can go a long way toward addressing this problem. Salespeople who understand the real benefits and added value of the product they are selling will be more confident and better prepared to close the deal. Salespeople also need to learn how to let go of the potential customers who do not value their solution and focus instead on attracting and selling to those that do.
4. Lack of Skill
Salespeople are not always adept at selling on value rather than price. They need to be furnished with the skills of Value-Added Selling. This strategy focuses not on price, but the key concept of value. Customers perceive a sense of value when they feel as if they are really getting their money’s worth for a solution. Training to provide knowledge and skills on Value-Added Selling is the best way to tackle this common problem.
5. Projection
Salespeople often erroneously project their own sentiments onto the client. In other words, many times salespeople mistakenly assume that everyone thinks the same way they do. For instance, they may think to themselves, “I shop price, doesn’t everyone?” This is assuming that price is the key selling factor for all customers. Since they base their own purchasing decisions on price, they assume that everyone else does too, and this makes it difficult for them to alter their sales methods to accommodate other selling points besides price. Again, training on Value-Added Selling can go a long way to fix this issue as well.
6. Mixed Messages
Sales managers may confuse their staff by giving mixed messages about how to sell. For example, this may happen when managers first begin to support Value-Added Selling, but then get nervous due to lack of sales. Then they decide to move to a volume-sales mentality, focusing on short-term gains and forgetting those principles of Value-Added Sales. Managers who change their minds cause salespeople to become confused. Success here depends on consistency of message.
7. Over identification
Sales staff can sometimes over-identify with clients and become personally attached. This can lead to poor business decisions as personal feelings and relationships are put ahead of sound business judgment. In business, professional distance is necessary at all times to ensure that good, solid decisions can be made regarding customers and sales.
All-in-all, proper training can go a long way to fixing most of the issues related to unnecessary price-cutting in sales. A knowledge-rich, skilled staff is better able to make good decisions, thus allowing your business solutions to be sold effectively and at the price most accurately aligned with their real value.
Not all customers are the same. Customers are different ages, different races or ethnicities. They are of different genders; they have different levels of disposable income to spend; they live in different locations, and have different values and standards.
Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing such as age, gender, interests, spending habits, and so on.
The practice of customer segmentation allows companies to target groups effectively and allocate
marketing resources to optimize the results. To do this, companies need to understand which customer segments they are targeting. All too often, you’ll hear business owners saying that “everyone” is their customer. This is not helpful from a marketing perspective. If the customer is indeed every person, it is difficult to develop a marketing campaign that will be attractive to the customer because all customers are different. It also often means that the product or service may not be specific enough to be appealing to any group of customers at all because it does not target anyone’s specific needs effectively.
Companies can use customer segmentation to:
The market can be segmented in so many ways, and there is no “one-size-fits-all” approach. The best way to segment the market depends on the specific business and its products or services. Here are some ideas of how this may be done:
My company, Information Technology (www.netcomlearning.com), targets business customers or B2B. As an example, here is a basic snapshot of customer segmentation of my company, NetCom Learning:
We target each of the above customer segments using the following criteria:
This allows us to develop marketing campaigns or service features that are relevant to our different segments. For example, if we are selling to a new client, we have to focus our campaign on selling the company since new clients may not be aware of who we are. However, if we are trying to sell to an existing customer, this segment already knows us, so we can focus more on selling specific features of a new service to them.
You can lose with hard work, but you cannot win without it. If you can find a way to become successful without hard work and a strong work ethic, I would love to learn it from you. Here is what the legendary basket player Larry Bird, the great American author Napoleon Hill who wrote one of my favorite books of all time “Think and Grow Rich,” and Abraham Lincoln, the 16th president of the United States of America think about hard work:
Here is my advice to you about hard work:
Typically, sales managers are former salespeople. They are familiar with the sales job, and their staff feels comfortable because their manager has done the same job before as they are doing now. Remember, leadership is a balancing act.
A sales person’s mission is to serve the clients and the company, but a sales manager’s mission is more complex. They must serve the clients, the company, and the salesperson. In addition, a sales manager’s job consists of four key domains: hiring the salespeople, training the salespeople, evaluating the salespeople, and growing the business.
But, should sales managers also continue to play the role of a sales person as well? Absolutely!
Here are four reasons why sales managers should sell to key accounts (15-30):
Although it is a good idea for sales managers to also be salespeople, they must do it right if they are going to do it at all. It is very important for sales managers to follow a time management tool if they chose to play a dual role: sales and sales management. Another word of warning—sales managers could be perceived as “self-fish” if they use their authority to take good accounts from their team members unfairly.
Above all, sales managers must possess high integrity and practice fairness in order to manage the team effectively.
I had a meeting with my sales management team earlier today to discuss if we should focus on hiring experienced or non-experienced sales people.
It is our finding that non-experienced people are comparatively loyal, adapts to the organization culture easily. On the other hand, the experience produce result immediately, requires lesser training and quickly adapts to the selling process. Read more »
