The Up and to the Right | Small Business | Practical, Actionable, Sustainable Improvements

Reminder: What is a Business Principle?

When I talked about what made a business principle I ended up here:

A business principle is a concept that is both foundational and relevant to all businesses.

This set a pretty high bar when it came to identifying what were business principles and what were strategies, missions and tactics.

Communication made the cut and that’s what I want to cover today.

What is Value?

According to Merriam-Webster the definition of “value-added” is: 

“a product whose value has been increased especially by special manufacturing, marketing, or processing”

I want to change the word “marketing” to “experience”. Marketing is a tool to communicate but it’s the experience that changes the value of a product.

Why is adding value a business principle?

Value qualifies as a principle because of the fundamental requirement to offer something that your customer values more than the money they wish to exchange for it and it is universally applicable to all businesses.

Examples of Value-Added

Intrinsic Value - Commodities

A commodity is an item that can be easily compared on price and is generally just as easily replaceable by another, similar product.

Examples might be automobile gasoline or general food items.

Luxury Products

On the opposite end of the spectrum we have luxury items which are difficult to compare on a cost base and are less replaceable than a commodity.

Differentiating Commodities and Luxuries

Of course, the scale between a commodity and a luxury item is wide. One of the key goals of marketing is to differentiate brands from competitors but also from the nearest commodity. This increases the overall perceived value of a product with the intent of increasing sales volume, margins or both.

A practical way to look at value-added is simply how we separate what we have to offer from the nearest commodity.

Consistent Quality

Sometimes you just want to be sure that you know what you’ll be getting every time you use a product.

Many ‘mass produced’ products rely on this characteristic. Fast food restaurants and automobile gasoline for example.

Functions & Features

Specific product functions, features and capabilities are a common way to differentiate your products and services from both competitors and commodities.

The Swiss Army Knife differentiates itself by adding the value of a combination of useful tools to the standard pocket knife.

Durability

Does your product last longer than other, similar products? Can your product be used in harsher conditions?

Durability makes it easy for customers to rationalize a higher cost when the product will last longer or work in more difficult circumstances.

Customer Identification

How a product makes us feel about ourselves can play a big part in our purchase decisions. We’d all like to imagine that we’re more rational than we really are when it comes to how we spend our money.

Helping customers identify positively with our products and services in ways that also give them a positive outlook on their own values can add value that is powerful but difficult to quantify.

Hybrid cars, health food stores and gyms often add this kind of value to their products & services.

Customer Experience

What is the environment in which your customer experiences your product or service? Is the environment part of the value? 

Think about flying first class versus coach or getting coffee in a boutique coffee shop rather than a convenience store.

Customer experience can be another way to add value that doesn’t necessarily add a great deal of cost.

How to Identify Your Value-Added

How can small business owners get a good understanding of what value they are currently adding?

• Ask
• Observe
• Compare

Ask

One way to find out what your customers think the value of your product is would be to simply ask. You can do this with a survey or in person. While this may be a good start it’s important to understand that survey data may be affected by the customers feelings and perceptions about the survey itself.

Observe

Watching what your customers actually do and say when they are in your store or using your product can tell you a lot about what they value and how they really feel about your business.

Compare

By comparing both the observations you make and the direct questions you ask you can get at least a somewhat comprehensive view of the value your customers see in your products and services without the cost of outside market research.

Practical Action

Alright so let’s get practical!

Here’s a quick way to get started understanding the value you add and adding to it!

1. Find out what your customers value through observation, direct conversation and/or by using a survey. These should be benefits you already offer as well as those that you may be able to add.
2. Answer the question: How does the value perceived above match the value you originally intended?
3. What can you do to enhance your product or service to add additional value?

Reminder: Look for ways to separate your product or service from the nearest commodity!

Do you have a creative way to add value? Drop a comment with your thoughts. Connect with me to keep in touch and share ideas!

References

“Value-added.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/value-added. Accessed 25 Jun. 2020.

Reminder: What is a Business Principle?

When I talked about what made a business principle I ended up here:

A business principle is a concept that is both foundational and relevant to all businesses.

This set a pretty high bar when it came to identifying what were business principles and what were strategies, missions and tactics.

Communication made the cut and that’s what I want to cover today.

What is Communication?

At its core, the concept of communication is straightforward. Communication is the transfer of information from one person to another. Of course, while the concept of communication is simple, effectively communicating is another thing entirely.

Why is communication a business principle?

The ability to communicate effectively across your organization and to the wider world of vendors and customers is certainly fundamental to the success of your business. Since the transfer of information is a key part of any business it’s clear that communication is one of the clearest principles of business.

-Communication happens whether you meant it to or not...

- Every time you communicate the entirety of the experience is part of the communcaition [ ]

- the tone you use [ ]

- the clothes you're wearing [ ]

- the environment around you or your recipeint or both [ ]

- the words you choose [ ]

- the channel you use [ ]

What are the components of communication?

While we’re not going to do a complete study of communication here I think it’s worth noting the basic components here.

• Source
• Message
• Channel
• Receiver
• Feedback
• Environment
• Context
• Interference

Note: These were not invented by me and when I tried to source them I had absolutely no luck finding the actual smart person that came up with them. Please comment if you know the source and I’ll add it!

While each of these is important there are three I think bear specific discussion in the context of business.

Channel

There is a tendency to reduce the concept of communication to written and verbal channels. It’s worth noting that each of our five senses is integral in how we perceive the information we are receiving about our environment and; therefore, it’s important to consider each of them as we work on our communications for our business.

Does your message change depending on what channel you’re using? Should it?

Message

The idea of message is layered. One layer is the information we want to share. The layer that I think is often missed is the message we sent ‘surrounding’ the message we intend.

An easy way to look at this is with video conferencing. When you’re joining a video conference everything that is visible to your audience subtly (or not so subtly) becomes part of your message. If your desk is tidy… that’s part of the message. If your desk is cluttered then that becomes part of your message as well.  In order to ensure that our video is communicating the message we meant to transfer it’s important to look at everything that’s visible in the frame and see how it supports or detracts from that message.

Another great example of this is body language. Most personal communication is actually achieved through our body language and not the words we say.

The same issues can be applied  to each channel that we use to communicate. 

Interference

Interference is all the ‘stuff’ that gets in the way of transferring your pure message from you to your recipient. This includes the way you encode the message as the sender (biased based on your experience and context), the way your recipient decodes the message and any barriers or obstacles in between.

If we assume that 1:1, in-person, communication is the most effective then for each step away from that we must take more care to reduce ambiguity and the possibility of misinterpretation.

Communication Guidelines

Video

• Look at what’s in the frame and make sure it reflects the message you want to convey.
• Get your audio right first.
• Remember you’re on camera!

Email

• Put your contact information in your email signature.
• Add a greeting for each recipient on the first email of the day.
• Only ‘reply to all’ for distribution or notification. For items requiring action - reply to the person responsible for the action.
• When writing an email, assume the person you want to read it least is going to get a copy.
• Never use email as the first communication of bad news… make the call or meeting then follow up with an email.
• If you’re angry and can’t stop yourself from writing… remove the email addresses from the TO, CC & BCC then save the draft and look at it later before sending.
• Be clear & concise.
• Remember there is no emotional context in email unless you put it there.

Phone

• Never say ‘Bye’ before your customer does.
• Stand.
• Smile.

Text

emotional context

don’t use

i use sparingly

Social Media

wild west of communication

be careful

experiment

be aware of the full messages you’re sending

Practical Action

We can’t all get a degree in communication but it is important that we are continuously practicing that craft to better share our ideas and expectations and value to our customers, team and business partners.

Here are a few things you can do to help improve the value of communication in your business.

Answer the question: How does your communication in each channel support or reflect your Vision?

Create your own communication guidelines and share them with your team.

Take a new look at communication and reinvest in the intentional use of language and tools to share your message.

What’s your favorite communication tool for small business? Why? Drop a comment with your thoughts. Connect with me to keep in touch and share ideas!

Does Planning Matter to Small Business?

The first thing we need to establish is whether or not planning matters to small businesses. At first, you might be thinking to yourself ‘Well of course planning matters!” but let’s be real here… as small business owners we have a tendency to fly by the seat of our pants more than we might like to admit.

A lack of planning and over-planning can both have a negative impact on small business performance.

So for us, planning has to be done in such a way that we create enough structure to achieve the desired results but we don’t unnecessarily spend time and resources.

I’m a planner. I can’t get enough of looking at a project, digging into the details, identifying possible roadblocks or methods of achieving goals. This is the trap I call ‘Plancrastination’ and combined with not planning at all we find the need for a practical solution to planning for small business.

What is a Plan?

My definition of a plan for small business owners.

“A plan is a series of listed milestones & actions that, when complete, will achieve a specific outcome.”

This definition is important because there are three key elements here that will make your planning easier and more effective while minimizing the effort required.

1. Stated Outcome - this helps prevent us from taking action without knowing exactly what we’re trying to achieve.
2. Listed Milestones - help identify significant points of interest or achievement.
3. Listed Action Steps - this is where the rubber meets the road and the work actually gets done.

Planning Horizon

For small businesses with limited resources (I think that’s all of us), one key element is the concept of only planning detail to the extent of our ability to act.

If you have a project that will take six months but have three people in your company it probably won’t make sense to plan specific action items that you expect to happen in week 20 of the project.

This means we only plan specific action within the timeframe we can reliably expect to complete it.

Small Business Planning Process

1. Identify the Outcome - Where do you want to go?
2. Determine Your Starting Point - Where are you now?
3. What’s the Difference? - Using the business vernacular “Gap Analysis”.
4. List Milestones - What are the major guideposts along the way?
5. List Actions - Who’s going to do what and when?

Identify the Outcome

This first thing I like to do is take some time to think about what outcome I expect. This may seem like a ‘no brainer’ but I’ve seen a lot of work go down a road to a destination no one looked at in the first place.

This can be a single sentence.

“We want to coordinate and structure customer interaction.”

Now you can begin a search for a Customer Relationship Management (CRM) system.

“We want to eliminate the production bottleneck of building the front panel of our instrument.”

Now you can start looking for a CNC machine.

It’s much easier to have a successful plan if you understand your endgame.

Determine Your Starting Point

In order to get to a destination you need to know where you’re starting from. Again, we need to keep this simple.

“We currently have three people who deal with customers and each has his/her own communication methods, schedule and information storage. Joe uses sticky notes to document everything on the wall over his desk; Suzanne enters everything into a spreadsheet and Stacy writes it all down in her planner.”

What’s the Difference?

In business terms we call this step a ‘gap analysis’ which is shorthand for what’s the difference between what we want and what we have.

This can actually be the hardest part of the planning process. As you can imagine that makes a key step. This is where you figure out what will have to be different from the way things are to achieve the way you want them to be.

In the customer service case we might say we want everyone to have the same communication process so customers receive a consistent experience. We might also decide that all three of them need access to all the customer records so if one person is out of the office the other two can continue to cover all the customer requirements.

We can answer these two issues by developing a customer communication plan and use a common database such as a CRM application to share information across the company.

List Milestones

Once we understand what needs to be different we can create the basic milestones it will take to get there. These are not specific tasks but guideposts along the way.

1. Research Database Options
2. Determine Our Database Needs
3. CRM or Other?
4. Research CRM
5. Select CRM
6. Train Staff
7. Enter Data

You’ll note that each of these would have a number of steps associated with it (some more than others). 

For the most part we won’t add details to these steps until we’re ready to actually begin that step (See ‘How Much Planning is Enough?’ below.).

List Actions

My framework for action planning is to get through the first four steps of the planning process above and then be very selective about planning step number five.

Only plan specific action within your capability to complete that action. Personally I only plan details within about a week.

How Much Planning is Enough?

The amount of planning that will work in a specific case is variable. For small business owners I encourage you to plan but… not too much.

In Episode 021 of Up and to the Right I offered the following guideline:

“If additional planning will not provide a significant increase in the odds of success… then we’re done planning and it’s time to act!”

I know… it’s subjective… that’s business for you. I have an inverse cost rule that might also be helpful.

The more a project is likely to cost or the higher the risk the more time can be spent in planning.

So, if something is going to cost 10 hours and $1,500 then you should spend as little time as possible planning.

Conversely, if a project has a high risk of not working out or will cost 1,500 hours and $25,000 then it makes sense to allocate more time to planning it.

Practical Action

So the next plan you need to make just break it down into the five step process I listed above and keep the following guidelines in mind.

“Only plan details within the capability of your business to act.”

“If additional planning will not provide a significant increase in the odds of success… then we’re done planning and it’s time to act!”

Write your plans down but keep them short. A plan that takes more than one page (single sided) could and should be trimmed. Come on… we have businesses to run… we need to plan so we can effectivel...

Does Vision Matter to Small Business?

Do we really need to write down our “Vision” as small business owners? Isn’t that just a Wall Street thing?

Being clear about your vision is about more than wall hangings or motivational posters. It’s about more than a twitter post or an infographic.  It’s about more than customer relationships or product development.

Do a search on the web or your favorite book vendor for business vision and you’ll have mountains of material.

I’ve read my share and while they’ve all had value none of them framed the value of an articulated vision in a practical, useful way that I felt small business owners could well… own.

So, to that end, here’s the short, practical and actionable vision… of Vision.

Defining Vision

Before we can get started using our vision to change our business (and then the world) we need to agree on what ‘vision’ means in the context of business.

In episode 41 of Up and to the Right I defined Vision as follows:

“Understanding your place in the social & economical environment today and into the future even beyond what you can reliably see.”

I’m going to take a bit of artistic license and amend it to this.

“Understanding your impact in the social & economical environment today and into the future even beyond what you can reliably see.”

Entrepreneurs don’t do all this work to have a ‘place’ we do it to make an impact.

What is different about the world with your business in it?

For Beyond 50 Percent it’s this. “Successful small business ownership is the rule… not the exception.”

This short statement shares the change we want to make in the world and our target market. 

If you read a few books or do some research you’re going to find two things I think you may want to avoid.

1. The idea that your vision is what you want your company to look like in the future.
2. The idea that your vision is a ‘goal’.

Why?

1. I like the idea that your vision is about more than a company… it’s about the impact you are working toward.
2. To me a goal is something you strive for, achieve, and move on from where a vision is the benefit of an impact on others. A vision is evergreen as they say.

Articulating & Creating Your Vision

First things first here. It may take a while to hone your vision. That’s fine. It’s important not to let perfect be the enemy of good here.

To the first order vision as I see it has three considerations but only two components.

Considerations

1. Impact
2. Beneficiary
3. Timelessness

Components

1. Impact - what is different in the world as a result of your organization’s existence?
2. Beneficiary - who is your direct beneficiary (customer)?

I think there’s a temptation (read… expectation) to come up with something profound or clever and that expectation becomes a barrier between owners and the creation and use of a vision statement.

While your vision will describe the impact you want to have for the customers you serve… the vision statement itself is primarily for your use. Yes there is a marketing angle to this if you want to use it for that but the point is to clarify your thinking and drive your own decision making process.

Getting Value Out of Your Vision

And now what?

If you’re like me you aren’t excited about something that doesn’t actively help your business.

I hear you!

What I can tell you is that by understanding the impact you want to have and the customer group that will benefit from that impact you’ll be able to quickly decide if a course of action is right for your company or better left to someone else.

If a new process or product doesn’t promote your desired impact it’s a no-go even if it might benefit your customer base. If a new process or product might create impact but not for your desired customer it’s a no-go.

What about ‘diversification’?

It’s certainly possible that you may see an opportunity that is indirectly related to your vision. Is it okay to ‘expand your vision’?

I’ll answer your question with two questions.

1. Do you have the resources to pursue this new direction sufficiently to be of value in the market without removing value from your existing efforts?
2. Have you truly exhausted all the reasonable efforts that support your vision as it exists today?

Let’s be real. Small businesses are resource poor and efforts that don’t support our mission become black holes for our already limited resources.

Practical Action

There are compelling reasons to create and document a vision statement for your company.

Let’s take a practical look at making it happen and getting useful value out of both the process and the day to day use.

1. Don’t overthink it. If you have the time and money and you want to go on a retreat somewhere to collect your thoughts and be inspired by a change of scenery by all means go for it. If; however, you’re trying to scrape together enough to pay rent or simply not interested in the existential head clearing that’s fine.
   1. Just write down what impact you want your business to have.
   2. Look at the people that will benefit from the impact you just documented and write them down.
   3. Now combine those things into a single statement.
   4. Remember it doesn’t have to be pretty it just has to be usable… by you!
2. Put it somewhere you can refer to when you need to make decisions for your business.

“Does this support or enhance our ability to fulfill our vision?”

Small business owners and teams can benefit greatly from having, articulating and using a company vision.

What is your vision? Drop a comment with your thoughts. Connect with me to keep in touch and share ideas!