Just because you are in business and you want to make, say, a million dollars, we have to ask ourselves why we are doing the things that we do. I’m here to ask you whether you can actually improve your business and whether you are on the right path. In this article, we will feature our conversation with a very special guest. She is Anne Graham from legendaryvalue.com. They are all about helping small businesses, entrepreneurs, and even medium to large scale businesses, to improve what they do through leveraging what they already have, and thriving using the tools that they’ve got available. I’m very excited to have this talk with her. So, have a look at our conversation and learn with us.
David: Welcome Anne.
Anne: Thank you very much David. It’s a pleasure.
David: Same here. Now I noticed you’ve got a lot to offer in terms of small business development and entrepreneurial business development as well. Can you firstly explain how you got into this business and why you started?
Anne: Absolutely, I’m delighted to do so. I actually started my career quite a long time ago with two big Fortune 500 companies. What was interesting for me there was that it didn’t really matter how hard or how long I worked, I was still one very small cog in a very big wheel. It was at that point that I decided that I would much prefer to work in smaller companies where you can actually get things done, with my eventual goal of being out on my own as an entrepreneur. So I spent the ten years after I left the fortune 500 really doing a lot of business turnaround for small and midsize businesses. Those are the businesses that have gotten themselves into trouble primarily because they weren’t looking after their customers, they were not watching their cashflow, and they were hurting. I figured out quite a number of things along the way, not because I’m brilliant but because I banged my head against the wall for several enough times that things finally made sense. If you ever see a photo of me, you’ll see a big flat spot on my forehead from all those days. I went there on my own, in the year 2000, and I have been working with small and medium sized companies ever since, basically helping them implement a lot of tools to help them get the most out of their businesses. All of us go into business because of something we absolutely love to do, and most of us end up getting trapped behind a desk or in really boring meetings, doing email all day, doing spreadsheets all day, and we kind of lose track of what it was that made business a lot of fun. So I always say that I would love to put some playback in your day. Well, we put some buck in your bottomline, and that’s what really drives me David.
David: Well, that is a great goal, because if you can help others, then eventually you will be helping yourself. What goes around, usually comes around, doesn’t it?
David: Now, before we get further into this, I noticed on your website that you’ve got some great giveaway products. Can you tell us about those?
Anne: Sure, you bet. I’m a big fan of giving away something of value. I love to help people learn, I love to help people improve their businesses. So what you’ll find when you go to my website, legendaryvalue.com, are some free assessments. You’re going to find some free papers, some downloadable reports. We will talk about the reports in particular, in just a little while, because I think there’s a great wakeup call for many small businesses. So you’ll get some assessments, some freebies, and downloads. There is a lot of good information there for you.
David: Well, that’s fantastic. Now, if I’m in small business and I think I’m doing okay, but I know there’s room for improvement. Do you have some tips that could help us along the way? Something like step by step methods?
Anne: I absolutely do. Let me share the first one with you that I think is really valuable, and it goes right back to that special report that you are able to download from my website. Every year, I’ve been putting together a little benchmarking tool, and that benchmarking tool is called return on people. Now if you’re a small business owner or if you’re a large business owner, one of the things you probably measure all the time is your Rs… your Return on Asset, your Return on Inventory, your Return on Investment, and your Return on Equity. All of those ROE, ROA, and ROI are business technical terms that we never really measure. People are the biggest assets that you’ve got, whether you’re just an army of one, if you’re a solo entrepreneur like I am, or whether you’ve got 50 or 100 or 1000 people reporting to you, Return on People is one of the most valuable assets that you should certainly keep an eye on. And when you start to really figure it out, it’s really going to help your business and here’s why. If you all remember the days when you were in high school or in college, and they put your grades out there, some people would get an A, and some would get a B, C, D, and F. Well the benchmark works the same way. The companies that are earning an A bring in over 600 and 25,000 dollars of profit per employee per year.
Anne: The average company brings in about 52,000 dollars of profit per employee per year, and most of the business owners that I’ve talked to, as I’ve been crisscrossing the country talking to well over a thousand business owners in the last year or so, most of them are down around five or ten thousand. So here’s the conundrum: If you give yourself or your employee a 5,000 dollar raise, you’ve just wiped out your profits. You’re not in a position to get up and grow in your business. Now if you’re earning 50,000 dollars of profit per employee or 100,000 or 600,000, you’ve got a lot more latitude to do the right thing for your employees, the right thing for your business, and the right thing for your customers. So one of the very first exercises I love to go through, and the report is on my website to help you through this, is to go through that exercise and really benchmark yourself, and say, “Where am I at today and where could I be now?” Not every business is going to bring in 625,000 dollars of profit per year per employee. One of the big things in the benchmarking report, that I’m happy to give away for free, is to basically expose your business to all types of different categories. Whether you’re in retail or you’re in professional services, maybe you’re in manufacturing; you can actually benchmark yourself against all the others in the industry. It’s all about just setting up and getting the goal for yourself and saying, “Here’s where we’re at today and this is what’s really possible.” It’s very powerful.
David: Absolutely. So if people can get a glimpse of what they could be doing, that’ll really spark the fire within them.
Anne: Exactly. And there’s an interesting story that goes along with that which might resonate well with some people, especially those who are in their 50s as I am. Most people know who Roger Banister is. Remember David who Roger Banister is?
David: I’ve heard of him.
Anne: Yes, well, he’s the man who broke the four-minute mile in 1952. What most people don’t know about that story is that two runners have been battling for over ten years in the 1940s to break the four-minute mile and they couldn’t do it. They got hung up on what they’ve always done. Now when Banister came along, one of his big motivations is that he didn’t win gold in the 1950 Olympics. In fact, he came in fourth and he decided, “I don’t want to hang up my cleats and retire until I make my mark.” He set a goal. He trained, he got some coaching, and he broke the four-minute mile. But here’s where the story gets very interesting. There was also a second runner by the name of John Landy, who, just 48 days later, broke Banister’s record. What does that tell us? If somebody can break through a barrier ahead of you, all of a sudden, you have the confidence to say, “I can go there too,” and you can make it happen. Third and last part of the story, when Banister and Landy raced together later that year, they both broke the four-minute mile in the same race. The first time it ever happened. It’s interesting that Landy turned his head backwards to see where Banister was, and Banister surged ahead to the finish line. Every business owner and every business leader I’ve ever known looked backwards, how they did last year, rather than looking forward to their possibilities. Change your mind, change your business.
David: Absolutely. You know what, as you were telling me that story, a little smile came off my face because it was just getting a little exciting. So imagine a business recognizing that fact, they could actually lurch forward. That’s fantastic stuff,
Anne: You can follow where others have gone. All you need is a road map to get there.
David: Yes. So along those lines then, if we can future cast ourselves… is there, let’s say, five or six steps to actually get to where we want to go faster?
Anne: Absolutely. I’ll give you five quick steps that you can do. I’m also going to let you know that I have a book coming out in the next week. It is called Profit In Plain Sight. It’ll actually walk you through, in detail, each of the five steps that I’m going to share with you right now. I’ve also put together a little quick video for your visitors if they send an email to email@example.com. It’s a free video, it’ll just take them through anything, in case they’re in their cars today and they can’t quite take note of everything that we’re talking about that might be useful to them.
So if you look at the five key steps in profit in plain sight, the first one is really Locking In On Customer Loyalty. Now, whether or not you’re in a situation wherein you’re expecting a big order from a customer and they go to the competition… I think we’ve all been in that situation before, haven’t we?
David: Yes, that’s right.
Anne: And you wonder what happened… why did they go to the competition? You did a great proposal, you had a great product, you thought you were making progress, and you thought the deal was yours. There are some basic steps that you can do to lock down how loyal a customer really is to you and whether or not they’re likely to go to your competition, especially for small businesses. One order can really make or break it. So it’s very important that you get a very clear sense of that. So step one is getting a clear sense of customer loyalty and using some proven tools. We’ll share the video in getting the sense of how we do that.
Second piece of the puzzle is Managing You Topline Growth, your revenue. Now, I’m going to challenge your readers with the idea that almost all of us, at one time or another, have fallen through what I call the revenue trap. And that is, we focus on the revenue to the exclusion of whether or not we make any money. I’m sure some of your readers are shaking their heads right now, sort of saying, “Yes, I’ve got customers that I’ve lost money on.” Well I don’t know about them, but in business school, I have also taught that the customer writes the check, not the other way around. So getting stuck in the revenue trap means that your topline looks really good. You’re growing your business this way, you’ve sold a lot of products, and you’ve got nothing to show for it. There’s a very simple way of plugging all those profit leaks and it comes into a very simple concept, where you basically figure out who your most profitable customers are, and you make sure you keep them. You figure out who your marginally profitable customers are, the ones who are kind of so-so, and there are some great little strategies you can use to either improve their profitability or help them do more profitable business with you. The third one is what I call the vampire customers. Those are the ones you know are costing you money and you’ve got to plug those leaks. Now probably some of your readers or probably even you as well, David, you’re shaking your head and saying, “Oh, sounds like accounting, profit per customer. We don’t calculate profit per customer, I don’t know how to figure that out.” That’s why a lot of people stay stuck in the revenue trap. So let me give you a simple little example of how we do that. David, you’ve got customers, yes?
Anne: Okay. How many of them pay you on time? And does that impact their profitability to you, if you’re financing them?
David: Oh, absolutely.
Anne: And you know exactly who they are, don’t you? You don’t need any fancy accountants to know who pays you on time and who doesn’t. Have you got customers who are really high hassle, high maintenance, versus the ones who are just a pleasure to do business with?
David: Yes, that’s right.
Anne: Are you spending all your time, your energy? If you’re a full entrepreneur, are you doing everything yourself? if you have a larger company, maybe you have a busy customer service group that are just taking care of these customers all the time, all day long. They can’t get through everything else they need to do. All of that hits your bottomline, doesn’t it?
David: Yes, that’s right.
Anne: For every company, there’s about half a dozen different factors like that. Those that you can just eyeball and say, “These are the ones that are in pretty good shape, these are the ones that have few issues, and these are the ones that are costing us a bundle.”
David: Do you classify them as, like, A class customers, B class customers, and C class customers? I’ve heard that hinted around.
Anne: Yes, you can call them ABCs, I call them green, yellow, and red. It’s really whatever terminology resonates most with you. But the whole idea is, if you figure out which one is in which category, then you can start to put together some strategies to say how we are going to change that. But as long as you’re in the revenue trap, and all you can say is, “Well, they’re a big customer and we don’t want to lose that kind of volume.” You have no strategies that can deal with that. Does this make sense?
David: Oh, absolutely.
Anne: Yes. So that’s a very simple thing, to start focusing on your profitable customers and your unprofitable customers. Just doing those two things alone will transform your business.
David: Yes, sort of better serving those who really serve you best as well.
Anne: Exactly. And when I do this in workshops in various organizations, we do it on a great giant chart. It’s very simple to do. It would take about an afternoon. But I’ll tell you, you can hear a pin drop sometimes. I was doing this just a few weeks ago, to our personnel in staffing organization, here in my hometown. It turns out that their biggest customer revenue, the one that was responsible for all the good things in their business, was in that red zone.
Anne: They were a vampire customer and here’s why: they price very grandly to get the business. Now I’m sure you’ve never done that, I’m sure I’ve never done that’ and I’m sure your customers have never priced too aggressively. Good thing that we’re all on board over that one. But they were also over servicing, again because they were big, and they were important, and they were blue chip clients. They were just bending over backwards every time a customer actually asks them to find a better new staff member. Instead of their contract that says they will provide three resumes, reviews or three candidates, they were finding six! Now just because they’re a vampire customer doesn’t mean they’re bad customers. Most of the time, I would say probably 90% of the time, it’s a self inflicted wound on our part, which means you don’t have to fire that customer because none of us would like to fire that customer and lose the volume. That’s a big deal for many of us. But if you can figure out where those self inflicted wounds are, you can fix them.
David: Yes, better manage them.
Anne: Exactly. And it doesn’t matter too how many idle conversations with a customer who says, “Hey, we love you, but this is not quite what we’re working for.” If we want to go forward, we need to look at these things in a different way. Whether it’s pricing or service or demanding customers or anything else, that’s just an idle conversation that needs to happen. Most of us avoid that.
David: Well that sounds really pointed, and now that you said it, it sounds very obvious, I suppose.
Anne: Well, there’s a reason why I called it Profit In Plain Sight. I didn’t come up with that title, it was one of my clients who said, “Everything that you’ve shown us is right under our noses, all in plain sight, and we weren’t doing it.” Doesn’t that make you want to stick your hand into your forehead and get a flat spot?
David: Yes, that’s right. Speaking of hitting your head, I said to someone just the other day, if someone just keeps on bashing his head against the brick wall, either, one, give up, two, get a really big headache, or three, change brick walls.
Anne: There you go, change brick walls! I think most of them prefer that last option. We just change that brick wall to something else to ease that pain off from our forehead.
David: So, what’s the next step?
Anne: Well, I gave you the first two steps. The first one is to really lock in to your customer loyalty through very simple conversation techniques. Number two was about topline growth. You have to make sure that you’re going after topline growth, but you can’t do it at the expense of profitability.
Now, let me give you a third way. It sort of blends the topline revenues as well as the bottomline profit. Simply, Look For One Percent Everywhere In Your Business. Now, in the video, I’m actually going to show on a white board a little calculation that you do to figure out what an impact of one percent in terms of either increased revenue or decreased costs means to your business. But I’ll give your readers the ballpark figures for most businesses. By simply shifting by one percent more revenue or one percent less cost, it’s going to make a difference on the bottomline, somewhere between 15 and 50 percent.
David: No way.
Anne: How many of your readers and you would like to increase your profits almost overnight? This is not a get rich quick scheme, but almost overnight, by six percent. Find one percent everywhere! Now let me tell you a little story. I was out doing a series of seminars and I had the CFO, Chief Financial Officer, in my group one week, and I had the CEO in my group the next week. The CFO was just all over this one. She just thought this was such a great idea. But what was really funny is, the next week, the CEO came into the session. He said, “I don’t know what you did to her, but she loves this stuff. She went to all our suppliers and asked them for a one percent discount, and the very first supplier she spoke to gave her five!” Whoa! Okay, so in their business, that one percent was making about 20 percent difference to their bottomline. So that’s five percent that she found from one supplier, that’s 100 percent difference to the bottomline. The profits have doubled!
David: Wow! Talk about small changes making a big difference!
Anne: Small changes. You can do it on the customer side in terms of fine tuning some of your pricing. And even if you’re in a very competitive business market, if your customers aren’t willing to spend one percent with you for all the good things that you do, there’s something wrong with your whole value proposition. That’s a different topic altogether.
David: Yes, that’s right. Just on that last point, you only just said scraping one percent off on a customer’s point of view. Imagine scraping another one percent inefficiency off your own procedures as well.
Anne: Absolutely. Find one percent everywhere in your company and it will transform your business.
David: This is good stuff. Keep going.
Anne: Isn’t this fun? I get such a kick out of sharing this information because it really does move the needle.
David: So let’s keep going Anne. What’s next?
Anne: Number four. Are you ready for another big tip?
David: Yes, go ahead.
Anne: So here’s idea number four: Differentiating From The Competition. It is difficult for most of us. These days, we all tend to look a little bit the same, and when our customers see us looking the same, they grind us on price. We lose our one percent advantage, right? Because we start discounting more and discounting less. I have a little free tip for you. If you’re used to doing a ten percent discount, do a nine percent discount. There’s one percent for you right there. Let me get back to you on differentiating from the competition. David, do you love travelling by airline these days?
David: I can’t say it’s my favorite hobby, but…
Anne: Not your favorite hobby, but when you think about it, the plane usually takes off from the right airport, it usually lands, and it usually lands in the right spot. So there’s no quality issue is there? They’re doing what they promised you they would do by taking you in a different spot. So why do we all hate airline travels so much, when they’re technically providing us the product and service that we bought from them? It’s the experience, isn’t it?
David: Yes, that’s right.
Anne: They pack us in like cattle, they don’t feed us, they don’t water us, and they put us in tight little seats. The one thing that small businesses can do so much better than big business is to put that experience piece in there that shows you care. Show that you welcome them as customers. Let me give you an amazing example that just blew me away last week. I was in the US, I was in San Jose, in a conference, and when I arrived for the very first night in the hotel, a smaller hotel, not one of the major chains, I had an email from the manager of the hotel welcoming me and wanting to make sure that my stay would be pleasant.
Anne: When was the last time that you saw anything other than one of those silly little customer satisfaction surveys at the very end of your stay? This was happening at the front end, and it turns out that I had actually very full service from the restaurant that night. So I said, “Hey, you’re doing a great job in all these different areas. There’s some this, this, and this. It’s all good. By the way, I know you’re trying to get better. Here’s an area in your restaurant that you might want to look at.” David, what do you think happened next?
David: You probably got some sort of complimentary dinner. Or at least, a great thank you.
Anne: Yes. I got an email back from him, saying, “I’m so sorry to hear that. Thank you for sharing, I will take care of it. In the meantime, all of those charges have been removed from your bill.”
David: Well, that’s fantastic!
Anne: Now, next time you go to… what’s your biggest hotel chain down there in Australia? Because the next time you’re staying there, see if they treat you that way or not. Small business can do this overnight. It takes almost nothing to put those little added touches in there. But which hotel am I going to stay in next time I’m in San Jose? One of the competitors? Or am I going back to this wonderful hotel that just gave me a total wow?
David: Well, that’s totally obvious. I mean, if you get treated well, you certainly want to go back there. Well, that’s a really good story, and I’m sure a lot of people can really appreciate that in business as well. I can really appreciate that point, because in any small business, if you get treated better than the average Joe, and you get treated like a really decent human being, and a thank you with it, you actually show that you really appreciate it. So of course, you’re going to go back to those places.
Anne: Exactly. Now, linking back to what we just talked about… Do you think if I will go to San Jose again, which I will be doing twice more in the fall, would I be willing to pay one percent more for that hotel room?
David: Oh, without a doubt.
Anne: Would I pay ten or twenty percent more? Absolutely, because the story I just shared with you was only one of the magical things that happened during the time of the conference, based on the way that hotel treats its guests.
David: And that’s a great point of difference.
Anne: There’s your one percent. Okay, so we’re up to number four now. We’ve done four.
Anne: The last one is Innovation And Creativity. They are almost in everyone’s to-do list. I’ve yet to meet a person, entrepreneur, big business owner, small business owner, and midsize business owner who actually has a plan to do it. Is innovation a big thing for you folks down in Australia?
David: Oh absolutely. You’ve got to keep moving, otherwise you’ll become stagnant.
Anne: Right. But guess what? Not all of us have the next iPhone S, right? Usually innovation is associated with R and D, research and development, associated with big budgets, and associated with a huge risk of failure. And guess what that approached innovation is, what actually drives invention? You remember the segway? We all know the story of the segway, that wonderful little machine that will change the future of the world, that really cool invention. And now they’re just little two wheels for those things that run around in the airports now and then. They never did take over the world.
David: No, not quite.
Anne: The difference between innovation, which actually solves all your problems, and invention, which is just very cool stuff that no one wants to buy.
David: Yes, that’s right.
Anne: The last chapter that I have in the book, and the last piece that I’ll share in the video, that I’ll put together for you folks, is a little bit about very simple ways of innovating. And it’s not unlike the story that I just gave you about the hotel that I stayed at. Oftentimes, the innovations that we can do don’t have anything to do with business or our product. It’s often simply the way we make our customers feel. That little extra catch, that little extra mile, something that costs us almost nothing but solves the problems for them.
David: Right, absolutely. Well, it looks like we may have to continue this conversation at a later time Anne, but before that, if you can tell us how to get in contact with you and get a copy of your book…
Anne: The book, Profit In Plain Sight, will be released in six weeks time and it will be on Amazon, available broadly around the world. If you want to get started a little bit easily and a little more quickly, all you have to do is send me a quick email to firstname.lastname@example.org, and what I’ll do is I’ll just send you back three little videos, about 15 minutes long. It’s going to take you through those five areas that we talked about. We’re going to have a few little quick solutions for you and it’s going to point you in the direction of the book when it comes off the presses and is available to you. You’re very welcome to start this whole process at no charge whatsoever, so, invest your time watching this video. And if you feel like you want to step up a little bit more, the book will be available to you. There are links throughout the book and more free training videos, and there’s also something that I call Profit U, Profit University, and it gives you the full real deal in terms of the agenda you need to follow every week on how to make it happen.
David: Thank you so much Anne, I really appreciate your joining us today.
Implement these steps straight away without mucking around. Don’t put it off. It is the time to do it now.