Developing Your Marketing Strategy

Basic Business Cents

A fundamental question for any business is, “Do you sell what you can make or do you make what you can sell?” The answer might surprise you unless you carefully develop a marketing strategy. The first step is to conduct some market research.

Study the demographics of who will use your output, consumers, resellers, age group, industry, etc. How large is the market, is it growing or declining, location of buyers, purchasing habits, and best sales channels are questions to explore. What is your appeal to this market?

The next step is to identify your target market. From my experience, if you say your market is so large that if you only get 1% of the market you can become rich, you will likely get lost in the crowd and not succeed. But if you narrow the niche or segment of the market to not only become a major player in that niche, but to dominate it, then you have a good chance to be successful. Consider how well your product/service fills unmet needs or wants, how well the niche fits your business vision and skills, cost of entry into that business, and competitive positions. This is really defining a favorable opportunity.

Now that you have identified your target niche, do an analysis of the competition you expect to face in that segment of the market. Develop a worksheet listing the competitors, their strengths and weaknesses, pricing strategy, benefits and features, reputation, sales channels, image, and financial strength.

With your market research, study of the prospective buyers, and competitors, you can develop your pricing strategy. Do your benefits outweigh that of the competition so that you can demand pricing at the top of the scale? Do your costs of production and delivery provide the opportunity to sell on lower price? Selling at the low end of pricing is usually a bad choice that can lead to price wars. You need to identify an area where you will have an advantage, maybe even an unfair advantage. Bundling of products, service benefits, application knowledge, location, features, and benefits, benefits, benefits…..can support higher pricing. Look at your pricing from your customers’ eyes and justify the value of your products/services. Make sure that your pricing provides adequate income for your business

Your marketing message should always speak in terms of benefits to your marketing segment customers/users. It is natural for us to fall in love with our products and tend to brag about them in our marketing messages but remember, the customers do not care about that; they only care about what that product can do for them. Always speak in customer language.

In marketing, there is value in repetition, so develop a short marketing message or brand that you use constantly to enforce the message of the essence of your business. Your collateral, advertising, logo, and signage should repeat this brand. As time goes on, you may wish to rebrand your business as conditions change, but remember the consistency of the image you wish to project.

A 12-month marketing plan should be developed and incorporated into the organization’s business plan. Begin by identifying the goals of the marketing plan such as to increase the awareness of your business among prospective customers, attract more customers to buy, and increase customer satisfaction and thereby increase more referrals. Develop a chart by month for the next year with tasks, roles/responsibilities, completion time, materials, social media activities, alliances, email marketing, conferences/trade shows, target media contact list, tools/resources, and budget. This plan should be reviewed monthly and fine-tuned with new information learned.

The budget should identify target customers and sales channels to reach them. It should also include one-time charges, monthly expenses, and staff time.

A summary of the marketing activities can be shown in a marketing calendar to serve as a reminder of what is required at which time. It should be reviewed monthly for learning of the value of each and adjustments made accordingly.

Your image and service need to be appraised constantly. Is your facility neat, orderly, and appealing? Are you and your employees knowledgeable, courteous, and helpful? Is your website easy to navigate with a clear call to action? How well do you handle customer inquiries and complaints?

The question stated earlier on whether you should sell what you can make or produce what you can sell cannot be answered simply if you want to optimize your success. It is an iterative process to be studied carefully and strategized for best results.

Like anything else in business, your marketing strategy needs to be current, which means regular review and making corrections as needed. It is a key guide in attaining success.

Reference:  SCORE Marketing Cookbook

Simple Recipes for Marketing Success

A Solution to Some of Community Challenges

Basic Business Cents

Listening to conversations around the community, many challenges facing small communities are revealed. Some of these lamentations are:

·      Local youth do not have anything to do

·      Young people can’t find work in this area

·      There are help-wanted posters all over town

·      Youth don’t know how to work

·      Youth do not stay in this community after schooling

According to Stars and Stripes, a newspaper for the US Armed Forces, 70% (yes, seventy percent) of today’s youth cannot qualify to join the military. The major reasons are:

o   Obesity

o   Didn’t finish high school

o   Criminal record

Years ago, many youth enlisted in order to get a job and learn a trade or were given a choice of jail or enlistment by a judge for some youthful indiscretion.

Sports, music, and other school and church activities partially fill this void for some, but not for all.  There is a simple solution to these problems today for many of our youth, GET A JOB! A part-time job that is; it should not delay or deter anyone from finishing their degree work. In fact, local high schools cater to those students who wish to participate in the work force and complete their education. The degree is tremendously important today with the complexity we face in any job. The lack of it will forever haunt and hold back any youth that quits before graduation.

This subject brings up the concern of labor laws. A Guide to Starting a Business in Minnesota published by the Minnesota Department of Employment and Economic Development clarifies this subject.

·      A minor under 14 may not be employed, except:

o   If at least 11 years old, as a newspaper carrier

o   If at least 12 years old, in agricultural operations with parent’s or guardian’s permission

o   As an actor or model with approval from the Minnesota Department of Labor and Industry

o   As an assistant soccer referee

·      A minor under 16 may not work:

o   Before 7:00 am or after 9:00 pm, except as a newspaper carrier

o   More than 40 hours a week or eight hours in a 24-hour period except in an agricultural operation

o   On school days during school hours, unless an Employment Certificate is issued by the appropriate school officials and kept on file by the employer

·      Sixteen and 17-year-old high school students may not work:

o   After 11:00 pm on evenings before school days (11:30 pm with written permission of a parent or guardian) or

o   Before 5:00 am on school days (4:30 am with written permission of parent or guardian)

Ideas without action are worthless. It appears that a matchmaker or focal point is needed to match youth who want a part time job with employers who want to help. Local high schools might be in the best position to be this matchmaker or clearinghouse. The youth need someone to talk to about their desires and have a two-way discussion with someone who has knowledge of opportunities.

The employers in the community need to create these opportunities as a part of their civic responsibility in addition to increasing their workforce. The parents need to counsel their children on the opportunities and benefits of part-time jobs.

Benefits, in addition to addressing the lamentations listed above, are numerous to all concerned.

The community benefits by adding to the work force energetic, willing-to-learn employees who might be more tempted to stay in the community after finishing their education. The employers gain by obtaining additional workforce at fairly low cost who might become full-time employees after completion of their education. The youth gain by obtaining fulfilling use of their time, exercise, income to aid their families or save for future needs, learn jobs that they do, or do not, like, and experience higher self-esteem.

That sounds like a win-win-win solution to complaints heard on the streets.

Choosing the Form of Business Organization

Basic Business Cents

One of the first questions facing an entrepreneur is what type of organizational structure is best for the start-up company. This is a key decision that could have serious consequences later; one that many entrepreneurs are ill equipped to make. A free publication by the Small Business Assistance Office of the Minnesota Department of Employment and Economic Development (DEED), titled A Guide to Starting a Business in Minnesota, devotes 60 pages to this subject. This 357-page book covering a variety of start-up considerations can be obtained without charge by contacting:

Telephone: (800) 310-8323,

Fax: (651) 296-5287, or

Email: deed.mnsbao@state.mn.us

A simple comparison of the four basic business structures can be viewed by comparing pros and cons of each. Note, this is the author’s opinion drawn from research and experience and does not constitute a legal position. Legal advice must come from an attorney admitted to the bar in Minnesota and is a necessity for anyone considering starting a new business.

	PROS	CONS
Sole Proprietorship	Simple Owned and controlled by one individual Profits are taxed at the individual’s rate	Individual is responsible for all debts and obligations of the business Individual bears the legal responsibility for the business
Partnership    General Partnership      Limited Partnership	All partners share equally in the right, and responsibility, to manage the business Partners are taxed on their respective share of the profits at the individual’s rate. The limited partnership must have one General Partner and at least one Limited Partner. The limited partners share in the liability only up to the amount of their investment in the business.	Each partner is responsible for all the debts and obligations of the business Partnerships lead to disagreements causing serious disruptions to the business The General Partner has the right and responsibility to control the partnership but is responsible for the debts and obligations of the business. Limited partners do not have the power to act or bind the business.
Limited Liability Partnership (LLP)	The personal assets of the partners are shielded against liabilities incurred by business in tort and contract situations. Profits are taxed on the individual’s respective share of the business at the individual’s rate.	Care should be taken that the correct initials must be displayed as a part of the name of the organization. An LLP is a fairly new form of entity and not well understood by everyone.
Limited Liability Company	Liability for business debts and obligations generally rests with the entity rather than with individual owners. It is not subject to many of the restrictions that apply to an S Corp.	Must obtain both Federal and State Tax ID numbers.
Corporation       S Corp      C Corp	A corporation is a separate legal entity, which in most cases shields insulates shareholders from claims against the corporation. An S Corp is taxed much as the same way as a partnership. Profits/losses flow through to the shareholders in proportion to their holdings. Best liability protection for the shareholders.	The S Corp must meet the statutory requirements like no more than 100 shareholders, no alien shareholders, only one class of stock. Dividends and salaries are taxed at the individual’s rates plus the entity has already been taxed at the corporate rate.

An individual or partnership that conducts business in Minnesota under a name that is different from the full, true name of each business owner must register the name of the business with the Secretary of State.  An assumed name will not be accepted if it is the same as the name as another entity on file. Business owners may call the information line of the Secretary of State (651) 296-2803 go to the web site at www.sos.state.mn.us to determine if the name is available.

All businesses will encounter certain organizational costs. Both legal and accounting professional help is strongly advised.

Source: A Guide to Starting a Business in Minnesota

Thirty-Second Edition, January 2014

Minnesota Department of Employment and Economic Development

Closing the Gap in Your Management System

Basic Business Cents

Our last column presented an overview of a management system for performance improvement to close the gap from where you are today to where you want to be, or need to be. This system ,called ADAMS, is an acronym for Assess, Discover, Act, Manage, and Sustain.

Phase 1. Assess

·      Complete an assessment of performance and perceptions. A complete disciplined determination of your organization’s performance is important to document your starting point; and since perception is reality, check on how you are viewed by customers and by the marketplace. The MN State Quality Award or the Malcolm Baldrige Award criteria have excellent ways to assess any organization.

·      Verify strategic alignment. Determine if your current position and where you desire to go are properly aligned with your strategy. Misalignment is often a major cause of problems.

The output of this phase is a clear and well-documented picture of your organization’s current performance, where it needs to be, confirmation of alignment between strategy and current direction, and a baseline for measuring future progress.

Phase 2. Discover

·      Establish Discovery Teams. Establish individuals or teams to investigate barriers preventing the organization from achieving breakthrough results.

·      Select Projects and Formalize Portfolios. Define the most prominent problems and issues and establish projects to address.

·      Determine Appropriate Initiatives. Determine the approach, tools, and methods to improve the processes or systems of complex problems.

Based on a disciplined review of the underlying problems facing your organization, define and prioritize specific projects to be completed and establish broad portfolios to manage.

Phase 3. Act

·      Do it! Establish a culture and approach where obvious problems are solved without undo management review and analysis.

·      Deploy Initiatives of Complex Problems. Select teams to address major problems, provide them with tools, authority to make process change, and manage progress.

Because of a focus on quick-hits and deployment of long-term initiatives, you are able to see immediate results and the efficient use of everyone; everyone gets involved and committed.

Phase 4. Manage. Once the assessment has been completed, the direction and action determined, and initiatives deployed, the most important function is to successful manage all of these activities. This is an iterative process where you will need to often return to review your assessment and verify your results. The deep involvement of senior management and the constant commitment of employees at all levels is required to continue to drive positive results.

This phase ensures an effective coordination of short-term projects with long-term initiatives. Best practices must be shared and driven across all functional elements.

Phase 5. Sustain. Success in assessment, discovery, action, and management can still run the risk of seeing initial success deteriorate into long-term failure. If you want long-term success, you must master the last phase-Sustain.

·      Institutionalize. Move beyond changing behavior to changing culture. This is a difficult task, yet it has the greatest benefit. If you focus only on the improvement techniques and not address the culture of how you work, manage, and treat others, then the lasting effect desired will be eluded. An atmosphere of mutual trust and respect must become pervasive throughout the organization.

ADAMS is an iterative system where you will need to constantly work through all of the phases enabling you to drive to higher levels of performance. If you don’t, your competitors surely will.

Lagging, Keeping Up, or Leading?

Basic Business Cents

A System for Enterprise Excellence

Competition today comes not just from the competitor across town, across state, or even across the country. With the improvement and innovation in transportation and communications, we are faced with competitive forces from all over the world. Many organizations have built on this global reach and even outsourced some manufacturing and service functions. In truth, to remain competitive, many of our organization’s key processes must be refined, improved, innovated, and streamlined to remove redundancy, waste, rework, and unnecessary steps as well as add value. Since the national average of productivity improvement is 4.5% per year, we must exceed this pace if we are to become leaders in our field. As Dr. W. Edwards Deming said, “If we want to be ahead, we have to get ahead.”

To do this, we need the brainpower, commitment, and skills of every employee. This cannot be accomplished by fiat, threat, or extrinsic motivation. It must come from within each individual who has an understanding of what it takes to succeed. To ensure this positive commitment, however, there needs to be effective performance improvement processes and a management improvement system, which integrates these improvement processes to remove barriers, prevents the damaging effects of organizational silos, destroys ineffective bureaucracies, and releases the innovative potential of each individual.

Most of us have looked at our operations and have decided there is a significant gap between where we are and where we want to be. The question is what to do?

In determining an improvement system, we need to do the following:

• Create Real Results:  Improve the bottom line on the income statement.  Simply using a method that cuts expenses is good but does not go far enough.  What is needed is a system that also increases revenue – the top line. For non-profits, the management improvement system must significantly improve the operations of the organization as judged by the users, employees, and the owners.

• Ensure Commitment:  Increase morale and ensure awareness, understanding, and/or commitment of everyone. The system must engage all employees in a quest to obtain a vision that is accepted to all and provide the methods to achieve it.  It must foster a sense of accomplishment and pride of work.

• Is Action Based:  Provide solutions in response to real needs, not to a pre-ordained solution. The resulting system must effectively integrate all of the process improvement initiatives.

• Create a Culture of Excellence:  Recognize the need to address the human side of action, not just the technical issues. It has to make sense not only to top management, but also to all employees. Clearly, people function best in an atmosphere of mutual trust and respect without fear of making a mistake.

·      Is Easy to Enter and Embrace:  Must allow different organizations that are at different stages of maturity in their improvement journey to use the management improvement systems to achieve similar results.

A proven comprehensive improvement system is named ADAMS for the acronym, Assess, Discover, Act, Manage, and Sustain.

Phase 1. Assess--Before we can take the first step in improving our organizations, we need to truly assess the current situation. We need to know where we are before we can decide how to get where we want to go.

Phase 2. Discover—With a clear vision of our current performance, the next phase of ADAMS allows us to gain a more comprehensive understanding of the underlying problems and issues preventing our organization from closing the performance gap.

Phase 3. Act—Assessment and discovery are fine, but what counts in the final analysis are resulting actions. If we do nothing with our information, we have failed.

Phase 4. Manage—Once we have determined our assessment, direction, and deployed our improvement initiatives, the most important function is to successfully manage all of these activities. This is an iterative process where we often return to review our assessments and verify our approach and progress.

Phase 5. Sustain—Finally, the major challenge we must face in completing these deployments is the real possibility of the trailing-off of performance improvement. We can be successful with assessment, discovery, action, and management, yet still run the real risk of seeing initial success but long-term failure.  If we want to be world-class leaders, we must master the phase of sustainability.

All organizations have gaps in where we are today to where we want to be tomorrow. The ADAMS system provides a disciplined method for closing that gap.

The next column will address details of how to deploy ADAMS in your organization.

Nuggets of Knowledge

Basic Business Cents

Advanced Strategic Improvements Practices

2014 Conference

Dr. Charles Liedtke, owner of Strategic Improvement Systems, hosts the Advanced Strategic Improvement Practices Conference each year in the Twin Cities where representatives from selected organizations present their performance improvement initiatives, results obtained, and lessons learned. It is a great day of sharing and learning from each other. Presenters at the conference this year were from Hennepin County, MN Office of Continuous Improvement, MN Department of Human Services, Mayo Clinic Health Systems, IBM, Buckman Associates, Hormel Foods, Cargill, Strategic Improvement Systems, Toro, Process Management, and Seagate.

This year was the best yet as the activities appeared to be more complete, well rounded, and focused on the leadership and people aspects as well as process improvement.

Some of the nuggets of knowledge that resonated with me are:

·      Tap the power of hidden influencers. In every organization there are untitled leaders at all levels, who demonstrate that they can get things done beyond what their title on the organization chart might indicate. Enlist the aid of these hidden leaders to further the improvement activity.

·      Leaders may provide direction, but do they provide leadership? Are they modeling the way? Do they recognize that they have work processes that they perform and do they work to improve those processes? Perhaps we are not doing enough to help senior leadership become effective change agents. Training and coaching are important for both formal and informal leaders. They need to become role models by improving their own processes. Leaders lead!

·      Government entities do not share knowledge improvement lessons learned internally as well as industry. Promotional opportunities are fewer and individuals sometimes hoard knowledge learned to increase their chances of advancement. Unfortunately, this is true in industry as well.  Improvement lessons learned must be shared openly and applied across the organization.

·      Provide education and coaching for all employees to understanding and obtain commitment for performance improvement and innovation.

·      Improvement ideas can come from anywhere; sometimes the best ideas come from the front-line staff. Everyone in the organization has a brain and do not overlook any resources.

·      The following quote from Roger Milliken was shared, “Operational Excellence secures the Present.  Innovation Excellence secures the Future.”   The world is changing so fast that we must continue to innovate products and processes.

·      One organization gave the Baldrige Explorer Survey to 200 employees and discovered that there was very little understanding of what their work systems were. As a result, the feedback on strategic improvement had marginal utility.

·      Create current Value Stream Maps for Engineering (and other departments) first and then create future Value Stream Maps for review for all employees. Once these maps are developed, they will generate ideas for improvement and innovation. As the ideas are generated and maps redrawn, more ideas will emerge.

·      Make sure improvement changes are sustained and do not slip back to the old way of doing things. Building a sustainable enterprise needs to be integrated with the Strategic Planning Process as an explicit strategic intent. Business needs to completely incorporate sustainability action in the way of doing business; it needs to permeate every decision and every part of the operation.

This sharing of knowledge learned in the various strategic improvement practices added useful knowledge to all the attendees. The presentations get better each year and this year was no exception. It was a privilege to attend and learn.

Strategy Execution

Basic Business Cents

Football coaches are fond of explaining a loss by assuring reporters that they had a sound game plan but the players just didn’t execute. In my opinion, that is just a cop out by insecure coaches as they have the responsibility to prepare the players. Tragically, that is also often the case in business.

Strategy Execution is an interesting term, but does that mean to implement it or kill it?  Unfortunately in many organizations strategy faces a slow death by neglect. It is just as necessary to develop and follow up on an execution plan, as it is to develop the strategic plan. Words without action are useless.

But, development and execution are not the only elements of good strategy management; communication and revision are also key elements to address.

Typically organizations look at their strategy as either brilliant or mediocre and their execution as brilliant or mediocre. The aim of the organization is usually developed by the top executive, followed by the top management team, who develops the strategy to reach that aim. This strategy is then handed down to employees to execute. In this way, each group can blame the other if desired results are not obtained.

We must remember that each employee has a brain and it is an asset that should not be overlooked by management. In addition, employees are closer to the work and usually closer to the customers.

Upon development of the strategy, it must be communicated to all employees in such manner that they fully understand and embrace it. In the past, strategy was often considered company confidential and many employees were considered to not have a need to know; they were just considered as arms and legs to do what they were told.

To obtain that level of understanding and enthusiastic buy in, in-depth discussion needs to be held with management willing to listen with an open mind to feedback. Ideally, all employees would be involved in the development of the strategy but that is not always possible. All people need to understand that communication is comprised of two parts, sending and receiving, so time must shared equally between presenting and listening. Reasons for the strategy, assumptions made, rationale, marketplace trends, available technology, etc., should be discussed and understood. It is always a good idea to document the assumptions because often we cannot remember at a later date why we made certain decisions.

Following the communication sessions, the strategy implementation can commence. The strategy is cascaded downward through the organization with each level defining the action required of them to meet the overall strategy. Leaders should be identified for each strategy and progress monitored at monthly meetings. Management should visit all work areas and discuss what problems are being encountered with the implementation of the new strategy. With full understanding of the strategy, the employees should feel empowered, not constrained. If not, management needs to investigate the obstacles and remove them. At this time, management needs to be flexible and if real problems are encountered, be willing to review and adjust the strategy. Mutual trust and respect must be obtained, up, down, and across the organization, so that employees are enabled and empowered to change if needed. A good strategic plan is a living document and grows with implementation and changes in the market. It should be dynamic, growing, and exciting.

Good strategy management does not just consist of development and execution, either of which can be brilliant or mediocre, but four elements-development, communication, execution, and revision. It then become “our plan” and is in a constant state of continual improvement, always keeping the aim in mind.

Written Communication

Basic Business Cents

"I cannot forecast to you the action of Russia. It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key. That key is Russian national interest." Winston Churchill in a radio broadcast in 1939

No, this not a political article but the quotation is useful to point another puzzle wrapped in an enigma that we are faced with today. Communicating through writing is essential in the modern world and is becoming ever more so as we participate in the information age. Yet, the current generation is thought to have terrible writing skills and use of proper grammar. We are living in an era where we have a flood of information but a drought of knowledge. We need to overcome this puzzle wrapped in a riddle if we want to be successful.

Written communication is more permanent and raises accountability. It is a lasting document that can be used for reference, guidance, and holds the author accountable for the truth of the document. Therefore, care must be put into the content. Fortunately, time can be taken to proof read, think about what is said, how others may interpret or misinterpret, and whether it clearly conveys the intention of the author. This is not always the case with oral communications.

Written communications need to be complete, concise, clear, and courteous. The document should contain the facts needed to support the aim of the communication but only those pertinent. It should rarely be more than one page long or it is in danger of being put aside until the reader finds time. Most people are very busy today and that time to read long treatises rarely is found. At the same time, do not fall victim of saving time by using acronyms. They mean something to the author but often not the reader. I sometimes jokingly say, “I would like to stamp out all acronyms ASAP” to prove a point. I need to follow my own advice; ASAP stands for As Soon As Possible.

It helps to clarify intent if you use active verbs to be more action oriented, and clearer about what you want to accomplish. Improper grammar can cause the reader to focus on mistakes and miss the point of the message.

Always remember to be courteous; don’t burn bridges that will haunt you later. Remember written documents are permanent. You are more likely to receive support and cooperation if you show respect and trust.

Emails have become a common means of communication and most of the common sense rules above are applicable in this medium as well. We tend to become lazy, hurried, and less formal with emails, but they are still are permanent documents in which we need to take care.

The first, and maybe most important, thing to remember about emails is to choose the subject line carefully. It may determine whether the reader opens the email. Clearly define the topic, relevant times and places, and key words. Personalize the subject line if possible.

Use only one topic per email and keep it short and to the point. Bullet points and formatting are helpful in adding clarity and conciseness.  Other rules above apply. If action is required, list desired results and times involved.

If replying to emails, direct your response to only those who have a need to see it; don’t hit reply to all if not required, so you are not cluttering up their inboxes.

In this age of smart phone messages, tablet computers, and other electronic help, writing skill is more important than ever to business success. If only I had paid more attention and studied grammar harder in school.