Articles | LimeMinds - A Fresh Approach to Business

Can Independent Retail Survive the Downtown?

Over the last 10/15 years the pressure on independent retailers has increased as the dominance of the supermarkets has expanded. The numbers of independent retailers are at an all time low and those who are surviving are finding profit margins squeezed more than ever.

Now the arrival of a severe economic downturn and un-relenting pressure on the high street, will independent retail survive?

Supermarkets have changed the retailing landscape for ever and the dominance of the big four is greater than ever – 1 in every £3 spent in retail is spent in Tescos. Price wars have eroded profit margins and independent stores just can’t compete with the stack em high, price em low mentality that the grocers are displaying.

Its been a painful trend for the small shopkeeper and it doesn’t look like improving much in the near future, so what can the independent retailer do to survive in this market?

1> Understand your role – What role does your shop play in the consumers routine? Are you mid-week top up? Weekend beers and snacks for a big night in? Tobacco and a paper on the morning walk to work? Find out what the majority of your shoppers use you for and make sure you have the products and the layout to make the most of your consumer demographics.

2> Don’t go toe to toe with the supermarkets – If Somerfield down the road are hammering the price on beer and wine, don’t throw all your profit away by trying to compete head to head on price. Look for a point of difference, range, pack formats, service. Whatever you can make your USP use it.

3> Make the shopping experience a pleasant one – It might sound basic but the number of independent retailers who have dirty shelves, cluttered aisles or a confusing layouts is astounding. Today’s shopper expects high standards, don’t let your shop disappoint, and remember your personality and attention to your shoppers needs will make you stand out from the supermarkets – make the most of it.

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Killer Questions to Analyse your Business

Here are a few of our killer questions that you should ask yourself and your team about your business when analysing your current position and performance.

What’s working in your business?
What’s not working your businesss?
If you had to rate the effectiveness of your business what would it be (1 – 10)?
What would need to happen to get to 10?
Where are your biggest opportunities?
What are your biggest challenges?
What is the one thing you would like to do but can’t due to resource of budget?
What is working well in your industry overall?
What is not working well in your industry overall?
What do you see working well for your biggest competitor?
What do you see not working well for your biggest competitor?

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Are We All Entrepreneurs?

The last few years have seen TV programmes such as The Apprentice and Dragon’s Den encouraging people to flaunt their business flair and have become smash hits in the US and UK. And recent research among graduates showed that more than half were interested in starting their business.

Does this mean there’s a surge of interest in becoming a tycoon? And are more and more people actually managing to ‘be their own boss’?

Well the answer is probably yes and no.

Yes – we all have entrepreneurial abilities that we don’t use (or don’t know we use) and we can sharpen some of these through training.

And No – the dedication, focus and ruthlessness needed to be a real tycoon probably exists only in a few.

Let’s investigate the yes answer a little more. A previous article, Releasing the Entrepreneur suggested that if we could all act a little more like entrepreneurs it would help us in solving problems, overcoming barriers and encouraging innovation.

This concept of an ‘internal entrepreneur’ suggests that if we could be more business-minded inside a company we could benefit both as individuals and as part of a company.

Imagine that when you are faced with delivering a task or project, but instead of using the company’s budget it was your own money

Here’s a simple test: imagine that when you are faced with delivering a task or project, but instead of using the company’s budget it was your own money you were spending. Would you feel differently about handling the money and resources at your disposal? You would probably be more concerned about things like waste and cost and what’s needed to get the job done.

Entrepreneurs tend to use what is known as ‘effectual thinking’. This type of person would, for instance, look in the fridge and rather than endlessly planning menus and shopping for the perfect ingredients, they would use what is there to come up with a meal.

This could be described as ‘thinking on your feet’ and using the things you have at hand to come up with the results.

But thinking like an entrepreneur is more than just worrying about resources. It can assist our every day work and help with innovation. There are a number of simple concepts that can be applied with very little preparation other than being prepared to be different.

Years ago Apple computers ran an advertising campaign that said, ‘Think Different’. Steve Jobs, the CEO, said that this statement was more for themselves than customers – they needed to be willing as a company to question the accepted ways of doing things in the computer industry. The results of this philosophy are products like the iMac, iPod and iPhone.

Supporting innovation
A major UK based organisation with no end of good ideas was finding it difficult to select the right ones to be developed into products. Part of their solution has been to build a talent pool of people with the crucial entrepreneurial skills, behaviours and connections to help drive the massive innovation cycle and draw out the real opportunities from the mass of good ideas.

In effect they are un-locking the talent and creativity that already exists

In effect they are un-locking the talent and creativity that already exists, so more ideas will get ‘test-driving’ by people who might not normally be involved with product development. And key to this approach is confidence and accepting that.

1. You don’t always get it right first time with new ideas; false starts are normal
2. There never is a ‘right’ time because you will never have all the facts
3. Your customer has got to believe in the idea

We are all entrepreneurs
Everyone, everyday, uses entrepreneurial skills whether it be convincing a family member to go on holiday to a certain place, or telling the story of your day at work to show what a great guy you are to your friends. We are regularly using influencing and networking skills.

Something we can practice is to think about what we have achieved that was difficult but successful and we feel good about. We can ‘visualize success’ by reminding ourselves about what we did exactly:

Why was it successful?
How did we go about it?
How did we feel at the time – the highs the lows?
What were the key points – the decisions, the turning points?
Who and what did we need to help us?
What did we learn that we could use again?

This idea of visualising success helps us develop our own personal best practice, reminds us of tools we can use and highlights ones we may need to develop. And crucially it helps bolster our confidence and shows that though we may have set backs we can still achieve our goal in the end.

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How to be a better Negotiator

You need a better price. You need a quicker turnaround. You a better return on your money. You need a better salary. Whatever you need, no doubt you’ll need to negotiate but are you any good? Many people will have experience of negotiating but often little understanding of how get the results they need.

First off lets make the distinction between negotiation and haggling. Haggling is the simple exchanges you can hear in any marketplace…

“How much for that vase?”

“£30!”

“I’ll give you £10″

“£20 no less”

“£15 my last offer”

“Deal!”

Haggling is a one variable negotiation (normally price as in the example), is often a one-off deal (you’ll probably never meet the trader again) and so usually results a in meet half way type of result and in more cases than not, one party feeling a little aggrieved.

True negotiation is often more complex with multiple variables included (price, time, quality, quantity) and will not be the only time you deal with the opposite party (they maybe an on-going customer or supplier).

To be successful at negotiating we suggest you cut out the following common mistakes…

Making your target public knowledge – “They will need to reduce their price by 50% before we agree to this deal”. Negotiators who make bold and public statements before going into the negotiation often never get the result they want and therefore instead of losing face they find a stalemate.
Making it personal – By getting personal and focusing on beating someone rather than looking at the positions and goals of the negotiation you often lose sight of what you want or need to achieve in order to deliver success. Not only will you lose sight but most likely you’ll get emotional. Emotional people are prone to making poor decisions and the negotiation table is certainly not the place to make mistakes.
Fail to Plan – Prepare, rehearse, prepare some more and rehearse again! There is no limit to how much preparation you should do (only the time available to you) and it is so vital. Most negotiations are won or lost at this stage the face to face discussion is only the final part. Your pre-game is where you can plan for the different scenarios, develop your BATNA and really understand what you want the outcome to be. So many people skip over this part they think simple setting a goal to achieve will get them the result they need but in the heat of battle a well prepared negotiator will know when to close and when to walk away.

When negoiating try to do the following…

Increase the size of the pie instead of slicing it up - Negotiations which slice the pic never really satisfy anyone but if you can increase the pie its more likely everyone will be content.
Always think Win Win - Too many people think negotiation is all about beating your opponent, its not. Win – Lose will always come back to bite you, just imagine how you feel when you’ve lost out in a negotiation. You may feel angry, aggrieved, dis-trust amongst many other negative emotions. All these feelings will destroy any business relationship and trust that may have existed and will probably inhibit any future dealings between the two parties.
Create a BATNA (Best Alternative To Negotiating an Agreement) – Not all neogiations result in the an agreed solution that both parties can be happy with. Creating an alternative to reaching an agreement can help provide you with greater power in the neogitation as you can always walk away if things aren’t going to plan. It also can be used when neogiations have reached a stalemate. Say you wanted to join the gym near your house but membership was too pricey, you speak with the manager to negotiate a better price, before you meet you look at your options your BATNA in this case maybe joining a gym further away but considerably cheaper. If the manager doesn’t want to budge you may want to mention your BATNA as a final attempt to move the negotiation. It might not but you can still walk away knowing you have a solution you are comfortable with. One note about BATNAs, don’t reveal it early in a negotiation and only declare it if you really can’t move the negotiation any other way. Early declaration of a BATNA can result in the other party simple meeting that requirement when the might have been a potentially better offer waiting to hit the table.

Remember negotiation is a game, put in the training and the preparation before you play to have the best chance of getting the result you want. Don’t feel like you need to rush into an agreement if things don’t stack up just to get it over with.

If you want more advice and help in developing your negotiation skills visit the LimeMinds Academy for our neogitation courses and training guides.

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LimeMinds Small Business Marketing Support

LimeMinds have now launched a new service for Small Businesses to help them create effective marketing plans. LimeMinds can how be put to work in developing a marketing strategy for your small business in 3 ways:

1> By the Minute – Hire LimeMinds to advise your business on online and offline marketing, analyse your competition and industry.

2> Create a Marketing plan or Strategy - LimeMinds can be hired to create your business an effective marketing plan.

> Act as your virtual Marketing Director - Many small businesses would benefit from having a dedicated marketing director or manager. LimeMinds virtual Marketing Director allows your business to access to have that resource.

For more details about these and other services click here.

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How to write a Financial Forecast

For anyone writing a business plan or trying to secure investment the financials part of the plan is the often the area that can make or break a company’s future. Many business owners and entrepreneurs find creating a 3 or 5 year future P&L extremely difficult, often these predictions are made before a single sale is made and most are finger in the air jobs.

Sales and Profit forecasts tend to go one of two ways. Either the forecasts are so conservative that they fail to interest any investor to commit to the business or go completely the opposite way and claim the business will be making £50 million within 3 years and are based on nothing but complete fiction.

A few simple techniques can help when creating financial business plans …

1> Understand where you fit in the market and its actual size – Many business owners make the mistake of mis-calculating the true size of the market in which they sit. This mistake is magnified when sales projections are then based on gaining market share. Take this (fictional) example… Company A makes software to help cardiologists make early diagnosis of heart disease in their patients. Company A’s CEO believes that 5years after launch they will achieve 1% market share – 1% is a favourite of entrepreneurs andfinancial projections, we’ll discuss the fallacy of this in the next point – The software market is worth £500 billion so In year 5 Company A will turnover £5 billion – Wrong! Company A’s market is not the entire software market, nor is it even the medical software market. The CEO needs to drill down until they find their true niche and the value of that market segment. Don’t over estimate your place in the market and over state your potential value, potential investors are very quickly turned off by un-realistic valuations.

2> Don’t use the 1% rule- It is unbelievable how many times this rule is applied by entrepreneurs and small business owners, I’m sure you’ll have heard it used. The entrepreneur tries to couple the over estimation of the market (see point 1) with what seems like a conservative (and fair) market share target (1%). The problem lies around the fact that whilst 1 % of a large market looks fantastic, when you drill down to the true market value then that 1% looks a little small. The other issue is that by quoting 1% market you look a little novice and inexperienced, (which of course you might be but you don’t want be telling everyone). Quoting 1% looks like you haven’t bothered to look at your market and don’t truelyunderstand your business.

3> Look at the competition- All companies started out at one time or another and all products were new to market at some point. You can use your competitors and their products to your advantage when forecasting your potential sales performance. What did your competition achieve in sales in their first 5 years? How did new products/services they brought to market (which are similar to yours) perform? What’s happening in your market in general? Answering these questions and adding in some reasonable assumptions of your own, should create a fair assesment of where your sales could be in 3/5 years and stand up to questioning from potential investors.

4> Don’t plan for exponential final year growth – For those of you who have watched Dragon’s Den you might recognise the following sequence…

Dragon: “Can you run through your sales and profit forecast for me?”

Entrepreneur: “Of course… 1st year sales £100,000 profit £10k, 2nd year sales £350,000 profit £50k, 3rd year sales £2.5 million, profit £1 million!”

Dragon: “OK…?”

Where did that final year projection come from? Yes we all want year on year growth, yes we all would like double digit growth but come on. I guess the lesson is be confident, be optimistic, be bullish but be realistic. Far fetched predictions will be quickly dismissed by any potential investor and it is probably at this point in your proposal or pitch that you will lose them.

However you plan your financial forecast remember to know your numbers inside out and to be able to justify them, you should find that you can stand up to even the most intense questioning from investors and your thoroughness at this stage will bode well for the future health of your business.

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