Archive for the ‘General Business Philosophy’ Category

Planning for 2010 and Beyond

Saturday, January 2nd, 2010

The first week of the New Year is always a special time for me. it’s when I sit down and try to objectively look at what happened in the previous year and plan for the coming year. For almost everyone 2009 was a train wreck of a year. The wheels came off and most companies are lucky to still be around. So, looking back for me was mostly painful. The only thing we can do is suck it up and keep moving forward. There aren’t going to be any quick fixes and fast turnarounds.

Planning is going to be the theme for January. Over the next month I’ll be blogging about how to set the course for your 2010 Business Plan so you can be as profitable and productive as possible. Here are some beginning thoughts to help you get started with your planning.

1) Focus, focus, focus. When I look back on ‘09, the single biggest thing I see was the disorganized, random, chaos of reaction. When things don’t go as planned, we react. Too often that reaction is unfocused and relevant to the event at hand. Our actions don’t fit into a bigger plan, so we aren’t nearly as efficient as we’d like to be. It is more or less like sticking your finger in the dike to stop the leak. It may fix the immediate, but it does nothing to address the bigger problem of why the dam is leaking in the first place.

Focus means selecting a course of action and sticking with it. You don’t have to get it all right, but you do need to concentrate on the desired outcome and fix on that. We can make minor corrections along the way, but don’t be tempted to make radical changes in midcourse.

2) Know what the outcome of your efforts is supposed to look like. Are you trying to add new customers? Increase sales? Increase frequency of sales? All of the above? Clearly define what your expected outcome is so you’ll know if you are on track or off course. Have Plan B, C, and D in place if you’re ahead of schedule, behind schedule, or on schedule. With alternatives in place, and a clear idea of the result you’re looking for, it makes it much easier to stay on target for your goals. This will help you avoid wholesale course direction changes that can stall your momentum and dilute your efforts. And it can help you from wasting time on nonproductive diversions.

3) Understand the difference between planning and action. The plan is the framework to achieve your results. It is strategic and should result in increased stability and soundness. The tactics or actions are how you’re going to get there. We tend to focus on tactics at the expense of strategy.

4) From Steven Covey’s Seven Habits of Highly Effective Leaders, “Begin with the End in Mind.” Define your ending point or year end goal for 2010 and begin piecing the parts together.

Over the next month, I’ll be concentrating on the planning process so by Feburary 1st, you’ll have a workable plan in place for you.

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Who Should You Be Doing Business With?

Monday, December 7th, 2009

Throughout the year I look at who we’ve been doing business with and how their orders compare. We use the traditional approach (Paretto 80/20) that shows us a relatively small number of customers account for the majority of our orders and profit. When I apply this approach it’s easy to see who is taking up most of our time and to compare if they are generating sufficient order size to make it worth our while. About a year ago we did this and were shocked to find one customer accounted for 66% of our press time, but they only accounted for 18% of our revenue. What does this mean?

When something this extreme becomes evident, I have to ask myself, “how did I allow this to happen?” The answer is not always an easy one. In this case, we were doing such a good job, the client kept feeding us more and more of their work. We were not their only vendor, but we were one of the only ones that could do their most demanding work. Over a period of about a year, we saw a shift in the mix of orders coming to us. They became more and more technical, while at the same time the order size was getting smaller and smaller. We found ourselves in the position of spending two to three times the production run time in set-up (registration and color adjustment.) So, for every hour of running time, we would have two to three hours of set-up. That was horrible to be sure, but it got worse.

Since the customer was sending us more and more work, they demanded greater price concessions due the volume of their orders. We quickly found ourselves in a position of having to agree to lower overall prices while their order size diminished (supposedly due to the economy) and more difficult work. There was no way we could recover the set up time over the run length and before we knew it, we were in big trouble. This was only compounded when they started to stretch out their payments to us, further impacting our ability to run the business. Overall, a very bad situation.

There are many lessons here. Number one, don’t get caught being asleep at the wheel. This is a perfect example of being so busy being busy that you don’t realize what’s gong on until it is too late. We all want to be responsive to our customers, but business is a two way street. If you can’t be profitable, AND get paid within a reasonable time, you mind as well not do the work.

Second, know what your ideal customer profile is and try to exceed it. When order sizes shrink, so must the set-up and changeover time. You need to know what the smallest size order you can do will be. Otherwise, you’ll find yourself being suckered into doing runs of 12 pieces with a 7 color front and an 8 color back. Suckered may not be the right word, more like coerced. There are a million justifications for having to do really short runs, but we all have to stand firm, or have a policy in place to account for these kinds of situations.

Third, compare the profile of each of your current customers with that of your ideal customer. If you don’t have enough ideal clients, you need a plan to fill the pipeline with new prospects so you can mirgrate away from the time consuming, profit robbing, customers you currently have.

This last year has been generally awful for most printers I talk with. While the economy seems to be getting better, it is still fragile at best. At the very least, we are coming into the slow time of the year and we all need to be especially mindful of these kinds of situations so we don’t accidently find ourselves in big trouble even though we seem to be busy.

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Friday the 13th - Superstitions

Friday, November 13th, 2009

Today is Friday the 13th, the third time it’s happened in 2009. A few of us were talking about it this morning and the topic of superstitions came up. It’s amazing how many people believe in them. It got me thinking how many superstitions we follow in our business. Most of them for no real reason other than this is what we’ve been led to believe to be true.

A superstition is really nothing more than an unexplained belief. Why do people believe that walking under a ladder or breaking a mirror brings bad luck? I’m sure if we researched each one we’d find some interesting stories, but no hard truth. Where I see superstitions at work is in the technical side of the business.

Most of the experienced printers in this industry got their chops by working their way up through the ranks. They started at the bottom and got promoted along the way as others were fired or left. Many of them have no formal printing education other than what they read in the trade press or learn at trade shows and conventions or from traveling company reps.

A common situation is to take this knowledge at face value, never questioning or challenging it. I call this “Tribal Knowledge” as it is passed down by word-of-mouth over the years. Each time it’s passed, something is added, deleted, or communicated incorrectly. After two or three generations it’s often difficult to justify what is being passed on as truth.

In all the time I’ve been involved in the industry, it still amazes me how often something we’ve been hammered on as “the way to do it” actually turns out to be the exact opposite of what we really need to be doing. I think a there are a couple of reasons for this.

The first one is that the knowledge may have been knowingly passed off as wrong to begin with. This often happens when a rep visits a shop and watches something innovative being done. When asked about it, the business owner fabricates a response he knows isn’t correct because he wants to throw the competition off track. The rep takes this information and willingly scatters it along his way, where it gets changed and tweaked each time it’s passed on. The original source passes the bad technique because they want to preserve their “trade secrets.”

Secondly, we have basic ignorance of how things work. Many of our production workers are true blue collar employees. They may only have a high school education, and often times they don’t even have that. Screen printing is full of these kind of workers. Nothing wrong with it, it’s just the way it is. The problem comes when they don’t have enough education to think about what is being told to them. They can reason why something should or should not work. There have been many, many times where someone, trying to be helpful, has passed on a technique or method with authority (this is how it’s done.)

When challenged as to why this works, they buckle. They can’t explain it and they usually will revert to citing where they saw it being done or who told it to them. In either case, we’re not getting the whole story. It is this blind faith that whatever is passed on is right that gets me. Simply asking why it works or how it works is all that’s necessary. If you can’t get a good, believable answer, I’d immediately be suspect.

What does all this mean? Simply, question everything. Look at your own business and see if you can find things you’re doing because “that’s the way we’ve always done it.” Ask yourself if there’s a better way. There almost always is.

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Migrating Your Products and Services Beyond Being a Commodity.

Tuesday, August 18th, 2009

No matter how hard we try, it seems overcoming the stereotype of being the “t shirt guy” is an impossible objective. The perception of being a t shirt company or vendor in the marketplace is huge. Just trying to get your customers to understand what you really do is a challenge. As I was thinking about this, some things began to occur to me.

My first thought was that the perception is reality. No matter how we see ourselves, customer perception of what we do is the real reality. They’re branding or labeling us with this perception. It’s up to us to fulfill that label, or somehow overcome it. Part of this labeling process is the commoditization of what we do. “You’re just another t shirt guy” is tough to overcome as it puts all t shirt printers into a giant group where everyone and every product looks the same. As I’ve said in the past, if you get caught in this trap, the only differentiator is price. That’s a losing game.

Your avenue out of this perception is to provide a logical path. Start with your position the same as everyone else. You can make or beat the lowest price in the market as the starting point. It really does not matter because our intention is to use this as a starting point for the conversation, that’s it. We have no intention for selling shirts for the lowest price in the market.

The key is to have a series of upgrades, steps, or levels. If you’re starting off with a cheap 5.4 oz cotton shirt, the next step up is a 6.0z with better graphics and special effects inks (high density, reflective, gel, etc.) Still not expensive, but something to compare with. Follow this with a more fashionable style like an American Apparel body or a 100% Certified Organic body with waterbase printing. Now you have much more margin and a clear choice that does not fit the stereotype. You’ve navigated away from a commodity to something beyond.

In order to make this transition it’s also important to give the reason why behind the upgrade. The reason why for the point of entry garment is all about being the cheapest, that’s it. It’s where it is because it fits the profile of the commodity. The fashion body is “hip” or cool, and the organic T is good for the environment. The more compelling you can make the story that leads up to the next level, the better chance you have of making the migration.

What you’re after is comparison. If you don’t have higher priced alternatives, you have nothing to compare against and the low end price gets pegged. Offering alternatives with a reason why behind them breaks the link to a commodity and frees you to move up to a higher sales price and higher margin.

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Connecting with Your Niche

Friday, August 14th, 2009

A niche is nothing more than an area of special interest. One of the very first things you can do to improve your business is to move away from being a generalist that does anything for anybody. When you target your efforts to a specific specialty, you move away from a commodity product or service to one of uniqueness. This specialization is the mechanism for increasing your profits. Today I thought I would share some of the elements necessary to make a niche effort successful.

When selecting a niche it really helps that it be something you are personally interested in. The higher your interest, the easier it is for you to become excited and engaged. This is one of the keys. Enthusiasm sells. It’s contagious. I’ve seen mediocre product sold very successfully in specialty niches simply because the company or site was enthusiastic about what they were offering.

Your role here is to connect. The more authentic and genuine you are, the more believable
you’ll be. Printed apparel in a niche area should reflect the look and feel of that market. The automotive racing and motorcycle niches have their own typical look. Likewise for major sports events. Fun runs, triathalons, and marathons (half and full) have their own look as well. You don’t have to try and reinvent the wheel for your niche. Look at closely related areas and see if you can identify a specific signature style.

Specialization usually means you know more about that area than the average supplier. The more you can incorporate the style of your market, the more you will sell. For instance, if you are selling to outdoor festivals, make it a standard practice to fold and bag all retail product. This keeps the inventory clean and protected and is a definite added value.

Talk to many different people in your area. These can be customers, other vendors, or participants and spectators. Find out from them what’s important, what they’re looking for. Ask them what’s missing or what would make for a better experience. You may be surprised at the answers. Be on the lookout for opportunities for you to partner with others selling into the niche. You can often piggyback onto their efforts to increase your credibility and reach.

Success in niche marketing comes down to three things: Market knowledge, passion or enthusiasm, and connection to the market. When you combine these three elements, you have a recipe for success and profit.

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The Value of Mastermind Groups

Thursday, August 6th, 2009

The first Thursday of every month is reserved for my Mastermind Group. This is a collective of 10 different CEOs from10 different industries. Each of us has a company ranging in size from about $3 Million USD to $50 Million USD in annual sales. None of us compete with each other and there are no conflicts of interest. We gather to discuss business in general and problems and challenges within our companies as a whole. I joined the group over 5 years ago and rarely miss a meeting.

What would cause a person to give up one business day a month to a group of guys that sit around and talk business? The answer to this question lies in the value each of us derives from the group.

Someone once told me your annual income can be loosely calculated to equal the average incomes of the five most influential people you associate with. If this is true, we can also look at the annual income of our companies in the same way. If you do business with a lot of small, local businesses, your business volume will reflect this. If you work with larger corporations, the size of your orders and your annual volume will reflect that as well.

The point here is, if you want to grow, you have to associate with those who are where you want to be. They’ve overcome the challenges you have and achieved a higher level. We can learn from their mistakes and experiences along the way. They can help us with insights on hiring, sales, production, administration, finance, and so forth.

Why would a bunch of larger companies want to hang out with a bunch of small guys? This is a very good question, and the answer lies in “agility.” Small companies tend to be very innovative and responsive. The larger a company gets, the more out of touch it becomes with its workers and the markets. This isn’t always the case, but for the most part the generalization holds true. These big companies are envious of the smaller companies innovative capabilities and their ability to capitalize and implement quickly. So their motivation is to see if they can gleen any wisdom or tricks that will speed up their own innovation cycle.

Napoleon Hill, in his landmark classic business book that everyone should be required to read Think and Grow Rich, proposed the concept of a Mastermind Group. He correctly theorized when you surround yourself with smart, successful, wealthy, experienced, knowledgeable individuals, their skills and influence would rub off on you. As a result, your overall skill set and capabilities rise as well.

It is a brilliant concept I fully endorse. Without outside perspective, we tend to become mired in our own thoughts and circumstances. We can’t seem to make out the difference of the forest for the trees. We become confused and lost in circular thinking. Solutions to problems evade us. What we need is fresh perspective. A Mastermind Group fulfills this purpose beautifully. Every business (or individual for that matter,) should be a part of such a group. The benefits are amazing as are the “AH HAH” moments or realization.

Finally, the Mastermind Group provides another valuable asset. It is accountabilitiy. This group of effective leaders holds each other accountable for things they’ve said and committed to. This need for accountability is crucial for entrepreneurs and business owners who do not report to anyone but themselves. They can’t run and hide behind anything to escape the scruntiny of the other group members. It can be uncomfortable at times, but it is a huge advantage to have this forced accountability. It speeds things up and makes it easier to get things done within the time frame you have budgeted.

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I’ve Got This Great Idea For a T Shirt! Part Two

Friday, July 24th, 2009

Having a great idea for a t shirt is just the beginning of the process. Getting it produced and marketed properly is a formidable job. Your two options are shortrun digital Direct-to-Garment (DTG) and traditional screen printing. DTG has a different look and fell than traditional screen printing and many consumers still feel screen printing is what they know and love.

For those who want the quality of traditional screen printing, there are a few things to consider. First, it takes more preparation at the front end to get the designs ready to print and on the screen. To keep your costs reasonable, you’ll need to do at least a couple of dozen shirts.

Second, before you go to all the expense of printing up a bunch of expensive samples do some basic market research to see if other people are as excited about your design as you are. Start by doing a Google Search (Your Design Idea) + T Shirt. So for instance do a search for: Michael Jackson Tribute + T Shirt and see how many other people are thinking the same thing you are.

Here’s an IMPORTANT TIP - you want competition. If you don’t find anybody who’s doing something similar, it usually means it’s a weak idea or you haven’t hit the key idea in a way others will recognize. If you find Michael Jackson Tribute T Shirts (and there will be a ton right now,) you’ll know there are other people who have gone to the trouble to develop and market a similar idea. This is a really good sign.

If you’re encouraged by what you find, it’s onto the production step next. With DTG, you pretty much go to the company website and follow their instructions. Screen printing is a bit more involved. The printers will tell you what they want you to supply and in what form.

Here’s a hint, DO NOT do your art work in Microsoft Word or Power Point. They are unacceptable formats. DO NOT do a screen capture from a web page. You’ll get horrible quality. Ask the printer for guidance on the file format and preparation.

Go the extra mile and get the art done right from the beginning. Great art is what sells shirts. When you have a great idea, you get their attention, but it’s the art that closes the deal. If you need to, get a REAL graphic designer to do the art for you. Having your cousin who has Photoshop do the art for you is like doing brain surgery on the kitchen table. Results are not going to be good.

Finally, when it comes to screen printed t shirts, NEVER use this approach: ” Give me your quantity price break on 1,200, but I only need 12 right now. We’re going to sell a ton of these.” It’s almost a sure way to get the boot. Every printer on earth has heard this line almost as many times as “I’ve got this great idea. . .”

Do this. Tell the printer you understand the set-up fees are front end costs. Ask them at what quantity the set-up is free. This becomes the point at which you can negotiate for the rebate of the set-up costs.

So if the free set-up is at 1200 pieces, negotiate a rebate of the costs when you hit this quantity. This way, the printer is covered up front AND you get the set-up fees back if you really do hit the big time. You’ll also find the printer has raised their level of respect for you because you’re sensitive to their issues, you talk the lingo, and you’ve done some homework on this project.

There is nothing that beats the excitement and satisfaction of creating a great t shirt and having it take off. Follow these guidelines and you’ll have a much better chance of being one of those successful few in hitting the big time with their great t shirt idea.

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The Principle of Reciprocity - Giving Free Stuff Away in Order to Receive

Thursday, July 16th, 2009

When I talk to printers about how they market, I get a number of different answers. By far the most common one is, Word-of-Mouth. This is great, but unless you have a plan in place to maximize the result, it can be unpredictable at best. There’s no doubt it’s the most cost effective (free) form of marketing, but you give up a regular stream of business unless you go about it differently.

Another very common one I hear is, “We sponsor fun runs and events in the community.” This usually means either contributing the shirts and printing, or heavily discounting the printing costs for the group or function. This leads me to the the discussion in today’s post; the value of Reciprocity.

Reciprocity is the principle that if you give, there’s an implied obligation to respond in kind. This is an age old principle. It’s led to the saying “There’s no free lunch.” Simply put, there’s always an expectation of a return favor. Obviously this can have sinister implications if it’s used for personal gain. On the flip side, we can use this principle to increase our marketing efforts and help give teeth to those weak sponsoring relationships and inconsistent Word-of-Mouth referrals.

We’re all aware of the practice of free samples. If you’ve ever been to a Costco on a weekend, they’re at the end of almost every food aisle giving samples of salsa, chips, sausages, cheese, salami, you name it. I know this must be effective because I watch how many people actually put the product in their carts after sampling. It’s amazing. If you’ve never watched, make a point the next time you have the chance.

We can do the same thing. We don’t even have to give away printed shirts or embroidered hats. We can give away information products that make it easier for the consumer to make a buying decision. One of the best ways of doing this is to put together a consumer awareness guide that contains all the right questions to ask potential vendors.

We’ve all see the comparison charts with the checklists. This is a great way to level the playing field. I even go so far as to provide a chart for them to fill in. They can add the name of the vendors they’re shopping at the top and then check off the answers as they talk to each one. This is a great way for them to realize it’s not about buying from the guy with the cheapest shirts.

You can expand on this concept and provide short pamphlets on specific subjects. Things like “Buying T Shirts for Your Family Reunion.” or “Making Your T Shirt a Hit at Your Event.” The idea is to inform and educate, but not sell. Of course you’ll brand every page with your logo and phone number. Be sure to add something to the effect of: “Prepared as a public service by (name of your company.)

The point here is two fold. First, it’s very inexpensive to do this. Secondly, the more information you can layer on, the greater the reciprocity factor. You’re seen as the knowledgeable expert doing the consumer a favor. Even if you don’t get the initial order, you can be sure you’ll have made an impression which will positively reflect on you when the Word-of-Mouth factor comes into play.

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How Long Does Your Sales Cycle Take?

Wednesday, July 15th, 2009

How long does it take to make the sale? With the pressure from the economy ever present, this is the question we should all be asking. Keeping your sales pipeline full of prospects depends on your understanding of the sales cycle and how long the development of the cycle is. The longer the cycle, the more prospects you need in it.

Our business is guilty of what I call “sales by necessity.” This simply means, when the pipeline gets thin, we go out and try to drum up business. I’m guilty of this just like you are. When times are good, we don’t do any of this, we simply let the work come in and we stay busy. When it slows down, we start calling past customers or start pitching potential new accounts.

This is confusing and annoying to the prospects at the same time. It’s no wonder the reception is lukewarm at best. This is sales driven by our needs, not the needs of the customer or client. I’ve been watching many different industries for several years now and the sales cycle question is common across all of them. The way it’s handled in each industry differs.

The Internet Marketing community has it together the best. They understand the real value of their business lies in the relationship to their list. The “list” can mean prospects, joint venture partners, endorsed mailings, past customers, and current customers. They have metrics in place to measure effectiveness and they can tell you exactly what it costs at each phase of the cycle. Very impressive compared to how we do it in this business.

I harp all the time about getting your customer list together and keep it updated. At the very least, regular contact via a physically mailed newsletter or even a regularly scheduled email will do wonders in reminding those you do business with that you’re still around and open for business. You don’t need to pitch anything, although having specials, sales, etc. doesn’t hurt either. It’s the common courtesy of keeping in touch instead of constantly going to them when you need work that makes them appreciate you more.

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How Innovative Do You Want To Be?

Tuesday, July 14th, 2009

Innovation. One of the key things that’s supposed to differentiate you from your competition. It’s one of the things we value the most about being in business for ourselves. We’ve been told “If you build a better mousetrap the world will beat a path to your door.”

I used to believe this. It’s been one of the things that’s driven me and my businesses over the last 35+ years. But when I sit down and really look at the history and experience of the innovations, and the resulting business that’s resulted from those innovations, I have to take pause.

Personally, I derive a great deal of satisfaction from innovation. I love solving problems and finding a better way of doing things. But there’s a problem with it. Often the problems we choose to solve are only problems for us, and not others. At least, it isn’t a problem for them yet. And there in lies the dilemma.

People and companies that make innovation a key part of their existence position themselves at the front of technology, the market, or whatever. They’re at the cutting or bleeding edge. We used to joke about it, but when times get tight, business is off, and cash needs to be conserved, being on the bleeding edge can be dangerous to your business health. I don’t think it’s any coincidence the companies that innovate the ideas and introduce them are rarely the companies that make money with them.

Here’s the problem. For those on the edge, the problem is apparent and this triggers the need to solve it. For those not on the edge, well, they many not even know a problem exists. When this is the case, the innovators have to take valuable time and spend a bunch of money to educate the market to the extent and need for the problem to be solved. This diverts resources away from the innovation. Since the problem isn’t compelling for them, it’s easy not to embrace or invest in the solution.

Over the years, on more than one occasion, people have approached me at seminars, workshops, tradeshows, and so on and said something to the effect: “Mark, most of the time I don’t know what you’re talking about, but I know I’m going to need to know about in the future.” I used to laugh at it, but it got me to thinking what they were really saying.

It comes down to this. New, innovative ideas, inventions, procedures and the like are of little or no value unless they are tried, implemented, and embraced by the market. We all want a competitive advantage, but it is a thin line we walk between being too far out and having an advantage.

One of the main reasons I write and speak is to expose ideas. I’ve been criticized for this in the past as giving away my “secrets.” I laugh at this because there really are no secrets. Secrets usually mean some shortcut or quick fix to a problem that doesn’t require much effort. Most secrets are just incremental efficiency improvements.

My response to this charge is that it’s dangerous to be too far ahead. It’s a lot like running a long distance race. If you’re a good runner, it’s easy to separate yourself from the pack and if you aren’t careful, you’ll be too far ahead before you realiz you’ve missed a marker and you’re off course. By the time you realize you’re out of the race, you may not be able to recover.

Such is the case with innovation. Especially when it comes to technology. All those new cool gadgets and gizmos, all the new software and operating systems do no good if they aren’t reliable (meaning they work when you need them to work,) or there are other alternative innovations competing with them.

I’m not saying to stop innovating. That would be fundamentally wrong. What I am saying is to make sure the innovation is just slightly ahead of where the market currently is. If it’s an incremental improvement, pretty much everyone will “get it” and it becomes a no brainer to adopt.

It’s the truly innovative, industry changing innovations that are dangerous. Keep an eye out for who is adopting. Open a dialog with them. As long as you aren’t competitive in the same market, they’ll welcome your inquiries. You’ll give them someone else to commiserate with when the dang things break down or don’t work the way they’re supposed to.

For those with true innovations, the path is the same. Create a breadcrumb trail of steps toward the new innovation. The breadcrumbs are the small, babystep innovations that are the no brainers. Introduce them fairly quickly over a few months and you’ll have a much better chance of acceptance.

Adopting new ideas is a dangerous proposition. The inherent nature of people is to be risk averse. Change scares them. Business owners are especially prone to this. They don’t want to mess with something unless it’s broken. Why move ahead when we’re making money doing what we’re doing? That’s the subject of a whole new post.

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