With that they saw the issue. The practice already operates with razor thin margins, and two of the doctors could not bear the overhead burden if one of them got sick. They realized that the importance of succession planning is not only an issue for the future, but also for the present.

Succession planning is the key to ensuring that your business will continue to operate as you take time away from the business. As business advisors, we always want to make sure that your business has a transition plan for either the unexpected or expected absence of key employees and owners. We often find that owners have not thought about a transition, either because they think they are going to work forever or because they think it would create an issue with their family. Neither of those reasons is good enough to avoid the subject. The key to overcoming the issue of succession planning is communication.

Colleen DeBaise from the Wall Street Journal recently wrote a brief article about ways to mitigate the stress and responsibility of succession planning for family/closely-owned businesses. Her article suggests to start by planning a multiday family retreat, away from home and the business to allow you to focus on the plan. If you find there isn’t a clear successor, then write a job description for the position. This will help reduce the emotion in choosing a successor, and perhaps also reveal that there is not a suitable family candidate and an external candidate should be considered.

No business should exist without a succession plan. While I have outlined some situations, excuses and ways to deal with the stress of succession planning they are by no means all-inclusive, and it would be wise to consult your business advisor regarding the assistance with planning. Please contact Somerset for help.

Source: Wall Street Journal, author Colleen DeBaise, November 12, 2009.

You don’t have to be a marketer to understand human search behavior. Here, let me give you a real life example… a month or so ago I was looking for two “antique looking” pendant light fixtures to hang above my sink in the kitchen. I went to all of the brick and mortar stores around Indianapolis but didn’t really see what I was looking for. So, I went to the Web. I went to Google and typed in the problem I wanted the search engine to solve: 5 inch diameter antique finished pendant lighting.

Within seconds I had a page of online retailers who offered so many options it made my head spin. But, the main point to this example is… my problem was more than solved via the results Google gave me.

Sounds simple, right? Well, for a marketer, getting found in search is an enormous frustration and perhaps an even larger missed opportunity for generating new business. That’s why we at Compendium are helping our clients overcome that obstacle.

How do we help exactly? Compendium is a software- as a- service blogging solution specifically built for businesses who want to be found in search for keywords they know their prospects are searching for. Simply put we help our clients be found in search through blogging.

Blogging. Now, you might be thinking to yourself… I thought only opinionated thought leaders or stay at home moms had blogs. But that couldn’t be further from the truth. Sure there are many “hobby” blogs that circulate the web these days, but Businesses are quickly adopting blogs as great marketing tools that help companies get found in search and acquire new business.

Here’s a great example, we have a client – they are a Law firm located in Indianapolis, IN who specialize in Software –as a- Service law (SaaS). They wanted to expand their reach nationally so they decided to give blogging a try. Last week we talked to one of the founding partners who said they just accepted a client who was searching for top SaaS attorneys on the Web, the prospective client found this firm’s blog and voila… a lead was generated.

From simple searches for light fixtures to major investments in law firms, the Internet is being used by all kinds of searchers typing lots and lots of different keywords and phrases to find solutions to their problems.  And, it’s the marketer’s responsibility to ensure their organization is the solution searches find. Compendium helps over 450 companies across the US make this a reality.

Megan Glover is the Director of Marketing for Compendium Blogware. Compendium is a blogging software built specifically for businesses and organizations who want to be found in search. As Director of Marketing, Megan is responsible for all demand generation as well as branding and PR tactics. A student of SEO, Online Marketing and Social Media, Megan is keen to power and transparency online marketing can lend to businesses and organizations of all sizes.

In addition her blog: Blogging with Purpose was recently voted one of the Top 50 Blogs in Indiana.

So I searched for an Indiana farm to interview about their Twittering experience. I was immediately taken in by Maple Leaf Farms. I have always enjoyed duck, and I started reading all the recipes that they had posted on Twitter. Admittedly, I am a typical U.S. consumer, so I went to their website to find out if they had an online store to compliment the recipes on their Twitter account. Sure enough they had plenty of choices, and I decided to order their duck sampler. Sold.

I called their customer service line to find out who manages their Twitter account, and based on the customer service experiences that I have had I was not entirely hopeful that I would get a return phone call. Much to my surprise I received a call shortly after from Beth. I asked Beth about the farm, and she said they sell most of their product through distribution companies. So I inquired why they would use Twitter, and she said that they wanted to create a dialogue with the end consumers. They wanted to talk to the chefs who purchased the duck and find out what they could do to improve the product they were receiving. With Twitter they are able to speak with a number of chefs all at the same time, and get instant feedback. Beth mentioned that the increase in dialogue has also increased the traffic to their website. 

The ancillary benefits of Twitter and the increased traffic to their website are the revenues generated from people like me. Increasingly, consumers are using the web to do research on the products they intend to purchase. They also tend to complete their research by purchasing online. In 2006, online sales hit over the $200 billion dollar mark. For Maple Farms it provides an additional distribution method for their product, and a new stream of revenue. Farms are getting more sophisticated in both production and marketing.  Check out Maple Leaf Farms on Twitter or their website. I am sure you won’t be disappointed.

There are many ways to create a competitive business plan. The following plan design is based on Stephen Lawrence, Ph.D. and Frank Moyes’ article “Writing a Successful Business Plan.” Dr. Lawrence and Mr. Moyes are professors from the Deming Center for Entrepreneurship at the University of Colorado at Boulder.

Developing a business plan may be one of the most important steps in starting a successful business and attracting potential investors. A business plan allows you to answer the hard questions about your business including: Why is there a need for our product/service? Who is our target market? How is our product different from other products in the marketplace? What is our competitive advantage? How will the business be profitable? How will the business be funded?

In order to answer these key questions, a successful business plan should include the following items.

1. Executive Summary - This is a one-page overview of your entire plan. The purpose of this is to capture the reader’s attention so that they will be interested in reading the entire plan.
2. Company Overview - This is a summary of your company. It should include how the company will be organized and what are the goals and ambitions for the company? This section should also include your mission statement. 
3. Product and Service - This section is rather self-explanatory. It should include a brief overview of your product or service. Keep in mind that your audience may not be familiar with your product or service so make sure it is carefully described and explained in sufficient detail. 
4. Market and Industry Analysis - Items to include in this section include any information that will help the reader better understand the market and industry in which you will be operating. Helpful pieces of information to include are customer surveys, supply chain analysis and samples of competitor products and promotional materials. 
5. Marketing Plan - Although all of these sections listed here are important, this section is arguably the most vital to the success of your business. Without customers no business can succeed. This section should be used to convince your reader that there are willing and able customers for your product. For more information on marketing strategies see: http://somersetblogs.com/category/marketing/. 
6. Operations Plan - This section includes all of the details on how you will produce your product and should include information on manufacturing, transportation, logistics and customer and technical service. 
7. Development Plan - Connecting back to the goals and ambitions discussion in the Company Overview section, the information here is a “road map” of how you will get your business from where it is now to where you want it to be in the future. 
8. Management - Potential investors are more apt to invest in a company that has a strong management team with a weak business idea than in a company that has a great idea and poor management. Use this section to build up your management team including resumes, customer testimonials and other honest information that highlight your strengths. 
9. Competitive Advantage - How is your product/service different from others in the market place? This is a key question that investors ask and it needs to be adequately addressed in this section. This section also should include how your business will sustain its competitive advantage once achieved. 
10. Financial Plan - The goal of every business is to turn a profit. In order to do that, a well articulated financial plan is a must. A strong financial plan alone will not help you secure investors it will only help to enhance the information that has been previously presented in the business plan. Included in this section should be projected balance sheets, income statements, and statements of cash flows. Also include break-even analysis, comparisons to competitors in the industry, and the basic assumptions used in developing the projection. 
11. Funding - This should be an overview of the funding required to start your business. Sources of funding include equity funding (venture capital and cash received from friends and family), debt funding (from banks, the Small Business Administration and consumer debt such as credit cards and mortgages), or other types (leases and customer advances). 
12. Appendices - This section collects all of the supporting documentation that is referenced by each section above.

Source: Stephen Lawrence, Ph.D. and Frank Moyes. “Writing a Successful Business Plan.” University of Colorado. 2004.

Question Details:
For a possible article for accounting firms and business advisers and strategists: What are the essential elements for leaders and managers in this economy?

Here is the response I posted:
For what it is worth Rick, I don’t think the success factors in this economy are any different than they have ever been. The fundamental factors of success in business have remained relatively constant over time.

The differences in this economy are the ramifications if we fail to focus on these critical factors that lead to success. There just isn’t any margin for error. Our safety nets if we fall have evaporated so much that if we fall we are likely to die as opposed to just being shaken up or slightly injured.

The Mission Critical Factors That Successful Businesses Know:

1. What are your most profitable products/services?
What product/service lines are you going to drop? Which ones are going to get supported by your finite inventory dollars?

2. Who are your most profitable customers?
Which customers are you going to no longer serve? Which type of customers are you going to build a marketing and sales plan around to get more of them? Which customers are going to receive a special incremental allocation of your finite customer service resources to make sure that you don’t lose your A & B customers.

3. What are your expense drivers?
What happens to your operating costs if you double your business? What happens to your cost structure and operating margins if your business volume gets cut in half?

4. How to keep control over your cash flow?
Can you accurately project your next 30, 60 & 90 days of cash flow?

5. What critical success factors apply to your business?
If you try to proactively manage 100% of your business you will fail. Proactively manage the 20% of your business that is yielding 80% of your results and reactively manage the remainder.

6. How do you identify, measure and monitor key performance indicators that are directly related to those critical success factors?
What you can measure, you can manage and what gets measured gets done.

7. What is your Strategic Plan for the next 18 months?
How are you going to compete and win by being different? What is your unique and compelling value proposition for your targeted customer? What are you going to stop doing because you cannot build a sustainable competitive advantage there?

Thanks for initiating the discussion Rick!

Please tell us your essential elements for leaders and managers in this economy.

We would love to hear from you!

1. Deteriorating margins
2. Declining current ratio
3. Increasing debt to equity ratio
4. Decline in customer loyalty
5. Decline in employee engagement
6. Decline in the proportion of right people in key seats in the organization

I would like to break this analysis into two categories. The first three are pretty basic and common business ratios. So what is the magic here? Well, it is twofold. First, you need to discern the difference between a fluctuation and a trend. Second, you have to take the trend seriously and take action to stem the tide of the negative trend.

First things first, what is the difference between a fluctuation and a trend. Any one of the first three ratios might vary some from month to month. So when do you start to take action–after the first month of decline, the second? One excellent tool to determine if a true trend is shaping is to perform a trailing 12-month analysis. This ensures that you have really established a true long-term trend vs. a mere short-term fluctuation. 

Here is a link to Kraig Kramers’ web site where you can purchase a TTM (Trailing Twelve Month) Excel template: http://www.ceotools.com/software/4760319.pdf

The second part of the magic of the analysis is to actually take action in the face of a true negative trend. You would think this would be self-evident and automatic, but don’t bet on it.  Jim Collins found no lack of knowledge of negative trends in declining companies. The problem was what he refers to as a culture of denial. He indicates they found little evidence of significant management concern and certainly not the productive paranoia they should have had about these trends. 

Jim provides a great analysis on pages 77 and 78 of the book of Leadership-Team Dynamics of companies that are on their way up versus companies in decline. It boils down to the difference between having a culture of denial or a culture of facing reality.

Now, let’s focus on the last three of the metrics. Every organization ought to have a close handle on all three of these, but in my experience few actually do. So, this is a different problem than with the first three measurements. We have to actually create the last three measurement tools in the first place before we can submit them to a trailing twelve-month analysis to determine if a negative trend is being established.
So, why don’t we measure numbers 4, 5 & 6? Well, let’s take 6 first. Here, the Board or CEO just needs to be honest with themselves and ask this question on a monthly basis. The question is two fold. First, how many key seats do you have? Second, how many of these seats are filled with the right people. Generally, you have a pretty good idea; you just need to start keeping a database. To the extent that you are not sure if you have the right people for the right seats, we can help you with selecting the appropriate competency and 360-degree review assessment tools to assist you in answering the question confidently.

Lastly, what is the problem with items 4 and 5 from the list above–customer loyalty and employee engagement? The push back to measurement here is generally cost. My thought is that regardless of cost, if these two measurements together are one-third of the critical leading indicators of organizational decline, you best just do it! That said there are many options and alternatives in these areas of measurement. We can help you choose a methodology that is appropriate for any budget and will be much better than doing nothing at all.

Please tell us your leading indicators of organization decline.

We would love to hear from you!

If you own your own business, you may have gotten started because you wanted flexibility and control over your time. Yet as many entrepreneurs and business owners know, once you run a business you often work more than you ever have before! Why is this? Typically when a business owner starts a business they do all of the work. As staff members are added to the mix, each one creates their own way to accomplish their workload. This is great for the business owner…until that person leaves or doesn’t perform up to yours or your clients’ expectations.

Not only that, business owners and employees often feel like they can’t even take a vacation because their workload is just too great or no one is able to do their job as well as they do. Yet what they may need is exactly that - a vacation - to refresh and bring a sense of rejuvenation to their role.
So what can you do?

1. Create systems - Systems can be anything from the simple to the complex. Often a business owner does not implement systems, or a standardized way of doing things, because they feel that they don’t have time or don’t want to put forth the effort in light of all of their other tasks. However, creating systems allows for less work in the long run as it allows you to better delegate and create a consistent experience for your clients.
2. Document your systems in an operations manual - Documenting the way that you do things so that it can be easily reproduced, whether you plan on growing your business or selling it, is vital to maximum efficiency and profitability. Start by simply writing your processes in a word document and changing them as things change in the business. Leave it on your computer as a working document; these days things change so rapidly there is no longer a need to print a copy and put it in a binder on the bookshelf.
3. Delegation is the key to your business running without you - By implementing and documenting systems, you can easily delegate tasks. Why aren’t you delegating now? I would be willing to bet that it is because teaching someone what you do just takes too much time. Implementing numbers 1 and 2 above allow you to easily delegate tasks so that you are able to take that much needed vacation!
4. Give it time - Setting up systems for your business is a process, not a destination. Companies change all the time and therefore perfect systems may never be achieved. Begin by creating your own proprietary business systems and slowly but surely, watch your efforts flow back to you in happier customers, more satisfied employees, and higher profitability.

Nicole Recommends…
The E-Myth Revisited has been around for a while, but is probably one of my favorite business books of all time. The main premise is that your business should be the vehicle through which you gain personal and financial freedom. It walks through how to balance the three different characters present in every business and the phases in a business’s life. It shows how the turn key revolution has changed the face of business forever and how you can use those ideas to create your own successful business prototype. Finally, it discusses the business development process and how to implement systems that work so that you can accomplish your life dreams. This is one of those that I will read each year to stay on track and grow my business. If you haven’t read it in a while, I suggest picking up a copy!

If you’d like to learn more about Nicole’s business, please visit her web site: http://organize2optimize.com

Although this sounds a little harsh, I thought I would share with you some of my greatest marketing pet peeves. Not listed in any particular order, these are some very common activities I’ve found among sales and marketing executives and business owners over the years. Are you guilty of any of them?

1. Using too much technical jargon in marketing materials.
2. Relying heavily on networking to get new business and not having the basic marketing tools to close the sale.
3. Being reactive with all marketing activities instead of developing a marketing plan, and then wondering why the sales results aren’t there (See my article on shotgun marketing).
4. Being afraid or hesitant to invest a little in marketing, even though your #1 goal is to increase sales!
5. Focusing too much of the marketing copywriting on the product or service features and not on the customer benefits.
6. Saying “We really need to update our website” and then not doing anything about it.
7. Not using built-in website and email newsletter tracking programs to gather sales and customer intelligence.
8. Keeping the marketing team out of the loop with what the sales team is doing and viceversa.
9. Giving up too early on a prospect, rather than sending multiple communications over time and eventually getting the sale.
10. Not dedicating enough time to focus on marketing activities (and always making excuses why you have no time)

How many mistakes were you guilty of performing? Do you have other mistakes you’d like to share, or can you relate to some of these? Feel free to send your feedback and ideas!

Susan Young is president of AimFire Marketing, an Indianapolis-area marketing, public relations and website strategies firm that works with growing companies to implement effective marketing communications campaigns. You can contact Susan and learn more about AimFire Marketing by visiting
www.aimfiremarketing.com.

Charge a competitive but fair price for your main product or service, charge prices that are noticeably less than your competitors on most items that are necessary to maintain your original sale and give the rest of your products and services away for free.

Where in the world does someone employ this type of philosophy?

       Holiday World in Santa Claus, Indiana

How can such a model work to create sustainable enduring success?

First of all, Holiday World understands the difference between optimizing the lifetime value of a customer vs. maximizing an individual customer transaction.  

Secondly, they understand the marketing buzz that is generated by the power of free.

I just got back from taking my family on our annual trip to Holiday World.  I spent one day sitting in the sun and the water park and did absolutely nothing for an entire day accept eat, bake in the sun and take several naps. 

During this much needed day of rest, I was reminded of a great story from Randy Pausch’s Last Lecture book. It was a story of how Disney created a magic trick when he was a child and turned $10 into over $100,000. He and his sister had purchased a $10 gift for their parents at one of the souvenir shops in the Magic Kingdom. As they walked from the shop back to meet his parents, the gift slipped out of the package, hit the ground and broke. Randy’s sister convinced him to return to the shop and at least ask for an exchange. Reluctantly he agreed to try even though he was pessimistic with their chance of success since the breakage was clearly his fault.

When they arrived back at the shop and explained what happened, the clerk accepted full responsibility for improper packaging, gave them a replacement free and was much more careful about how she wrapped and packed the gift the second time around. When Randy and his sister relayed the story to their parents, the Pausch family was so impressed that during the rest of Randy’s life, he estimated that he and his extended family spent in excess of $100,000 at Disney World.

As Randy retold the story in the book, he knew he was relaying a lesson about great customer service. As a computer scientist as opposed to a business consultant, he might not have known that he was telling a classic story illustrating the power of focusing on optimizing the lifetime value of a customer vs. maximizing an individual profit per customer transaction.

Randy shared this story with a group of modern day Disney executives as an adult and asked them if their current business practices would allow a store clerk to make that type of decision today. Their silence told them everything he needed to know. Disney has become a corporate machine obsessed with maximizing profit per visit. They make sure you leave their compound without a penny in your pocket to spare. You have a great time, but you feel a little cheap and used as you return home.

A visit to Holiday World (HW) takes you back in time when Walt Disney’s original legacy and magic was still alive at Disney World. HW charges a fair and competitive price for their tickets. Where you really start to feel the difference is once you get inside the gates. For most theme parks, the ticket price is just the start.  The real expense begins once you start buying food. At HW, you would have to work really hard to spend very much money once you get in. The food prices are fair and the food quality is good. 

This is where the remainder the formula for sustainable success kicks in. Step 1: Charge a fair price for your main product–tickets in the case of HW.  Step 2: Charge a noticeably lower price than your competitors for subsequent purchases that are necessary to maintain your original purchase–food in the case of HW.  Step 3: Give the rest away for free.

Step 3 is the one that will drive your competitors completely crazy. HW provides free drinks and sunscreen all day, every day. This amounts to a substantial savings and increased enjoyment for their customers over any of their competitors. It is also very unlikely that your competition will every try to match a move this bold. Most businesses are obsessed with maximizing the profit per customer transaction. Only truly great and enduringly successful companies are obsessed with optimizing the lifetime value of a customer; the magic trick of turning $10 into over $100,000.

The second dimension of free is that it is the highest ROI marketing expenditure you could ever make. You can actually justify a price of free in terms of marketing ROI alone without even considering its effect on lifetime customer value. If you take the cost of the free sodas and sunscreen that HW incurs every year and divide by the word of mouth marketing that comes from people like me telling every one they meet about their experience, you would find that it is the most effective and cost justified part of their extensive overall marketing campaign.

As a sidebar, this is why Somerset CPAs provides our Practical MBA series for free.

http://www.somersetcpas.com/PracticalMBA.HTM

Please tell us your stories of organizations that understand lifetime customer value and the marketing power of free.

We would love to hear from you!

Question 2: Can it be done? The next hurdle we usually find is mental. It is hard for some business owners to believe that they can achieve this level of success. Well, the facts bear out that you CAN! In order to make the cut for Jim Collins’ Good to Great study, you had to outperform the general market by at least 3 times. If any one company can achieve these results, then that means it is theoretically possible for ANY company to do so as well.

Question 3: How do you accomplish this feat? There is a system to outperforming the competition that you can follow. Success is a science, but it is not rocket science. The good news is that all you have to do is some very ordinary things better than others are willing to do them.

Question 4: What is this mysterious system? It is a paradigm called working ON your business. 

Question 5: What exactly is working ON your business? It involves the following building blocks:

1. Defining your Vision, Mission and Values.
2. Clarifying your Critical Success Factors and Key Performance Indicators.
3. Documenting Standard Operating Procedures to help you and your team execute on your Critical Success Factors consistently, predictably and reliably.
4. Completing a Strategic Planning exercise that answers the question of how you are going to compete and win in the marketplace by being different.
5. Creating an Organizational Structure that is appropriate for your unique vision, mission, values and strategies.
6. Manipulating the variables in your Business Model to maximize profit, cash flow and return on investment.

Please tell us your life changing questions.

We would love to hear from you!