Presentation on theme: "Turning Adversity into Opportunity Growing Your Business Summit Series Seoul, 13 April 2012 Daniel Evans, Chief Economist and Co-Founder."— Presentation transcript:
Turning Adversity into Opportunity Growing Your Business Summit Series Seoul, 13 April 2012 Daniel Evans, Chief Economist and Co-Founder
Presentation Objectives Understanding current market risks Discuss attracting new users and retaining current customers Ideas for how to weather changes in market conditions (e.g., competition, reduced cash- flows, shortages, new market channels, etc.)? Tactics to increase business profitability
Key Concepts Customer retention Maximising productivity Freedom from deficiencies Reducing overheads Minimising risks Generating new sales What actions we can take today?
Current Environmental Scan Challenges we face today in growing business
Challenges to Growing Business Weak global economy Increased competition More demanding customers Government, business and consumer budget cuts Retaining existing customers Lead generation Lack of funds for new lines of business Risk aversion
Challenges to Growing Business Lack of capital Resources to support growth Difficulty in finding new opportunities
Inflation and seasonally-adjusted GDP vs. trend, quarterly figures, first quarter 2000=100 Global: Two-speed Recovery
Global Market: Future Risks World economy under stress: Two-speed recovery, rising commodity prices, ongoing tensions in the financial sector, eroding confidence in public finances, shift in market sentiment from inflation fear to recession panic US economy: Structural weaknesses Europe: Slow recovery Sovereign debt crisis in the euro area: Ongoing instability Asia: Growing market potential but large exposure to US & Europe risks
Inflation-adjusted GDP, change on previous period in percent Euro Area: Slow Recovery
Facing the Challenges Getting better, stronger, healthier
Considerations Satisfying Current Customers (80/20) Attracting New Customers Learning more about Potential & Current Customers Determining effective outreach methods
Methods of Improvement Acquisitions -Growth New Product/Service Partnership New Market Expansion Loyalty Programs -Increase Customer Base New Customer Incentives Different Channels Cost-Cutting Programs -Increase Profits Emphasis on High-Margin Products Supply Chain Evaluation Pricing -Defend Against Competition Promotion New Products
Sell More To Existing Customers They are the easiest to sell to because they already trust you. Bundle products. Offer customers multiple services for a special/reduced price. Customers are happy to consolidate services with one vendor as long as they are satisfied with your service. Look for up-sell opportunities. If the customer already purchased a service from you, offer the warranty or the first software upgrade at a discounted price. Offer a discount. Discount the products you know your customer is interested in but can not afford normally or tell them when the product will be on sale. Reward customer loyalty. Offer loyal customers a gift with purchase or free product with 10 purchases. Offer free samples. Let your customer try it before they buy it. Create a desire within the customer to purchase the product.
Generating New Sales Teaming with affiliates Co-market with affiliates or vendors that offer complementary services, Advertising Dont forget to be visible so people know youre around ! Networking Attend business and social events, e.g., tradeshows, civic organizations, chambers of commerce, industry associations, and open houses. Connect with friends and colleagues on Linkedin, Facebook, and Plaxo. Creating product champions Work with customers to create case studies, testimonials, or product endorsements. Post on your website. Ask customers to share your success story with others. Analyzing metrics Analyze and track how you obtained your current customers and continue these efforts, such as advertising, interest in articles written by your company, marketing materials, websites, and relationships.
Reduce Overheads Maximise Productivity COST SAVINGS $$$$ Improving business profitability VALUE outputs Reducing Cost Understanding your inefficiencies and areas of excess capacities Utilise all of your resources to either earn you more money or pay for your existing expenses. Conducting want vs. need analysis on your current expenses Dont be short-sighted or cut corners … it may come back to haunt you.
Understanding Cost Offsetting Fixed vs. Variable Costs Debt-service costs Infrastructure and Systems Costs Human Capital Costs Salaries Benefits Healthcare costs Advertising and Promotional Costs Overhead and Administrative Costs Research and Development Costs
Understanding Cost Offsetting Many types of costs can be offset against increased sales or under- utilised capacity This includes costs to: Retain existing customers Generate new sales
Offsetting Taking advantage of every opportunity
Generating New Sales Within a Closed Business Network Sales Generated Come at a Lower Cost BuildsRelationships Building a Network With Mutual: Financial Benefits Social Benefits Structural Ties Profitability Working With A Network
Why Is Barter Beneficial? Reduces existing cash outlay Buying using your own goods or services as payment is a lower-cost option than purchasing using cash Helps expand (or maintain) market share Increase sales Sidesteps liquidity problems Cleans up bad debt situations Offers interest-free credit Credit is based on unsold capacity versus cash credit which is based on pre-sold capacity
A barter platform serves several functions: Provides a multi-lateral matching system of wants and needs Helps source new customers Promotes existing participants (nationally and globally) Acts as a third-party to mediate between delivery of goods and services for the best price Finds alternative (non-cash) suppliers for you to make purchases from Records the values of transactions Issues account statements to show the transactions A barter platform provides each member with an account which: Offers access to interest-free lines of credit Records the value of every purchase or sale Issues account statements A Barter Network
$0 $1,000 $2,000 $3,000 -$3,000 -$2,000 -$1,000 When a member sells, their barter account is credited for the value of the sale – just as if it had been sold for cash When a member buys their barter account account is debited
Case Study #1 A CPA who served middle-class corporate personnel has noticed that his sales are going down. He has analyzed the market and learned the following: His customers are retiring and moving South or have been hurt by the economy and lost their jobs. The new people moving into the area represent a younger ethnic-oriented crowd, blue-collar, who prefer to be served by members of their own community. The CPA has two options: Change/expand his services to attract new customers. Look into different markets.
Case Study #2 A small restaurant owner has a place at the Galleria that attracts a shopping crowd. However, since the economy hurt mall attendance, he decided to open another location in a nearby city. Unfortunately, he only found a place in the business area that closes down at 5pm and his new customers are coming for lunch only. How can he bring customers for dinner and compete with more centrally–located larger restaurants with already established local reputations?
Case Study #3 A grocer is hurt by the Wal-Mart expansion into the area. He can not fight the Wal-Mart prices, especially in the dry goods area. How can he defend himself? He has two options: To identify products/services where he can be superior to Wal-Mart. To develop special loyalty programs for customers that would offset higher prices but still would be cost effective for him.
Looking Forward Be consistent and stay involved
Action Points Closely examine each category of your expenses and ask: What type of expense is it? Variable? Fixed? Do we really need to incur this cost? Would changing suppliers affect our business? Evaluate your cost to make a new offset sale: What are the most profitable lines of products or services I could sell to offset those costs? Benchmarking is key … know the profitability of your barter transactions and act accordingly!
Types of Costs Suitable for Barter Fixed vs. Variable Costs Debt-service costs Infrastructure and Systems Costs Human Capital Costs Salaries Benefits Healthcare costs Advertising and Promotional Costs Overhead and Administrative Costs Research and Development Costs
Best Practices Lean and Mean does not need to translate into a compromise of your culture … rigor can be instilled without rigor mortis … and discipline can be instilled without fear Profitability-improvement programs do not always need to be focused on reducing costs … there should also be an effort to develop higher-margin revenue streams Act with integrity and honesty …. Cost reductions through offsetting can be successful provided that you do not sacrifice quality of your services or the services of others… Whatever you do in a network will come back to you… Communication and creative thinking is critical…
Considerations The 21st Century world of business never rests – the speed of flow of information has created global markets in which we all trade. Consumer needs vary widely across time and space creating constant need for alertness and change. If we as managers are not keeping up with the pace, others will – its very competitive out there!
International Presence > AUSTRALIA > HONG KONG > MEXICO > SWEDEN > CANADA > INDIA > NEW ZEALAND > TURKEY > CHINA > INDONESIA > PAKISTAN > UNITED KINGDOM > EGYPT > IRAN > POLAND > UNITED STATES > ESTONIA > ITALY > ROMANIA > ZAMBIA > FINLAND > MACAU > SOUTH AFRICA > GERMANY > MALTA > SOUTH KOREA Existing Office (retail) Government Trade ) Launching 2012 Under Negotiation
GLOBAL TRADE VOLUME (millions of U.S. dollars) NATIONAL OFFICES Business Growth