There’s already many challenges and obstacles making it very difficult for SMBs to merely survive let alone flourish. The small business failure rate is horrendous and only increasing as Big Business does all it can to ensure SMBs continue to close their doors.
Sometimes the difference between a struggling SMB set on a downward trajectory, and a flourishing SMB helping themselves and their community, is wafer thin. The right process, the wrong product, the right workloads, the wrong hire. These and many other seemingly small factors can see an SMB tumble into insolvency. They can also send an SMBs fortunes into rarefied air.
This report is a combination of recommendations, tools, technologies, and ideas to help fortify your SMB. Some will help immediately. Others will take some time for you to realise the benefits. All are important.
1. Customer is king
If there’s one thing that has resonated across all business since time began, it’s that customers will largely stay loyal so long as they continue to have a remarkable experience with your business. Go above and beyond whenever you can. Include extra value that your competition can’t or won’t. Pick up the phone and actually speak to your clients and get first-hand feedback as much as you can.
All this is pretty standard business practice. You could fill a library with books on these subjects. However, it’s when companies receive negative or bad feedback that you’ll truly see how much belief they have in their customer service processes. The fact is that many SMBs choose, consciously or otherwise, to hide their head in the sand when undesirable comments surface.
Even before widespread internet use allowed bad news to travel globally in seconds, I always viewed negative feedback as a very real opportunity to secure a customer “for life”. For example, I had a customer service process that I followed every day for 15 years when I worked in education services. Every morning I’d go over our event evaluations forms from the previous day. Whenever I came across something I wasn’t happy with, I’d pick up the phone and personally call the person who had signed off on the applicable event.
I’d explain that, based on the feedback listed on the course evaluations, I wasn’t happy with how we delivered the day before and we’d be investigating this further. I’d also offer them copies of the evaluations for their own records. For the customer, it was valuable for them to hear this first from me, as opposed to a disgruntled employee complaining to anyone with an ear who’d listen.
After I had explained, I’d politely request that they pass on anything they learned should they investigate the feedback. The next day I’d phone them again (or meet in person if need be) and ask them if they learned anything more from their own investigations. On almost every occasion they said very similar things, usually something like:
- Overall the feedback from the group was very positive
- One person didn’t like … (insert one of many small issues here)
- The person who made the complaint is a serial offender and very difficult to please.
I was already pretty sure this was the case, but I always followed up. Why? Because, the point is that my early and proactive steps proved to the client that they could trust us. Trust usually takes a long time to nurture, however this situation gave me a direct way to prove that we had our client’s best interests at heart.
This level of customer service kept companies coming back to us. It had the effect of drawing our clients closer and making them more loyal. All of this from a situation that, in the beginning, had the potential to cost us both the customer and other potential clients as negative word of mouth spread.
I know a good number of businesses, as I’m sure you do, who continue to live in a fool’s paradise when negative feedback comes calling. Those companies are doomed to fail – it’s a question of when, not if. They simply aren’t living in the real world where a bulletproof and process-driven customer strategy is essential for SMBs to survive and grow.
2. Always review
You may already have some sort of customer service policy in place. If so, I’d ask that you sit down with a few other people and roundtable how you can make your customer service experience even stronger and more memorable. I have no doubt you can. You just have to take some time to pull it apart and rebuild it while ensuring the finished product is more robust and customer focused. Further, set an annual meeting on the same subject, and repeat this same exercise. So much can happen in 12 months, so an annual review will help your customer service offering retain currency and continue to add real value.
3. Processes? What processes?
Many SMBs still have no (or at best only a handful of) business processes. Not surprisingly, these same companies also moan about the crazy amount of time they have to invest in running their organisation.
When we talk about business processes, we’re going to use this great definition from cloud company Appian:
“A business process is a collection of linked tasks which find their end in the delivery of a service or product to a client. A business process has also been defined as a set of activities and tasks that, once completed, will accomplish an organizational goal. The process must involve clearly defined inputs and a single output. These inputs are made up of all of the factors which contribute (either directly or indirectly) to the added value of a service or product. These factors can be categorized into management processes, operational processes and supporting business processes.
“Management processes govern the operation of a particular organization’s system of operation. Operational processes constitute the core business. Supporting processes such as human resources and accounting are put in place to support the core business processes.”
Without solid functional and purposeful processes in place, SMBs are making it that much harder on themselves to realise success. Solid business processes can provide cost-savings, simplify compliance requirements, reinforce and increase customer and staff satisfaction, and reduce risk. These are but a few examples of how strong processes benefit organisations. Show me an SMB that wouldn’t want to see these benefits and I’ll show you an SMB clinging to the side of a financial cliff.
Business processes aren’t just for so-called “big business”. They’re equally important, if not more important, to SMBs trying to survive and grow in what is typically a highly competitive and disruptive business climate.
You bake bread? Applying processes will help grow your business.
You cut hair? Applying processes will help grow your business.
You design websites? Applying processes will help grow your business.
Good business processes aren’t a nice-to-have. They’re a must-have. It really doesn’t matter what your company does: business processes are essential.
If you already have some business processes, then sit down and audit them, preferably with someone you trust who also knows your business. How can they be improved? Can any be sped-up by using new technology? Are there more functions in the business that could benefit from a process?
If you haven’t realised the power of good business processes yet, then I want you to stop and think about why you haven’t. It’s almost a guarantee that designing and implementing some business processes into your day-to-day operations will result in many benefits to your small business.
4. Find your “Keeper of the Books”
I’ve investigated the following from many sources and, while not all agree on the exact duration, whichever figure you choose it’s not good: 90 percent of small business operators spend 15 to 20 hours every week on cashflow management. This includes things like payroll, invoicing, purchasing, etc.
Let’s delve into this a little bit deeper. Let’s say Bob somehow manages to get two weeks off each year. That leaves 50 weeks he’s in the business. Let’s take another 2 weeks for public holidays – 48 weeks left. 48 weeks times 20 hours per week is 960 hours. So, Bob spends, give or take, 960 hours every year doing financial tasks.
Let’s say Bob works, on average, 10 hours per day. We can now uncomfortably predict that Bob – and many others like Bob – spends 96 days every year, on what is often basic and mundane financial duties. Now don’t mistake me. I’m not saying these tasks aren’t important. They absolutely are. But do you really need to be spending so much time on them yourself?
Now, I want you to think about what you’d do if I gave you an extra 96 days in your business every year. How would you spend them? Research and development (R&D)? Perhaps reassess your business processes? Some SEO (Search Engine Optimisation) on your website? Perhaps pick up the phone and expand your partner network? Innovate?
What I’m saying is, if you haven’t done so already, hire a casual bookkeeper. Depending on your company’s size and complexity, you might be able to hire a bookkeeper for as little as $150 to $250 per month. $250/month, or roughly $3,000 per year. This gets you about 90 days back into the business, which in my opinion is a very good return on your investment.
Your very own “Keeper of the Books” will conduct payment of accounts, manage invoices, sort out receipts, process payroll, prepare BAS, report on financial transactions, keep all financial records and keep employee records. And your accountant will also thank you for it.
Further, bookkeepers are far better at doing this than most small business operators. Something that takes you all day, they can do before morning tea. And when they do, it’ll be a huge weight off your shoulders. So get a good bookkeeper.
A great place to start is the Institute of Public Accountants – they specialise in helping SMBs. Go to www.publicaccountants.org.au.
5. Digital detail
SMBs without some form of digital strategy have a future about as bright as a setting sun. However, it’s important you understand exactly what I am referring to when I use the term ‘digital strategy’. I’m not referring to digital marketing. Digital Marketing is something most SMBs would claim to use in one form or another, to varying degrees of success. No. A digital strategy is much more than glorified email blasts to a largely unqualified database.
I am referring to a defined digital strategy that spells out your digital goals and how you are going to achieve them. This doesn’t need to be a huge report with pages and pages of detail. But SMBs do need a plan that incorporates digital assets because, put simply, customers now use digital mediums far more than any other. That’s not likely to change anytime soon.
The challenge many SMBs face is that they’re not exactly digital natives. A few might be, but for the most part, the majority are just like me – we know enough to make us sound marginally credible over a dinner-party discussion around SEO. But if you ask me to sit down and formally plan, design and implement a digital strategy, rest assured the end result will be a lot of cracked eggs and a nasty-tasting omelette. A digital strategy is crucial to your SMB and it can’t be left to best guesses.
Even if you do feel confident enough to coalesce a digital plan for your own SMB, I’d still counsel you to reconsider. Sure, you know your business better than anyone. You know your market. You know your competition. You know your customers.
Here’s the big missing ingredient though: you’re not an experienced digital marketer. Your full-time job isn’t exploring and implementing digital technologies to help businesses grow. You’re nowhere close to being an authority in this highly valuable field.
While it will cost you, I implore you to find a good local company that can develop and realise a digital strategy for you. (In Australia, I’ve found Lead Laundry are very good and easy to work with. You can find them at www.leadlaundry.com.au.) Companies like this are built to provide the digital services that modern SMBs need. They’ll do everything you can and so much more, and they’ll do it faster and more effectively.
Most small businesses won’t need a digital strategy partner for much more than three to four hours per week or fortnight. When I first began working with Lead Laundry, from memory I had a budget of $400 per month. Within six months the return I received was much more than that sum. An SMB succeeding without a proper digital strategy in place is swimming with both arms tied behind its back. Commit to a strategy, do your research and start speaking with someone who can become your digital strategy arm.
Whether you’re looking at implementing a DIY or DFY (Done For You) digital strategy, keep these five key elements front-of-mind when building your digital ecosystem. If implemented effectively, they’ll also help make your SMB more attractive to government.
Check out our post on SMB Technology for a more detailed list of Software & Tools for your Small Business
6. Hire the right people
Finding, pleasing and keeping the right staff is far easier said than done. I’d say it took me a good eight to 10 years to find the right interviewing process that increased my odds of bringing on a newbie who’d be ‘right’ for the business. Before then, I’d tried all the techniques I could find that promised perfect new employees: personality tests, fancy questions designed to draw out meaningful responses, overly formal, overly informal – you name it. None seemed to be better than the others. It still seemed like throwing darts blindfolded most of the time.
I had candidates who interviewed well, who convinced me they’d increase the KPIs by 40 percent or who’d performed the exact same role with my competition. Time and again, they fell short. Eventually, I formulated a theory that finding the person with the right skillset wasn’t exactly the number one priority. This drew me to the conclusion that finding the right cultural fit was the real key to finding new long-term team members. Once I found the right cultural fit, then it was a case of coaching and training the new hire into their role. This is infinitely easier, quicker and more enjoyable.
After deciding on this new philosophy, I went about overhauling my interview process. I took it from a “capabilities” interview to a “compatibility” interview. In this kind of interview, whenever I conducted an initial meeting with someone, I’d first take a few minutes to get them comfortable and relaxed. I then explained that the interview we were having was to be two-way. By that, I meant that I wanted them to interview me as much as I would interview them. This usually received bemused expressions. I then made it clear that there would be no smoke or mirrors from me, and that I expected none from them. I’d tell them, warts and all, what it’d be like to work here, as well as what I’d expect from them if they were to be offered a place. I also explained that I encouraged “conflict” in the workplace. More strange looks.
I’d elaborate, explaining how I loathed talk “around the water-cooler”. I’d make it clear that if they were hired and had a problem or issue, anything at all, they could freely discuss it with the entire team together. We’d agree on a course of action and then move on from there – as a team.
If the interviewee could make the adjustment to their mindset, then pretty quickly the interview would evolve into a frank and friendly conversation. Ultimately, we were really just trying to determine if we liked each other, and, at the same time, if we thought we could work together.
Just as we would say our good-byes, I’d ask them to think about everything we’d discussed – the role, the team, the culture, everything. Then, within 24 hours, to call or email and tell me whether they were still interested in the position and why. This gives a candidate time to think things through and make a cool-headed choice. This also gives me time to consider the candidate further. To be honest though, I’d already know if I wanted them for Interview II within the first 10 to 15 minutes of the initial compatibility interview. Anyway, the candidates would always contact me within 24 hours and thank me for the honesty and transparency. Almost every one asked for the opportunity to join our team.
If I believed they’d be a good fit for us, I’d ask them back for Interview II. Interview II was a bit different as I wouldn’t be present. Instead, they’d have 30 to 45 minutes with the entire team. This was their chance to ask anything they wanted without me there hovering. How difficult was I to work with? The worst things in the role? The challenges? The hassles? The positives? Commission structures? Everything was fair game. It gave candidates the opportunity to really look under the hood. It allowed real insight into what it was like to be on the team and hear it all from those that are walking the walk.
Crucially, this also gave my team the chance to effectively vet the potential newbie. Further, I always knew the team would answer all questions honestly because they knew the impacts of the wrong hire would be felt directly. The post-Interview II feedback my team gave me was invaluable. If ever I were sitting on the fence about a potential newbie, I’d lean towards the team’s recommendation. Most times they were spot-on. Finally, if the stars aligned and we all agreed – and by all, I mean the candidate, the team, and myself – then it was a no-brainer: they were offered the position. Since employing this interview process, our average tenure for a BDM went from 14 months to 33 months. In other roles, it was even higher.
Of course, there’s one big obvious problem with this ‘open book’ interview process. If you have, let’s say, a poor to average company culture, then it will be exposed in the interview process and will cost you good candidates. If, by some chance, it’s not exposed in the interview process, then this is likely because you and your team haven’t been completely honest with the potential newbie. They may indeed end up working for you, but once they get a sniff that you’ve lied to them, all trust disappears. They’ll exit stage left as soon as they find another company to take them on board.
In short, unless you are completely sure that your company culture is strong and your team trust you and the business, do not use the compatibility interview blueprint.
There’s a bit more to this interview process than I can put here. If you’d like to discuss any aspect further, don’t hesitate to reach out. I know that if you’re able to implement the structure well, then your screening of new hires will significantly improve and you’ll hire more of the right people who fit into your company and its culture.
7. Healthy (and happy)
Another major problem within today’s SMB community is an alarming growth in mental health problems. You don’t have to look far to understand why. Long hours, huge responsibilities, mounting pressure, work issues, staff problems – they all form part of the day-to-day for small business operators. It’s a heavy load to bear for any one person. Unless mental health struggles are identified early, and then managed with treatment, they’ll negatively impact the affected person, the people around them, and the business itself.
I had my own health ‘awakening’ a few years ago. In hindsight, it came pretty close to breaking me for good. It happened when I walked into my doctor’s office on October 12, 2010 for a stubborn and heavy headache. The exact reason isn’t all that relevant, it’s what was revealed when my doc did some tests. For some reason he took my blood pressure. When you see your doctor’s eyebrows raise as they look at a result, it’s usually not a good thing. So, high blood pressure it was. That runs in the family, so, while I was a little surprised as I’d no history to-date, I wasn’t blown away. My doc then asked me to go up the hall so they could draw some blood and test for ‘a few other things’. I obliged and got on with my life as usual.
A few days later, I got a call from the medical centre. My doc wanted me to make an appointment to see him to discuss the results. Now, this was interesting. I’d never had my doctor do this to me before. I assumed he wasn’t calling me in to congratulate me, a 35-year-old, on having the physical fitness of a 25-year-old. I figured it wasn’t good news. I made the appointment.
Now, you don’t know me, but I’m a bit of a fatalist when it comes to my health. And with the real-time research powers of the internet, I like to self-diagnose (please don’t do this!). Only a couple of months ago I went down to the medical centre to tell my doc I was pretty sure I had Parkinson’s due to a few physical issues that I’d noticed. I wanted him to advise me on treatment. Five minutes of basic tests revealed that what I really had was mild carpal tunnel syndrome. You can appreciate how I was feeling leading up to the Big Blood Test Reveal.
I arrived on time for my appointment, waited through a 55-minute delay and then finally went in. I sat down, looked him in the eye and asked him to tell it to me straight.
“Tom, if you keep doing what you’re doing, in 10 to 15 years you’ll be dead.”
Well, you could’ve heard an angel fart. I wasn’t expecting the news to be quite that dramatic. I waited for the ‘just kidding’ part, but it never came. My doc then handed me the printout of the blood test results. He said I could take them home with me, presumably as some sort of macabre memento. At the time, the words and numbers meant nothing to me. Now, very different. My bloods looked like this (summarised for you):
Test: HDL Cholesterol, SERUM
CUMULATIVE LIPID RISK REPORT
Total Cholesterol: 6.8 mmol/L
Triglycerides: 14.3 mmol/L
HDL (protective): 0.9 mmol/L
LDL (atherogenic): Could not calculate because Triglycerides exceed 4.5 mmol/L
Total/HDL Ratio: 7.6
If you don’t know how to read blood work, it’s enough to know that these are troubling numbers indeed. How did it get this bad? Well, I was stressed from work and slowly killing myself through increasingly relying on a diet of fast food. I resolved to change my ways.
I could spend a long time now relating everything that happened from that day forward, but that’s a story for another time. What you need to know here is that I completely remodelled my diet. It took a while, but I basically began eating only meat, vegetables and fruit. That’s it. My wife joined in too. After 30 days, I felt wonderful. My energy levels increased. I was far more alert at work. Stress levels dropped. I breezed through my daily workload and started getting home earlier. I was happier and smiling more often and far more easily. So much more relaxed. And sleep! Oh, my sleep was so rested and peaceful.
I was amazed at how much a shitty diet can affect the human body and mind. After a total shift to whole foods, I wasn’t quite a new man, but I was different to the one who presented to my Doctor on October 12, 2010. After some time with this new eating habit, I went back to the doc and asked him to run another blood report. First, he took my blood pressure. Again, the raised eyebrows, but this time he followed it by telling my blood pressure was perfect. Next, for the all-important blood test!
I came back a few days later and he sat me down and gave me my new blood report. This time he looked me in the eye and said, “Whatever you’re doing to have managed these results, Tom, just keep doing it”. The report read like this:
Test: HDL Cholesterol, SERUM
CUMULATIVE LIPID RISK REPORT
Total Cholesterol: 6.1 mmol/L
Triglycerides: 4.3 mmol/L
HDL (protective): 1.37 mmol/L
LDL (atherogenic): 2.79 mmol/L
Total/HDL Ratio: 4.5
To this day, I still have these blood reports on the wall next to my PC screen. They’re a constant reminder of how much positive impact a decent diet can have on professional and personal life. What’s all this got to do with mental health?
Back in 2010, I wasn’t diagnosed with a mental health illness, but, thinking back, I have no doubt I had some mental health issues. These mental demons led me, over time, to adopt a diet of fast and processed food. It just so happened that by cleaning up my diet, I also cleaned up my mind. I also believe there’s one more change that will help you manage the many daily challenges of SMB life: get a hobby. Seriously.
As you’d have read in Chapter 5, I’d always wanted to learn woodworking skills, but literally couldn’t put a nail through plywood without smashing my fingers. When I finally booked myself into a class, every lesson became like therapy to me. I could switch off from the world and just focus on the task at hand (or, in the case of table leg tops, over-focus). The craft is so foreign to me and my “touch” for woodworking is minimal.
This is actually for the best. It means my concentration levels must be high and I must become completely absorbed in what I’m doing. Each week’s class is three hours of intense and single-minded attentiveness in which I forget about everything outside the woodshed. You might think I’d walk away from those sessions exhausted. Interestingly, it’s the opposite. As I drive back home a feel, well … almost light. Free, sort of. It’s difficult to put into words. I’m certainly very happy. And really relaxed. It’s a feeling I’ve not experienced at any other time in my life. I love it.
So, Mr or Ms SMB, I’m pleading with you to take on a hobby. Don’t put it off. And when I say hobby, I want you to pick a new hobby – not something you did as a kid. You want something completely foreign to you, but that you’ve always been interested in or admired. Glass blowing. Jewelry making. Leatherwork. Knife forging. Lead lighting. Sewing. Whatever. I think it should be a bit creative and also something you have no current skills in. Reason being that it will help you just to fall into that world at your lessons. It’s so easy, then, to lose yourself completely. It’ll also help to keep you coming back for more. As you learn new skills and techniques, you’ll want to learn more. And more.
I just started a bowl-turning course at the RM School of Woodworking (www.rmschoolofwoodworking.net.au). It’s my third course there and I can see myself spending a lot more time there over the next couple of years. Apart from learning new skills and having a great time, I know this hobby helps keep my mind healthy and active. And that is the best defence against mental health illnesses.
8. Challenge everything. Regularly.
While most SMBs won’t admit it, for many, their processes and operations are rooted in the past. What was once considered best practice is now considered archaic.
15 years ago, it was considered good practice to deliver an invoice within two to three days. Now, with the right technology, it’s down to 20 to 30 minutes.
15 years ago, it was realistic for significant website changes to take three to five days. Now changes can be made in close to real-time.
15 years ago, it was virtually impossible to understand how your customers were engaging with your marketing initiatives. Now, software can report on client interaction within minutes.
For those who can afford it, get an external consultant to come in and audit your business from top to bottom. Your onboarding, digital strategy, sales processes, accounting, operations – everything. The recommendations you’ll receive will be enlightening and, often, quite scary. Take it all on board, take a deep breath and identify what changes you can make. Then go ahead and make them. Start with the small ones and work up from there. Every change you make will help build a stronger business.
If you can’t afford to bring in an external party to do this, you’ll need to DIY. Yes, it’s cheaper, but it’ll also be much harder. You’re close to your business, so taking your blinkers off will be very hard. It’s a classic case of not being able to see the forest for the trees. While you might be able to see the details, you’ll often miss the larger issues.
It’s good business practice to conduct an audit every year or two. If you don’t, you’ll run the risk of opening up your existing customer-base to your competition. Your new customers will also slow to a trickle when it’s just easier, simpler and cheaper to do business with your competitors. Regular reviews will keep your hand on the tiller and keep your SMB from falling behind in the market.
9. Never forget recommendation one
Without customers, every SMB is in strife. A detailed and comprehensive customer service strategy is extremely valuable to SMBs. It can not only help you keep regular clients loyal, but also will also help you capture negative customer experiences and turn them into positive outcomes.
Today sees reviews positive and negative accelerate out to the market in record time. According to business.com between 67 percent and 90 percent of people look for reviews before they make a purchase. It was also estimated that, in 2017, US$537 billion was lost due to customers switching to different brands after a bad experience. This is one statistic you don’t want to be part of.
Perhaps even more challenging is the widely accepted belief that it takes 40 positive reviews or comments to negate the effect of one negative review. Got five negative reviews last quarter? Well, you’re going to need around 200 positive reviews, give or take, to dispel them.
I’ve experienced firsthand how difficult it can be to win over new clients from the competition only to only lose them due to a poor customer service strategy. Make your customer experience as magical as it can be. Make it extraordinary and watch your revenues increase. Make it best-of-breed, keep it there and watch the market move further into your corner.
10. Partners are powerful
Partner arrangements have traditionally been neglected by a lot of smaller businesses, and I’ve always struggled to understand exactly why this is the case.
Partnerships offer paths towards new customer market and segments
Partnerships offer access to a more diverse product mix and better value-adds for your customer base.
Partnerships offer opportunities to entertain and then deliver larger-scale projects that would otherwise be very difficult for an SMB to facilitate.
Partnerships not only offer immense value when bidding for government business, they can be as equally powerful in the private sector.
The organisations that already see partnering as an asset and have built a partner network are seeing the benefits of their labour. You, as an SMB, must consider the pros and cons of partnering and conduct an exercise making note of each. I think you’ll find many pros. You’ll also find mostly crickets and tumbleweeds in the cons. I’d recommend reading Michael D. Eisner’s book Working Together: Why Great Partnerships Succeed. It looks into some of the most successful business partnerships and why they were so successful.
Partnering doesn’t need to be too complicated. Partnering doesn’t need to be overly time-consuming. Partnering doesn’t need to be inordinately expensive. If making SMBs stronger were a tree, partnering would be its established and abundant root system. While partnerships won’t recession-proof your company, they will provide a much thicker skin when our economy hits difficult waters.