Mar 7, 2025 | Customers, Innovation, Marketing, Small business
I have started seven businesses, so I have some entrepreneurial form.
One I sold, one delivered profits over a 5-year period, but circumstances led to its closure, several did the dead cat bounce, and a few more struggled a bit before common sense cut in, and one, StrategyAudit has been going for 30 years. On top of my own gigs, I have been involved, engaged, and accountable for many, many more as a consultant, interim manager, and contractor.
After all that effort, sweat, broken dreams, conflict, disillusionment, and frustration, mixed in with some ‘I told you so’s’ what have I learnt?
Timing is crucial. Two of my dead cats were just timing: I was too early, and others since have done similar stuff and made a killing, proving that a good idea is rarely yours alone. Connected to this, but not in a causal way, is that it always takes longer than you think. Take your worst case time-frame, the one that cannot happen, then double it. If successful, that impossibly long time frame might be close. We never hear of this from the start-up porn inhabiting the web.
You are never too old. Ray Kroc was a 52 year old appliance salesman when he had the brainwave that led to McDonalds. In Australia, the age group most likely to start a business is 35-39 years old, comprising 19% of start-ups. The likelihood of extreme success keeps rising until the mid to late 50’s, so Ray Kroc is not an outlier. This is contrary to the common perception of the hoodie wearing entrepreneur who only needs to shave once a week. In my case, all my efforts except StrategyAudit were born before I was 40, the earliest, not counting my efforts to make a bob while still at school and University, was when I was 22. StrategyAudit was born from necessity when I was 44.
Focus and commitment are mandatory. Entrepreneurs by their nature are curious, perceptive, and usually see things from an uncommon perspective. As a result, they are easily distracted by the new shiny thing, or great idea to bolt onto their baby. Sometimes these great bolt-on ideas come from early users, whose opinions carry considerable weight because they are so important to you. The internal struggle with this fragmented attention and less than absolute commitment is often a real problem. In my case, it probably cost me at least two potentially extremely successful businesses. I have often wondered at the role of ‘necessity’ in the game of unicorn chasing.
Boot-strap or take equity partners. Every start-up is short of two things: cash and capability. It is enormously tempting to address one of both or these by taking in partners by one of the many avenues open. Often this is the right thing to do, it usually makes scaling quicker and easier. The downside is the loss of control. Most entrepreneurs have some level of ‘control-freak’ in their DNA, and struggle when they go from having the final word, and having to take on board the views of others.
Capability shortfall. No entrepreneur can cover all the capability bases required for a successful business. That leave the choice of how, when, and sometimes if, you fill the gaps. Getting this wrong causes all sorts of terminal events. Often these are around cash flow shortages, particularly when the enterprise appears to be rapidly gaining ground and being successful. However, all the other functions that must be executed by a growing business are equally vulnerable. These days it is sometimes little more than finding and keeping the right people who operate at whatever ‘coalface’ you service.
Solve a problem felt by others. Solving a problem only you have will not lead to a business unless others have the same one. Equally solving a problem you think others have, when they do not feel the impact of it, or your solution costs more than the problem costs them, is not useful.
Round pegs and square holes. In most SMEs seeking to scale, or even just survive, the choice of personnel, and the jobs they do is critical. Make a mistake and it can be terminal, as SME’s do not have the cushion of scale to absorb those mistakes. The adage of ‘hire slowly, fire fast’ is especially important for SME’s.
Too little marketing. Marketing is an investment in future cash flow. Often this is really, really hard when current cash flow is in the toilet. It is profoundly different to the conversion to a transaction, usually called sales, which is just the end point of the process. When you just have the end point, with too little or misdirected effort at the wider functions of ‘marketing’ in the revenue generation process, you will have a mix of productivity suck-holes and opportunity costs that will not show up in any standard set of accounts.
Too little attention to the numbers. The ‘numbers’ critically include the financial numbers, but they are not the only ones that should be monitored, managed, and leveraged. While I obsess about cash with those I work with, cash in the bank is an outcome of a wide range of other things that have gone as anticipated, or if the bank is empty, not as expected. The most critical ones fall into two categories:
- Internal numbers. These are the numbers over which you have direct management control. They range from the costs of manufacturing and service input, to the overheads resulting from the costs associated with keeping the doors open every day. Inventories, cash conversion cycle time, capex and the timing and quantum of expected returns, personnel productivity, and many more consume cash and importantly for an SME, time.
- External numbers. Critically, these are the numbers around the behaviour of customers. They will vary depending on the product you are selling, but customer acquisition costs, referral rates, lifetime value, and repeat purchase rates will all directly impact on the cash in your bank account. They also should include some consideration of the market context, trends, competitor assessments, and regulatory considerations.
Importantly, and often overlooked until too late is the most fundamental number of all: Sales revenue. None of the above is the slightest bit relevant un the absence of revenue. Go after it early and hard!!
There you go, 50 years of hard-won wisdom in a 5 minute read. Call me when you need more.
Feb 28, 2025 | Marketing, Strategy
‘Find a niche and own it’ has been a mantra of mine for years.
SME’s who have done this can do very well.
What it implies is that you have gone out and found those few people who overvalue what you do very well.
Defining what you do better than anyone else is the start.
You do not have to be the best in the world, you just have to be the best available to your ideal customer. For many SME’s that is a geographic market, for others, it may be personal service, or a particular blend of coffee beans the delivers a specific flavour, every time when made by Tony the barista.
When you excel at something that a potential customer overvalues, that is a recipe for success. Price will become a secondary consideration.
My eldest son paid his way through university buying and selling guitars, and valves for amps. He knew guitars and their value, so was able to make a few bucks on the arbitrage. However, he knew valves to an extraordinary level of detail. His market was highly specialised Blues guitarists in Sydney, those few insisted on valve amps rather than the modern electronic units. They came to him explaining the sound they wanted from their amp, and Geoff would assemble a valve set that delivered. It was a very narrow, deep, and specialised market and price was never a determining factor.
As University neared completion, he had to ask himself if there was a market in the niche, rather than just a niche in the market. His conclusion, yes there was a market in the niche, but the infrastructure and investment necessary to make a real commercial go at it, rather than just be a side gig for a uni student was more than he was able to make. As a result, he wound it down, and got a ‘proper job’ after graduation.
Briggs and Stratton is one business that years ago identified, leveraged, and now owns a global niche for mobile, small capacity internal combustion engines designed for outdoor use. Lawn mowers, outboard motors, pumps, and mobile generators all use B&S motors, often supplied and branded with the end product. For example, Victor lawn mowers in Australia is a venerable brand. The motor is branded Victor, the engine is actually supplied by B&S.
As their markets ‘electrify’ power systems (engines and batteries) for mobile machinery, it remains to be seen if they can retain their position.
When you are the only solution to a burning problem, even when only a few have it, price becomes increasingly less relevant as the urgency of the problem increases.
The marketing challenge is to identify and highlight the problem to which your solution is the only one possible.
Header drawing by DALL-E
Feb 18, 2025 | Marketing
In a world of homogeneity, marketers that focus on delivering customer value via the ‘product P’ in the four P’s’ will win in the end.
The age of cost cutting the minutiae to drop a fraction more to the bottom line is over. As Zig Ziglar once said ‘when the crowd is zigging, you should zag’.
Years ago, as product manager for Fountain tomato sauce Management constantly pressured me to reduce costs. At the time Fountain was runaway market leader at premium prices In New South Wales and had solid share in Queensland and Victoria. The challenge to reduce costs came down to replacing the tomato content with something else that was cheaper. To reach the arbitrary reduction goals, we had to skip on tomatoes which represented about 60% of the ingredient cost, and 35% of Cost of Gods Sold.
We were skimming those tomato ingredient costs, compromising the product quality for what amounted to a few cents.
Over the years, cost-cutting had reduced Fountain to the point that it was no better and little different to the alternative products on the market. Fountain had maintained the ‘Rich Red Fountain Tomato sauce’ advertising position for 40 years, although it had become progressively untrue.
No ‘richer’, no more ‘red’ than any other tomato sauce on the market.
It had seemed to cost-cutters over the years that a slice off a cut loaf was never missed. Until, suddenly, the loaf was no longer of any differentiated value.
In frustration I asked the lab to make up a sample from the original recipe and put it into the latest taste-testing. The difference between the original recipe and the current one, before any further cuts, was dramatic. The panel, which included the MD chose the old recipe as being by far the best option.
While the planned round of cuts was shelved, no further move was made to restore the original recipe, and for being a smart-arse, my career opportunities were suddenly limited. Subsequently the combination of an ordinary product, and an eroding brand position resulted in Fountain becoming just another commodity product in a market it used to dominate.
That erosion of market position and long-term profitability could have been avoided by a very modest reinvestment in the product, and associated brand equity.
Jan 24, 2025 | AI, Marketing
Close your eyes.
Now think of the sound that happens when you open Netflix or HBO, the cello riff at the opening of Game of Thrones, the McDonalds ‘ba dada boop ba’ that ends every ad.
You can ‘hear’ them in your mind, they are an unambiguous reminder of what you are about to see and hear.
Think now of a song that meant something important to you when you were growing up. All you need are the opening bars of the music.
Can you feel the emotion that memory brings?
We humans are very tuned in to music (apologies for the poor pun). Somehow is sticks in our brain, and opens a door to our memories, emotions, and situations.
How would you like to have a sound that to your customers, wider networks, and those who have a casual acquaintance with your brand, brings your value proposition straight into their brain?
In the past that marketing luxury has been the territory of large companies with large marketing budgets. You had to pay songwriters, musicians, pay royalties, hire studios, session singers, or even celebrities.
All very expensive and time consuming.
Not now.
Now you can do it in a few hours at most with an AI tool (CHAT, Claude, Gemini, et al) that will write lyrics for you, and another tool to deliver you the sounds to order. Want your lyrics to be performed in the genre of country, pop, hip-hop, metal, whatever, tell the tool, and it will deliver. It will take some iterations, and prompting can be a challenge as music is much less specific than prompting using text., but you can get there.
There are several AI sound generators. Suno.ai is the tool of choice of a mate who has experimented with several, and which I found to be amazing, but there are others.
Want that sonic brand identifier?
It is now easily within your reach.
Jan 17, 2025 | Analytics, Branding, Marketing, Strategy
Small improvements in average price drive large improvements in profitability.
Do the numbers.
The normal expectation in consumer markets is that volumes will increase when you promote. Usually they do, but that period is usually followed by a period of lower volume, as what you have done is pull volume forward. This gives those who would have bought at the full price a discount, and rewards those who only buy on price, but who will move on next time to the cheapest on the day.
Brand equity flattens the peaks and troughs of price driven demand, reducing the volatility of price driven volume.
A reduction in the volumes driven by price alone, and an upward to the right movement in average prices paid, act together to drive profitability.
The challenge is to be in sufficient control of your distribution to be able to manage the balance of price based promotional activity often demanded by distribution channels, and investment in brand equity held by the end consumer.
In Australia, the power of the supermarket duopoly together with poor management of that balance by weak minded and brand equity unaware management has resulted in the brand equity of most consumer brands being trashed by supermarkets. It has been replaced by cyclic price promotions, with mandatory participation if distribution is to be maintained.
One of the great missed opportunities to build and leverage brand equity (in my opinion anyway) is the use years ago of Al Pacino by Vittoria coffee.
I have no idea how long the campaign went, or how much they spent, but I clearly remember seeing the ad on TV, and on posters in coffee shops around Sydney. I still buy Vittoria coffee as my preferred coffee, but have been ‘trained’ and rarely need to buy it at the full price of close to $40/kilo, when it is ‘on promotion’ regularly at between $20 and $25. I drink a lot of coffee, so the low price is a pantry stock opportunity.
Unless I am highly unusual, Vittoria has missed out on many millions of dollars of profit over the decade. Heavens, they miss out on several hundred a year just from me!
The potential power of human emotion on the purchase choices they make is huge.
Most fail to leverage it to its fullest extent.
The campaign for Meadow Lea margarine that ran from about 1977 to the mid-eighties is another example. ‘You ought to be congratulated’ not only drove the brand to massive market share leadership at an average price that was a premium to its natural competitors, but it also drove the size of the whole market.
When the dopes who took over the brand failed to recognise the dynamics, and cut advertising, while bowing to retailer pressure, the brand shrunk like a balloon with a slow leak.
Nearly 40 years on, the ‘you ought to be congratulated’ positioning may retain enough equity to be revived. Similarly, I am sure Al Pacino still drinks coffee every day, but may now be a very expensive spokesman.
Maybe not. Worth a try?
Jan 15, 2025 | Communication, Marketing, Small business, Strategy
A few days ago I turned 73. Well past any reasonable retirement age, but I cannot see myself as retired. While there is not the same pressure of past years, the thought of playing golf and going to lunch a lot does little for me.
In late November last year, WordPress cut off the basic numbers that had been supplied about readership of this blog. I could no longer see which posts had been opened, how many times, and the country and source of the opener. It had been a free part of the site for the whole 15 years of the blog, and I did look at it, and once a year, do a superficial analysis of it in a post, referring to the most popular posts, but that is all I did.
It was a curiosity for me to see which post performed best, but the numbers are tiny, ridiculous in any commercial context. However, I did nothing with that information.
In contrast to my advice to all my clients, I did not bother to look at the also free Google Analytics. I stopped that some time ago when I realised I was spending time looking, and doing nothing with the conclusions.
Equally, I have made no effort to ‘monetise’ the blog, rarely touting for business, no ads, no affiliate links, none of the obvious things I knew I could do to generate some cash.
When I started the objective was to use it as a lead engine for my one man strategy consulting business, but that did not last. Rapidly I realised it was way more personal, self-indulgent, even selfish than that. I did not really care who read it, although gratified to know a few did, The purpose had become to order my own thinking, be creative in the way I thought about things, and to sate my curiosity.
Back to the numbers. My initial annoyance with WordPress, dissolved, Who cares, I don’t. The metrics did not matter to me, beyond some level of vanity, as I did not use them. Their absence for the past 6 weeks has not altered my ‘scribbling habit’ at all, a habit that like any deeply held habit is very hard to break, and why bother, it adds value to my life, and if it adds value to anyone else, that is a bonus.
We live in a world of numbers.
If it cannot be counted, it does not matter sayeth the consultant, I have said it many times, while knowing the truth of Einsteins utterance that ‘Not everything that matters can be counted, while not everything that can be counted matters’.
Rarely do I see myself as a writer. Occasionally, when someone compliments me on post, I feel that maybe I am, but I see myself as a scribbler, one who feels compelled to write stuff down in order to make sense of it, to coalesce the conflicting information and emotion banging around in my brain. The act of writing is what is important, not what comes after. Therefore why should I be annoyed that WordPress has demanded I pay for some numbers that may appeal to vanity, but I do not use.
Stick your numbers up your arse WordPress. I will scribble on regardless, and reconsider GA.
Have a great 2025.
