Opportunity and business planning

In the past few days, I've received a business proposal that, on some levels, is highly appealing. If successful, the idea could accelerate our growth, expand our capacities, and allow us to develop exciting new markets, vertically and within our niche. And I sense the proposal's proponent is desperate; allowing (at least in theory) the opportunity for a good deal if we move quickly.

But I'll pass on the opportunity. I don't know the other party to the transaction at all. He initiated communication with me through a public portal; all his communications have been over the phone and some things he said left more questions than answers.

I, of course, think it is wise to keep my mind open to unsolicited external proposals; there can be a gem out there that we might otherwise miss. In any case, the openness of this blog and other external marketing is great enough to invite new ideas.

One thing you learn quickly in business is there is never a shortage of ideas and possibilities. Out of 100 idea initially, 10 might be worthy of further review, and only one is 'right' to implement. (The same ratio, it seems, also applies to resumes from people seeking employment!) Here are my screening criteria:

Is the proposal relevant to our business? We publish locally relevant construction industry news and information. If it isn't in that area, we should pass;

Is the risk worth the reward? This invites several other questions. Is capital required; and if so, how much? Will the project/initiative tie up management resources and time that can be dedicated to other opportunities? Is the payoff worth the effort? How likely is the project/initiative to succeed?

Am I comfortable with the other party(ies) to the project? This is both subjective -- a 'gut feel' --and objective. Are there warning signs like poor or non-existing references? Sometimes you can hold your nose and do business with people you don't like for transactional/short-term projects; but you wouldn't want to set up an initiative with anyone longer-term if there is any significant doubt.

Now, ideas that don't entirely pass this scrutiny can still move forward, but with caution, or if they represent exceptional opportunity or otherwise are very low in risk. And bigger direction changes and fundamental shifts in the business are possible, but these should be planned carefully and executed only after the planning is completed.

So the idea I heard yesterday might 'work' but only after we put it through our full-scale planning process. And if this means we miss a short term opportunity because of the desperation of proposal's proponent, so be it. The potential reward in this case is simply not worth the risk.

Balance in business

The Business Development Bank of Canada, which provides some services similar to the U.S. Small Business Administration, provides some basic resources on the web, including this article about Cash Flow Management. I'm not overly sold on relying on these agencies for business/managerial advice and support -- my best advisers have been experienced, successful business people whom I've learned to respect and trust.

It's 6 a.m. and I'm musing on the essence of successful business management. After close to two decades as a publisher (and that means surviving some recessions, most recently an internally generated one), I'm still amazed at the daily excitement, complexity and challenges in keeping it all together.

At this stage, we need to manage creativity and growth with cash flow control. Our systems are pretty good and simple, but this month, for example, I'm noticing the percentage of receivables heading past 30 days is too high -- and it explains the reason we don't have the cash in the bank we should. Now, I need to look at the sales projections, upcoming costs, and available resources and decide how to manage the growth -- especially since we've decided to hire a new employee who starts Feb. 1 (and will of course need to be paid on the regular payday mid-month.)

My mind analyzes: Why are the receivables collecting slower than normal? Could it be a shift in the economy -- the dreaded "R" word? Not likely, at least as far as I can tell in our existing markets.

Probably it is the seasonal shift -- things always slow down in January. Or it could be that our Accounts Payable person (collector) who comes in on Fridays part time, had a couple of weeks off ill and for Christmas break. I know the matter is important and am keeping an eye on things.

This is just one thing to watch: Innovations from our sales team; performance standards, editorial quality and writing, administrative and office systems, product development, community group and client relationships, the website development, and more, all have to be co-ordinated like a symphony orchestra conductor. Of course the whole thing works because we've assembled talented individuals into a team; each with different skills and strengths, but each well above the 'norm' for their area of expertise (and certainly better at what they do than I would ever be.)

Building a successful business is like that --you need to connect many things together to make it work. Most intriguingly, and in part the purpose of this blog, you need to integrate your marketing process throughout the business/client relations cycle. Sure, you can set up systems for canvassing, cold calling, and the like, and many of them work (see this Contractortalk.com thread describing successful canvassing approaches), but in my opinion, you will achieve the highest results if you think longer-term and in the context of giving rather than irritating your community, as Seth Godin advocates, or patiently building lasting networks within the AEC Sector, as Ford Harding suggests.

Four (different) routes

When searching for an image to go with this posting I came across this book, Construction Management Excellence, by Gene Fessenbecker.

When it comes to marketing construction and related professional and trade services, with experience, I can discern three basic business models. Each model has advantages -- in practice, we probably all use some parts of each model, to varying levels of intensity.

Low bid wins the job
We seek out public tender/bidding opportunities, review plans, and put in our bid. This is the pure "low price wins the work" model and until the last few years proved to be the way many businesses won publicly tendered jobs -- supposedly in a fair competitive structure with bid depositories and the like. In this model, you don't waste money on marketing (outside of using perhaps paid lead services), and focus on sharpening your pencil to find a way to come in lower than anyone else. It is a grind.

Selling your services
Old-fashioned selling techniques, including cold calls, canvassing, and telemarketing are sill widely used in certain retail sectors (such as vinyl siding, driveway pavement sealing and the like) but are of course truly uncommon in the professional services area. They 'work' for businesses which can stomach the hard-rock approach; and may prove to be surprisingly effective if you are in the professions and are willing to take the risk.

Value/relationship/informal branding
These are businesses which build and maintain trusted relationships; deliver exemplary service and value, and never need to 'advertise' simply because repeat and referral clients keep them busy. Pricing is competitive but they can beat the commodity pricing trap by having a solid reputation. They deliver the goods, and are known for it.

I generally prefer the third route but wouldn't discard the other two models. If your marketing is 100 per cent 'reactive' -- that is, you are serving your existing clients well and relying on repeat/referral business for everything, you may be pricing yourself lower than you need, and failing to replenish and revitalize your client base and opportunities. If you refuse to engage in "low bid wins the job" competitions, you may fail to see options for reducing costs and improving efficiencies which could truly help your bottom line.

And of course the opportunities within these three frameworks vary depending on your market segment/trade. Some businesses, perhaps because of low entry points or traditional business practices, work in one segment more than the others -- and deviation from the norm is risky.

This leads me to a fourth option, the one that I like the most:

Integrated/planned and creative marketing
We combine the elements of the other three models in a creative -- sometimes unconventional -- approach; drawing out and finding new high-value clients, attracting and retaining loyalty (generating referrals), within a cohesive, low-cost and highly effective business model; one that can both grow and weather the most challenging economic environment. And that, of course, is what this blog is all about.

A year in the life of this blog

Our new design will be implemented next month

It's been a year since I set up this blog on the blogger.com site. Here is the first entry:

http://constructionmarketingideas.blogspot.com/2006/11/i-arrived-at-my-office-today-to.html

Looking back, of course I can see how some assumptions and projections were wildly optimistic. But the general gist of the entry -- that the business had survived a tumultuous turning point and would soon be thriving, has proven itself true.

We are growing again. Today, the company will sign an employment contract with Ken Lancastle, who will be our new full-time staff writer/editor, and we are moving forward to hire a third Canadian sales representative/associate publisher. Our websites still need serious work -- but our success in rebuilding other parts of the business and this blog have given me confidence that, when we start work on that project, we will get it right.

More than ever, I appreciate how important individuals and attitudes are to a business success. On Wednesday night, I discovered an old file, dating back to 2003 -- two years before the "old" business almost disintigrated. It contained correspondence and notes regarding a former employee's disgruntlement and hostility -- she had kept her thoughts under wraps but I accidentally found about them (the stuff proved to be so sensitive I decided this file needed to be kept at my home, rather than in the office.) Rereading this almost-forgotten document, I can see how negativity had infected the business and would, in the following couple of years, almost destroy it.

Of course no business owner can or should micromanage people; and I certainly don't want to invade my employees' privacy. But the attitudes reflected in that file contrast sharply to our brief weekly sales update meeting yesterday -- where employees contributed ideas and thoughts that added insights and created opportunities for everyone.

Lessons learned:

• Regular meetings are essential. We have a general weekly staff meeting and second special sales meeting. These are timed and managed to minimize disruption and waste -- and never go beyond an hour (usually we are done in 30 minutes or less.)
  
• Employees need to be part of the systematic planning process -- they accordingly participate in our twice-yearly planning and budget meetings, which each require at least a full day of undivided attention.
  
• Solid hiring systems are essential. We have protocols for employee selection designed to avoid the stereotypical "read resume, interview" mind-set (which really, if followed, just tells us who can write a good resume or 'interview well'. We don't want to fill the spot with someone who is just "okay" -- the new employees must really be right for the business.
  
• Our clients deserve really good service and value. This comes directly from our products and values -- but ultimately it is the interaction between our employees and clients that determines the relationship success.
  
• You don't need to push, intrude, be disrespectful or a pest to succeed in business. In fact, conventional 'hard rock' selling is better replaced by Permission Marketing; where the important thing is truly giving rather than trying to sell stuff. This blog reflects these values. (I see other cases where someone trying to sell uses the blog, surveys, and e-letters as not so thinly disguised selling ploys. These approaches may work, some of the time, but I doubt are sustainable or truly effective long-term.)

So, where will we be one year from now?

Our operating business plan is confidential but I am confident we will be publishing in several new communities and the websites will be fixed and contributing dynamically to the industry. I think we will grow by 50 to 100 per cent -- this may seem wildly optimistic, but this growth will simply bring us back to where we were in 2003. The difference this time around is we will follow effective systems, use common-sense, and respect and encourage employees to share and contribute in the experience.

Our biggest lesson

I've just written and published on the website networks, Our biggest mistake -- expanding without planning.

The story is humbling. I've learned some important lessons.

Have you had similar experiences and learned lessons of your own from them?