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NEWS - PLANNING
If things go wrong make a plan
9/28/2004
A few months ago, Greg Cromwell, the strategic director of Bush Branding& Marketing, noticed turnover at the business wasn't going up.
"Things just weren't looking very good," says Cromwell, who has other ventures including Australian Boot Company, Blundstone Canada, Steam Whistle Brewing in both Australia and Canada, and bayweb.com.au that were all performing well.
"We said it was time to practise what we preached."
The businesses, with annual turnover of $10million, employ 70 people.
Cromwell strongly believes the most important thing a business can do in this situation is to write a strategic plan, whether this is on the back of a coaster or in a complex, time-consuming document.
He says it is helpful just to note, "this is where we want the business to go".
"I've found that first-hand with my own business," he says. "We hadn't updated our plan and we were languishing."
As well as putting numbers down on paper and deciding what is needed to achieve the goal, it also gives everyone in the business, including employees, a collective goal to aim for.
"I find when I go through this process with folks, one to two new ideas a year will get the growth you are after," Cromwell says. "It isn't that hard."
As a result, BB&M's September revenue was ahead of the original goal, and up 200 per cent from August.
Marketing, sales and branding has not always been top of mind for small to medium-sized businesses (SMEs), but as they start to drive the economy and move offshore, they need to get more sophisticated.
In a recent survey of family business by Deloitte Growth Solutions, marketing and sales advice headed the wish list by a long chalk.
The survey of 105 family businesses found 38 per cent seeking help in these two areas followed by assistance in strategic and corporate governance (9.1 per cent) and finance (5.7 per cent).
Walter Dinale, managing partner of Deloitte Growth Solutions, explains, "They need assistance to grow their revenue." In other words, the businesses have grown as much as they can based on the internal skills of the business.
They either increase revenue by selling more of their existing or new products to existing customers, or by winning new customers with new ideas. "It's a market-making activity," Dinale says.
A business idea will grow to a certain level and, unless change occurs, it will usually stagnate.
"I think a lot of businesses struggle through and just do not have the expertise, the understanding and in a lot of cases, the resources to be able to take things to the next level," Cromwell says.
He believes that SMEs need to spend more on marketing and branding, but be selective in their spending.
Up to 20 per cent of revenues should be used for this purpose, depending on the type of business. While a commodity style, business-to-business company may manage with as low as 5 to 10 per cent, competitive, consumer-oriented business will need to invest more.
For services business, there is no set figure but consultant Linda Hailey of Hailey Enterprises believes 3 to 5 per cent is not uncommon.
And marketing does not have to mean advertising. Sometimes funds are better spent on relationship marketing, customer services or research on the target market.
"For a lot of small SMEs, you don't actually have to spend a lot of bucks if you go with the target market because it's much easier to reach as you know who they are," says Hailey, who is also author of Kickstart Marketing, a book written specifically for small business owners.
It may be as simple as going to a trade show rather than advertising in a trade publication.
The need for marketing help is not confined to family businesses, although they do have some issues not faced by owner operators.
Family businesses are traditionally more cautious with marketing as they are protecting family assets.
"The older generation feel they must preserve it for the younger generation," Hailey says.
If family business owners believe the market is saturated, they may need to look at their product. And this may be a time to give the younger generation their chance to reassess the product.
"Markets change," Hailey says. "Often people get so focused on the internals of the business they don't understand the markets have moved on."
When older family businesses find that business is levelling out, one option is to look at another market for their products or services. But the best option may be to look at what else can be sold to existing customers who have "grown up" with the business.
Hailey, who has been in business for 14 years, says that all markets are tougher now.
"The old days of small business saying, 'I have one marketing message and I'm going to pop it out there and see who discovers it' are gone.
"They need to have specific target markets," she says, "and that's because they need to spend their resources wisely."
Reproduced from the Australian Financial Review - 28 Sep 2004
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