Is Your Quoting Process Losing You Money?

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As customers move away from accepting ticket prices at face value, more and more businesses are using quoting to generate a price to present to customers. But there are hidden traps in the quoting process that business owners need to watch out for.  Businesses who quote often use standard rates, whether they are metered rates, day or hourly rates, or a standard materials markup. But the true cost of taking a job from quote to completion isn’t often taken into account when standard rates are used.

Many businesses have little idea of their true costs, and if they need to discount to win the job, they don’t know at what level they will lose money on the job.

To quote on a job and know that you will make a profit every time, you need to understand the true costs in your business. That comes from understanding the financials, what makes up your fixed and variable costs, and then understanding your breakeven rates when you put the quote together.

So, sit down and have a look at your last few complete jobs. Analyze the actual cost of the resources you put into each job- materials, labor – including overtime and any extra time spent than you’d planned for, and including your own labour, any permits or fees you paid for the job, transport, any other costs, and covering a portion of your everyday overheads. Then look at how much you were paid for the job.

If you found you made little profit, broke-even, or even lost money on the job, then you should be making changes to your estimating and quoting process.

 

Critical Non-Essentials

Colleagues working on project

Critical Non-Essentials – Make A difference to your Customers

Critical Non-Essentials.  Principles
You need to know your talents – and lack of them.

You have to know your stuff if you want to succeed.   But being technically competent in the core part of your business is not the be-all-and-end-all.   There are other things even more important if you want to build a successful, profitable enterprise.  Your experience and training does not always reward you for the things that are useful in the real business world.   Sometimes it even  encourages behavior that will be detrimental to your future business.
People use the environment to make value judgments about the character and talents of the people in that environment.  For good or bad, we do use the personal appearance of others to make judgments about their character and value.  Do not expect your customers to value the same things that you and your peers value.  The way you appear to do something is often more important than what you do.
Concerning what you do:
·        Logic – what people think is powerful
·        Emotion – what people feel is far more powerful still!!
·        People don’t always value technical excellence…sometimes they just tolerate it.
Introducing the CNE’s
Customers judge your expertise in areas they do not understand by your expertise in areas which they do.  When you pay attention to detail in the very visible, non-technical part of your business, clients will tend to judge your core product or service as also having the same level of quality control.  So these little things that are quite inessential for doing your job (and which don’t impress your peers at all) nevertheless seem to play a great part in persuading customers that you and your people are good at what you do.
So CNE’s are not really non-essentials at all.   In fact they are highly critical to any business.
That said…because they seem to be so unimportant it is often hard to find the time to systematize them…it’s far easier to justify the time to develop systems so that the main areas of your business are taken care of predictably.
Super CNE’s
·        They persuade uninvolved third parties to say nice things about your business.
·        Word of mouth is a powerful, speedy and cost effective way of marketing your business.
·        People value relationships above everything else.
·        I need to understand the power of the CNE’s to effortlessly do ‘good’ in my business.
How To Create CNE’s
Step 1:   Choose an area that will convince customers that you’re good at your core business.
e.g.   an electrician who creates a system for cleaning up after himself so that the work area is absolutely spotless, i.e.
   •    A detailed description of the method
   •    A checklist
   •    A system for reporting
   •    A small clean-up box with cloths, cleaning fluids, small vacuum, rubber gloves etc
  • e.g.   a dentist who has immaculately clean walls, floors and carpets etc doesn’t have to worry about posting impersonal notices about how they sterilize the instruments.
  • e.g.   a dental laboratory that presents caps with care to a dentist will have find that the dentists are far less likely to regard the quality of the cap suspiciously.
  • e.g.   a bank that sends out a statement that’s plain, easy to read and human is far more likely to keep customers happy than one that looks like it’s from an automatic blood-scanning machine & which is full of cold, impersonal words
No matter how good you say you are. It often takes a well-designed CNE to convince people that what you say is true.
Step 2:   Make sure everyone in your work team understands the power of the CNE.
The way to  persuade people to be vigilant and tireless in their creation & maintenance of CNE’s is to educate them to the real importance of the seemingly non-essentials.  You must show your people that it’s in their best interests to impress your customers…and then that CNE’s really WOW customers.
Step 3:   Make a system to ensure that the task is always completed flawlessly.
Design simple, routine systems to do your CNE’s  the same way every time – without a lot of effort or brainpower (which would be silly).
Systems = consistency 
It takes some effort to set them up but once perfected they’ll take little effort or thought. The outcome is…simple systems that make a large impact on the customers and, after initial development, require relatively little effort.
e.g.   Washrooms in a supermarket that are always immaculate
     •   Manual for the cleaners
     •   Training for the cleaners
     •   Card showing when due, cleaned
     •   Notices urging customers to report unsatisfactory state
     •   Periodic supervisor checks
     •   Weekly check of all cards
You & your team will be rewarded each time a CNE impresses a customer…and once the team realise the importance…your standards will rise.
Six Insights Into CNE’s
Well constructed CNE’s take on a life of their own – complex tasks will happen automatically. They work behind the scenes & s sometimes it’s hard to spot their immediate benefits.
Insight 1:   CNE’s will work with your team
Insight 2:   CNE’s will work with your suppliers. Concentrate on the little things in business & the big things will look after themselves.
Insight 3:   CNE’s are very efficient. They offer a far greater return on your investment of time & effort than most other things in your business. Work today while you have the time & energy in order to make things easier for you in the future when you don’t. Make sure that any effort you expend has an effect beyond the effort involved.
Insight 4:   CNE’s bring out the best in people.  A good CNE has a positive effect on everyone.
Insight 5:   You can create situations where other people’s CNE’s work for you.
e.g.   Paddi’s gardener goes the extra mile to keep his gardens immaculate because he’s allowed him to place a plaque advertising his business on the garden wall, i.e. it’s in his best interests to keep Paddi’s garden looking amazing.
Insight 6:   CNE’s need celebrations.
e.g. including the building cleaner in the bonus scheme & displaying her photo along with he other team members.
The Birth Of The Super CNE’s
How to systematize the process of delighting your customers.
Everyone likes to spin a good ditty – so why not create one for your customers to tell about your business?
e.g.   Tea Set & Tea Ceremony vs. the X-Ray Machine.
No-one ever told a story about the excellent X-Ray machine.  Over the years the Tea Sets have returned many times the investment but the X-Ray machine has barely broken even.
e.g.  The 4 Door, V8 Cappuccino Machine.
C
NE’s versus Super CNE’s
CNE’s
     •             are the little household tasks that give people reasons to believe in your business, particularly the parts they don’t understand.
     •             In the background somewhat.
     •             Important but not exciting.
     •             Stop you getting bad press.
     •             Show you’re competent.
Super- CNE’s
     •             Are CNE’s taken to a sensational degree so that everyone remembers and talks about them.
     •             Get you good press.
     •             Provide the WOW that gives people a good ditty to spin.
     •             Provide the dazzle.
More About Super-CNE’s
What sets one business apart from another is often more to do with a product’s presentation than its actual quality. Super-CNE’s get you talked about = Lead Generation.
CNE’s get you the customer = Conversion Rate.
Some CNE’s will also increase Number Of Transactions, Average $$ Sale & increase your Margins.
Understand The Dialogue Between Customers.
A – Tells Super-CNE .
B – Yeah but is he good at his job?
A – Tells CNE stories which have convinced them that you are.
Super- CNE’s Are A PR Boon
How To Create Super-CNE’s
Step 1:   Pick something you’ll enjoy.
Step 2:   Choose something distant (but not too distant) from the core of your business.
Step 3:   Build on CNE’s that are extremely visible.
Step 4:   Pick areas of customer concerns to.
Step 5:   Take your Super-CNE’s to the extreme.
Step 6:   Make sure your Super-CNE’s appear difficult – but really aren’t.
Come back and let me know how you did!

Manage Your Time or it Will Manage You

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Accept – you will never be able to do everything you want… because there is just too much to do.

Purpose – the driving force behind managing your time is to accomplish your ultimate goal/s.

FOUR SKILLS  required to use your time wisely
Analysis, Planning, Delegation, Self management

THE PROCESS  for success

  • Determine what to do, what are the priorities that will move you most effectively towards your goals (you do have goals don’t you?)  Or what things will have the most negative impact if you don’t do them?
  • Focus on spending your time doing what is key to the success of your business.
  • Work on tasks that can only be done effectively by you. (4 “D’s” — Do it…. Delegate it….Defer it….or Dump it)
  • When to do – plan your week ahead, plan your tomorrow at the end of today

Organize your activities into the “urgency” vs. “importance” quadrants.  Plan your time/ organize your work schedule so that you are never working the issues that fall into the two “Not Important” categories. (Read Stephen Covey if you’re not familiar with this matrix).

How to do (organize)

Create a “template” schedule for each time period – month/week/day – which allocates time periods for specific types of tasks.  Ex: travel to customers, return/place phone calls; do quiet work, organize paperwork, read.  Always work on your highest priority items first thing in the morning.  Don’t fall into the inbox and find yourself still there 3 hours later.

Tool – Time blocking chart – map out your Important activities onto your calendar every day.
Follow your calendar – be disciplined.

The key to efficient use of time is planning.  Always work from lists & mark the items for priority (a,b,c).  Use weekly and daily lists.

PLANNING For Efficiency

Create your weekly or daily plan in advance — Friday night or weekend for next week; the night before, for the next day, rather than the morning of. Your brain will start working for you on the things you told it were important while you sleep.  Gather any materials you’ll need to accomplish your tasks in advance, so can “hit the ground running”

For motivation

Put as much on your list as you can, momentum gained as you check off.  Don’t fall into the trap of doing unimportant tasks just because they can be done quickly. That doesn’t make them a priority.

When large projects, break them into small steps so you can see progress.

For effectiveness

Each major project should be planned out over time periods – with other activities interspersed

HINTS for SUCCESS

Incremental progress is key. So for projects, “divide to multiply”. Start now, step by step.

Do the toughest things first, stops procrastination you’ll feel great… therefore…you’ll be inspired to do everything else required for the day

Delegate.

Include scheduled time in your plan to oversee/ train/ obtain & review reports on the work you have delegated.  Do not slip into the habit of doing it.

If you schedule on importance not urgency –the urgent will almost never occur!

Don’t Get Bored with Your Marketing – Lather, Rinse, Repeat

lather_rinse_repeat_1

As humans, many of us get bored with doing the same thing day after day. We seek variety and change, so therefore we find new activities and adventures to keep us stimulated and refreshed. Let’s be honest, how many of us have bought a new vehicle mainly because we became tired of the old one? Yep, I see you raising your hand right now.

Here’s the problem when it comes to marketing strategies. If we are using a marketing strategy that is working, why would you change just because you ‘Got bored with it.’ Don’t laugh; I’ve heard that from business owners.

Let me give you a real life example. One of our clients, a landscaper, conducted a door hanger campaign whereby he placed door hangers on 500 homes in an upscale neighborhood. From that he got 5 leads, and two new customers that more than paid for the door hangers on the first job. He was thrilled. When I asked him what his marketing game plan was going forward, there was no mention of the door hangers. When I asked why, his response was “I wanted to try other strategies.” In essence, he got bored.

That is where “Lather, rinse, and repeat” come in. If a strategy works, keep doing it until it stops working. Your need for variety and change should NEVER interfere with making money in your business, so stop rushing after new and different strategies if the old ones still work great.

However, as a caveat, make sure that you are always testing and measuring your marketing campaign to make sure if they are still working.

There is nothing worse than a marketing campaign that once worked, but no longer does, but you are still paying for it. Make sure that your current marketing campaigns are profitable, and if they are, “Lather, rinse, and repeat.”

When Your Best Customer is Actually Your Worst Customer

Have you ever worked in a business where one customer is viewed as the most important and precious to the company, who everyone treats with kid’s gloves? Yet this customer seemingly pays later than all the others, demands special terms, takes up all the managers’ and staff’s time and never seems satisfied?

when_your_best_cust_is_your_worst_cust

When asking about how it works that one customer can seem to dominate a firm, the reply is often along the lines of, “they’re our longest serving customer” or, “they’re our biggest customer” or even “they’re a personal friend of the owner”.

Bottom line; is this customer adding to the growth and well being of the firm or, actually detracting from it? This is particularly acute when a customer’s business represents greater than 40% of the overall turnover. This benchmark indicates that the customer has so much influence, in effect, it runs the business, not the owner.

For a SME it’s easy to accept large orders or, to grow on the back of one customer placing more businesses into a dangerous position. Indeed I’ve both been in a business where this has been the case and worked with clients in this position. The key point though is that if this large customer starts to dictate how your business operates, what markets it is in, what products it offers and then, crucially, pays late, then the business owner is in real trouble.

How to get out of this? In the short term, work towards educating the customer about the terms of business you want to have. Easier said than done you may say, yet when explaining what you want, need, and why, to many people, it often does produce the change you’re looking for. In the long term, work towards expanding your customer base and even, towards exiting doing business if desired. Again if a customer doesn’t pay on time, no matter what their size, are they really a customer? And how much time could be freed up to handle those that do pay with better margins? Remembering to work this plan in alternative customer sources and cutting of ties when the time is right for you.

In ActionCOACH we call this getting rid of ‘D’ Class customers (from grading all customers A to D). Therefore, review your customer base. Does your ‘best’ customer upon inspection really live up to this premise- or if you had a choice, you’d rather not to have taken the order and would prefer to have other customers?

Do You Know the Power of Goals?

In his book, “What They Don’t Teach You at Harvard Business School,” Mark McCormak made an interesting discovery about the 1979 graduating MBA class. Within the group, 3% had written goals, 13% had thought of some goals and the balance were just thrilled to be out of school (I am sure you remember those feelings).

The interesting part was what happened ten years later.

Here are the results of their success after a decade:

The group that had non-written goals were making TWICE in the field compared to the 84% of those who had no goals leaving Harvard.

The group with written goals was making TEN TIMES what the other 97% were making on average.

I think you would agree that the folks at Harvard have a long history of knowing what they are doing. So if the top 3% were able to make TEN TIMES the money as everyone else by simply writing out their goals, why aren’t you doing it?

We are already through the hardest part of the ‘recession’ and yet people and businesses are still worried that our economic situation is dire. Resolutions made back at the beginning of the year, to get in better shape, to be a better golfer, to give more to charity, to be the best parent or spouse or partner that you could be may be starting to fade if they haven’t already. But who says making and keeping resolutions is just for the beginning of a year. Why wait?

Make sure that one of the resolutions you set and keep right now is to make a strong plan for yourself and your business; ones with enough detail that you can actually make progress against them on a consistent basis.

Write down ALL your goals you have for the next year. Then, find someone to share them with and have them check up on you monthly (quarterly at a minimum) to see if you are making progress. Have them hold you accountable with winnings and loosing for completion.

ActionTIP: Make milestones and chip away at each goal a little everyday so the overall picture doesn’t seem so overwhelming.

If you do this, then it won’t be long before you are making TEN TIMES more than your competition.