Keep Your Manufacturing Efforts Out of Commodity Hell

We’ve all heard that manufacturing in the US is a dying effort.

Well, it need not be. Yes, you probably have to spend more in capital to make up for our higher labor costs, to meet (or go slightly above) imported prices. And, you might have to outsource some basic operations to Mexico or Canada. These two are generally considered to be better than China.

But, final assembly and finishing is doing fine in the US.

A 2013 study by Booz Allen highlighted the way: Innovation.

I can personally vouch for this as a great way to run a manufacturing company, having done it some 20 years ago. Apparently, the old lessons are still out there.

So, where do you get innovation? Here are some ways:

1. Look at what your competitors aren’t doing, and do for your customers what they aren’t. This can cover a wide variety of things: coatings, products, upping your service game, better people/processes, etc.

2. People first. I heard an interview recently with the CEO of a recent startup and he was absolutely manic on the subject. They hire good people even before they can technically afford them.

3. Have your inside/outside sales people talk to customers and find out what they’d like you to do. I got 10 years of innovations out of this method, and some of the ideas were still in the pipeline when I sold the company.

4. Look at foreign markets, even with the dollar up. Europe, Mexico, South America and even China and India are possibilities. Partner with local firms, though, because culture differences can kill you. Back in the day, my company had 25% of its sales in foreign markets, again during high-dollar times.

5. It takes money, but money is out there for well considered plans. Forget borrowing from the banks though. All sorts of alternative lenders are out there.

So, don’t just sit there in your exec chair….innovate!

 

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Inside PayPal’s MicroLending Program

You can put this one down under ‘who knew?’

Entreprepeur ran the summary of the PayPal program in their March issue, and it’s a revelation.

Since launching the program, which is called Working Capital (we can’t even say how you access it on the PayPal website), they have granted some 35,000 loans and lent more than $200 million, so it’s not small potatoes.

There is a catch, however: you need to be using PayPal’s platform, presumably for your ecommerce. PP will lend you up to 8% of your total PayPal volume, and most of the borrowers have used the proceeds for working capital. You must also have at least $20.000 of sales with PayPal in the last 12 months, and the cap for the loan is $60,000.

APR rates are 2% to 11%, and the higher the percentage of your sales that goes towards repayment, the lower the rate. This is an interesting way to do repayment.

When you consider what the banks associated with the credit cards you use might do for you, or what alternative finance companies might do (maybe 25% of sales), it’s not such a big amount, but it’s out there. And, if you have seasonal imbalances in your cash flow, the PayPal program could be just the thing for you.

PayPal could do more to publicise their program too: we’d never heard of it until the Entrepreneur magazine ran the story. And we use PayPal for about 20% of our payments to various entities.

So, there you have it: useful program, if you can meet the qualifications.

 

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The High Cost of Saving a Failing Business?

Ya gotta love the Wall Stree Journal. They had a big article on March 26th on the high cost of saving a failing business, by putting it into Chapter 11, which might have amazed some, and scared some with the high costs.

I checked with one of my clients who went BK three years ago, and the initial journey cost him about $50k, but he continues to spend about $50 k a year on added record keeping and the added costs of high-rate loan that he took out to keep going (we’re trying to help him get in refi-d. But, he’s alive and prospering, which is the whole idea of Chapter 11 in the first place.

A couple of things jump out at me:

1. The major culprit in the WSJ’s article seems to be–you guessed it–the lawyers and outrageous fees, both up front and continueing. My client spent about $1500 as a retainer for his BK (we’re in AZ, things are cheap), and we strategize  on how to keep stuff out of a lawyer’s hands. He spends $500 a month, as opposed to several times that much with lawyers doing their thing.

2. Clearly, if BK is in the cards, get a mentor to work with you on the perils and pitfalls; we’re available on our 800 #, 716-9626, and via Skype, at johnheinrichtwo. We’ve been doing some telemarketing of our new service, CEO to Go, www. ceotogo.info, and one of the more bizzare things we’ve discovered is that 50% or so of the companies that could have used us have failed in the past 3 years.

3. Cities and counties charging property taxes on your property can be your friends, because their collection efforts are poor. and they seldom follow up.

4. Normally, your longtime suppliers will work with you if you confide in them that a BK is in the cards. This can free up working capital.

5. Really take a look at your sales effort….could it be better? Sure it could, and we can help.

These are just some of the ideas out there. The point is, don’t throw your hands up and quit on your business that you’ve lovingly built.

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Marketing That Pays Off

This was the topic of a recent article in the Wall Street Journal which probably embodies what many startups think.

We assume that you’ve got a product or service that is perceptually distinct from the competition as defined by your target market.

Even if you meet the big differentiation test, we, as is our custom, we have a few things to add:

1. Spend money on a classy web site. Don’t go for the bargain brands. Remember that the site is your window to the world. A blog is about the cheapest form of self promotion you can do (which is why we started this one), but have something to say in your industry and make it read and sound well.

2, We agree with not spending wasteful money on advertising. Really focus on what influences your target market the buy your product. Our blog is now second only to forbes.com as a source of business wisdom. in three years.

3. Even in view of number 2 above, remember that spending marketing dollars is an interative process, and you’ll waste some money.

4. Figure out the maximum you can spend on marketing, because, unless you’re spinning of from a previous employer in a field where you’re well known, not many will know your name.

5. Be patient: it takes the search engines as long as two months to get your search terms and your site indexed.

6, Free publicity, from media press releases, does have some benefits, but they’re becoming less and less, in our humble opinion. Print space is increasingly valuable, so expect that at least you’ll get an online mention.

8. Sprending money on marketing doesn’t make a lot of sense if you can’t close the prospects. Talk to my friend Mike DiCarlo about that.

7. And lastly, be prepared to spend your own time doing publicity. Perfect those elevator pitches. Don’t take more than five or ten minutes for your formal presentation. Focus on lines that make potential investor say ‘tell me more’.

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4 Keys to Finding Hidden Leaders in Your Organization

This article appeared in Leadership now about a month ago, and we used it in Solutions Foorum, but I think it deserves wider dissemination. Besides, one of my private clients just acted on it an promoted a female inside sales person who showed signs of leadership to his production manager. So far, a month in, she’s justifying his faith in her.

But, here are some more signposts (ranked in Leading Blog’s order):

1. Demonstrated integrity. Does he/she display a strong ethical code? This one surprises me, and doesn’t say much about the ethics of other workers.

2. Lead Through Relationships. No surprise here: does he/she form and lead teams, sort of naturally? Strong interactive skills.

3. Focus on Results. What does it take to get the job done? My client was impressed that his inside person followed orders that might be difficult through production and smoothed out potential problems.

4. Remains Customer Focused. Duh. I would think this should be number one, but we’ve done lots of blogs about it. It’s a big picture focus.

So, there you have them. Now go put them to work on Monday.

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If it’s not on the agenda, we don’t talk about it

This article appeared in Fast Company, and is in support of organized meetings, rather than disorganized blabfests.

Meetings are one of the unfortunate byproducts of corporate life, but we’ve normally gotta have ‘em. The trick is to keep them short as possible and to the point of the meeting.

It’s probably more appropriate for larger companies, but agendizing is a good idea. When we run Solutions Forum group meetings, we do it off of both an agenda and a time limit for each member, so that each one’s issues can get discussed.

Further, someone in the group should take notes and distribute them to all the other participants, so they have a record of what  was committed to.

This all sounds rather structured and stifling, but it’s not. The key is the person who called the meeting moving it along.

Feedback on this one would be appreciated: any other items that are used out there to make meetings better.

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Make Time For Yourself

There was an article in Fast Company recently that struck a nerve: Bobbi Brown, the founder of the cosmetics line of the same name, did an article on how she gets away from running her business: exercise, going to the grocery store. Even reading about non-business topics.

I like vacations, doing something that you don’t normally do. For example, every two years, I treat myself to a long weekend at Ford Racing Experience. I have a couple of clients who go hunting. Another goes to dog shows. When my kids were little, once a year, I would gather them up and we’d go to a bunch of theme parks in California. My wife actually relished the time away from the kids, and I relished the time alone with them.

The idea is to get away from your business: believe it or not, if you have good people, you CAN be gone for a week or so. You’re not indispensable.

So, all you loyal readers out there, what do you do to get away?

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Here’s a Market Researcher

One of the persistent themes of this blog has been the need to do market research before you launch a new product with your existing customers, or the new customers that you hope to have.

Well, a guy named Richard Decker called me last night, as he does about once a quarter to catch up, and I thought it would be a good idea to publicize his background in the blog, because it reaches a far wider audience than just our clients here in Arizona and elsewhere.

Richard is a quant jock as we used to call them, which means he’s data driven to his conclusions. He will design the questionnaires that will get objective answers (possibly not the answers you want to hear) and are essential to moving forward with product or service decisions. He has done both B2C and B2B research. They can also do international research. His background is on his website, www.globalfieldresearch.

Richard’s email is rdecker@globalfieldresearch, and his phone number is 801-224-3994.

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View From The Top

The Wall Street Journal recently devoted an entire section, called C-Suite Strategies, to what leaders of corporations were thinking.

Frankly, it was a little underwhelming.

I expected to see great thoughts on gaining market share, pricing philosophy or people strategy and other worthy topics that bedevil CEOs, but that wasn’t present.

Instead, we get Joe Ripp, CEO of Time Magazine saying that People magazine allowed competitors to get a digital foothold, meaning somebody screwed up. No mention of what he’s going to do to fix it.

Or we have Susan Cameron CEO of Reynolds American saying a decade from now, people could be ‘vaping’ or smoking e-cigarettes. News flash Susan: they already are. What’s your plan beyond ecigs?

One we have someone named Melissa Ben-Ishay talking about how she apparently turned down venture capital to keep her bakery ‘true to itself’. Maybe the wrong v.c.’s were talking to her, maybe she’s afraid of growth. Either way, it looks odd. Why not have a smaller part of something much larger.

So, at least WSJ is covering some business strategy; the bad news is that they’re not probing very deeply, and the CEOs come off as looking rather shallow.

And, they missed a few topics: customer service is a major omission. How are they using social media, if they are?

Time for a follow-on article, guys. Let’s get a more positive outlook on things, not just how we screwed up.

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4 Keys to Finding Hidden Leaders in Your Organization

This is an excellent article in the Leadership Blog that rather had the punch line of the title buried in the body of the article.

My experience has been that leaders will assert themselves in meetings or in how they manage their groups, but the article makes the case that there are hidden leaders in your organization that you might not be aware of.

The point of the article was that hidden leaders demonstrate leadership through four key attributes:

1. They lead through relationships. They get along with others and value others, interacting well with others.

2. Focus on results. The hidden leader maintains a wide perspective and acts with independent initiative. They use the end to define the means, which can mean working outside strict procedures and processes to get results. Unorthodox comes to mind.

3. Remains Customer Purposed. This is different than customer service; it is an awareness of how an action in a specific job affects the customer.

4. Demonstrate Integrity. This was actually the first one listed, but you can see from the others that hidden leaders would act with integrity. They will be focused on the welfare of everyone, not just themselves and/or their team.

The article goes on to say that flatter organizations are more likely to have hidden leaders, but I should think, based on my own experience and that of our larger clients, that larger organizations are more likely to have them, but recognition might be more problematic.

So, here’s a little thinking for you over the weekend or this afternoon: who in your organization fits these characteristics.

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