by Gerald Anderson, MBA
© 2023 It is impossible to go through life as an entrepreneur without occasionally needing business advice or assistance. The problem is that the wrong advice can easily take you, and your business, down the road better left un-traveled – costing you money and peace of mind every step of the way. Sustaining a successful business is a multi-faceted task, and no business owner/manager is an expert on everything. Business owner/managers often need help to simply be more profitable. And there is no shortage of sources willing to provide you with their opinions and recommendations on how to do so. Everybody’s got an idea. Friends, family members, fellow choir members, ‘consultants’. The list of potential sources is endless. However, not all advice is created equally. In business today, it is common for sales professionals to hold themselves out as ‘consultants’ of one sort or another. Ostensibly, this makes their intended prey feel as though they are there to help them. When, in fact, the ‘consultant’ may have something to sell them – the perfect pre-packaged solution that just happens to solve your problems. A software package. A photocopier. Advertising. A business opportunity. Something. Apparently, a lot of businesspeople have become familiar with this sales game. When I tell a business owner that I am a Management Consultant, I will inevitably have to tell them within the next 30 seconds that I am not a salesman in disguise with a product in tow. But, a businessperson that has never experienced that sales game may find out how it works the hard way. Every now and again I get reminded of how much potential damage can be done if a businessperson seeks the wrong advice from the wrong person. I was listening to a local radio show the other day and the topic was business development. One lucky entrepreneur got to bring their product (in this case smoothie drinks) into the radio studio and a panel of local ‘marketing consultants’ will give her some on-air advice to “do better”. They sampled the products; they hummed and smacked their lips for full effect. (For background purposes, the business was a smoothie and juice concessionaire located inside of a major grocery store in Inglewood). Of course, the business owner thought that increased sales was the answer to their problems. And, one by one, each one of the panelists gave their suggestions on how to improve. When each of them suggested that the business owner needed to do more advertising, I could not believe my ears. I could not believe my ears in terms of what they recommended, and what they did not. In the privacy of my own car, these panelists were the stupidest consultants in the city. But, after several minutes of listening to this gross misappropriation of trust, Jupiter realigned with Mars when the panelists revealed that they thought all the business owner needed was additional advertising, and that their own newspaper, or their magazine, or their event, was the perfect advertising or promotional vehicle for her to get back on track. Of course, they thought that. What else would they think? I was raised not to hate another person’s game, but I couldn’t help but to think of how much money this business owner stands to lose by choosing first to advertise, rather than some other less costly methods to increase profitability. After all, advertising can drive sales, but it’s also expensive and the effect in this case may be marginal, if measurable. A ‘real’ consultant – not a salesman in disguise – would have first helped the business owner/manager understand that smoothie consumers normally buy more on impulse than planning. I like a good smoothie, but I can’t remember the last time that I made a special trip just to get one. Most smoothie customers don’t go out for smoothies, but rather will pick a smoothie up if they see a business, or an ad, at the right time while they are out (unless they are “special” smoothies!). Additionally, a ‘real’ consultant would have recommended some other measures to the business owner that may very well increase profitability – first considering those measures that cost less yet yield the desired results. This is especially so where the business profit problem is due to a “leaky bucket” (consultant-ese for a business that has strong sales, but low profits), and everyone knows to plug the leaks in the bucket BEFORE putting more water into it. For instance, the business owner could have looked at her numbers to see where the sales dollars were going after they came into the company. Whether it be payroll, or product costs, or insurance, or some other line item on the P & L, there are always costs that can be cut without sacrificing quality of service. To improve profitability, business owners/managers always want to first look at cutting costs before generating additional sales. That’s because each dollar saved goes directly to the bottom line whereas only a percentage of sales dollars make it home. After costs are cut and bottom line profitability improves, then additional sales yield more profit than they would have before. Another method the business owner could try involves promoting her beverages to the customers of the grocery store. In-store promotion can be as simple as complimentary samples or discount coupons. Neither method costs much. These promotions may also drive the impulse that drives the sales. Before she spends one dime of her own money for advertising, she would first want to capitalize on the millions of dollars per month the grocery store spends on drawing customers into their stores. After all, I would imagine the grocery store charges a premium on her rent for this very reason. But I thought to myself that this business owner would probably go ahead and spend the money on advertising because the ‘experts’ said she should, and because it would probably not dawn on her that they were telling her to advertise for their own good, and not hers. And it would be another classic example of how conflicting interests and perspectives can cost business owners hard earned revenue. In business, as in life, all advice received has a perspective from which it is offered. That perspective depends on the knowledge, experience, and agenda of the ‘advisor’. That perspective may or may not be the perspective that you need for the problem that you have. Knowing why advice and recommendations are given is just as crucial as the advice itself. Simply ask the advisor why they are recommending a particular solution, and always ask for alternate recommendations. A salesman trying to shove their canned ham down your throat probably won’t have any. A true consultant will have several options. Learn the perspective of the advice you receive as if your bottom line depends on it. Gerald Anderson is currently Director of Consulting for CEO Services Group, a small business management consulting firm. Previously, Mr. Anderson served as a Sr. Business Consultant and as Project Manager for the largest small business consulting firm in North America, performing consultation in virtually all industries throughout the western U.S. For more information, visit www.CEOServicesGroup.com .
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By Bishop Vashti M. McKenzie, DMin.
excerpt from: Pastoral Leadership: Help Wanted, Leaders to Serve the Body of Christ, The Pastor's Manual: For The 21sy Century, Volume II: Toward the Orders of Elder, AME Sunday School Union (2002) |
AuthorGerald Anderson, Instructor, Entrepreneur Coach, Author ArchivesCategories |