Business Coaching

Industry Analysis: Threat Of New Entrants

Today we will look at how you could be affected by the threat of new entrants in your market. This is one of the forces in Michael Porter's Five Forces model of industry analysis.

This applies to any business of any size but can be particularly damaging if your market is a fixed size and suddenly you find that you have to share it with a competitor e.g. another shoe shop opens in a small town.

Why Should New Entrants Be Attracted To A Market?

Any indication that a market is growing, under-served or particularly profitable will trigger interest from an entrepreneur who believes that there is money to be made from your market.

Where the existing business is making good profits, an entrepreneur will see this as an opportunity too good to miss.

So before you order your Porsche and move house to a ten bedroom mansion, you need to think what these signs of success are saying to your competitors.

Barriers To Entry Make It More Difficult For New Entrants

To discourage new firms coming into your market and competing for your customers and profits, you need barriers to entry.

Common barriers include:

1. Entrants must make a big financial investment
    
2. Established firms have cost advantages unavailable to new entrants
    
3. There are supply restrictions, either from suppliers or to customers which make it more difficult for new entrants to become established
    
4. Customer loyalty makes it hard for new entrants to attract customers
    
5. Legal barriers and patents
    
6. Threat of retaliation from existing competitors

Financial Investment As A Barrier To Entry

Some industries require a large financial investment before a new business can start. This introduces doubt into the minds of the prospective entrepreneur and any financial backers.

Some potential competitors won't be able to raise the funds and others won't be prepared to risk so much on a new venture which may not succeed.

Other industries, for example my own business coaching and consultancy require virtually no financial investment (unless people choose to buy a franchise) so we have to rely on other barriers to entry.

Cost Advantages As A Barrier To Entry

Cost advantages can come from three main sources:

1. Economies of scale - the bigger the business, the lower the average unit costs. For more details see economies of scale.
    
2. The experience curve - the more you perform an activity, the more opportunity you have for finding the best ways to do it for the least cost.
    
3. Low cost input prices, either from a favourable location e.g. a lower wage economy or long term supply contracts at very good prices.

These factors naturally favour the existing companies in the market although increased globalisation is opening up many markets to competition from the lower wage economies for the first time. New technology can undermine the cost position of the existing competitors.

Where brand names are important, an new competitor has a major problem becoming known and accepted unless it is prepared to invest heavily in sustained advertising and/or buy market share at a low price.

Supply Restrictions As A Barrier To Entry

A new entrant in the market may find it difficult to buy the supplies necessary to compete (including skilled labour) or it may be that it finds that distribution channels to the customers/consumers are reluctant to add extra lines and won't drop existing proven products from their range.

Customer Loyalty As A Barrier To Entry

Happy customers who are delighted with the service and the products from the existing companies may be very reluctant to risk buying from a new competitor.

Depending on how important the product is, even a much lower price may not compensate for the uncertainty of dealing with a new company.

It may also be difficult for customers to suddenly switch from one supplier to another because of incompatibilities. For example it is a big decision to switch computer suppliers because of all the inconvenience and effort required.

Legal Barriers And Patents As A Barrier To Entry

New companies may have to deal with difficult legislation issues and even legislation that doesn't affect incumbents. When I worked for a company with an iron foundry back in the early nineties, we did not have to meet environmental legislation that a new competitors would have had to comply with.

The market may also be protected through effective patents which stop a competitor bringing out a product very similar to your own.

Threat Of Retaliation From Existing Competitors As A Barrier To Entry

Any new entrant is attracted by the prospects of high profit so if existing competitors can put together a convincing threat that they will stop this happening (by cutting prices or extensive advertising), the new company will see high profit will not materialise.

But it is difficult to pull off.

Threatening retaliation against a new entrant means sacrificing the short term profitability of existing businesses so the new competitor has to be seen as a major threat which justifies the costs.

Barriers To Entry - An Effective Deterrent?

High barriers to entry are good if you are already established in a market but bad if you are investigating a market as a possible route for expansion.

The factors can change which is why it is important to keep reviewing Michael Porter's Five Forces model and the danger is that once one entrant has succeeded, other copycats may see that entry barriers like the threat of retaliation were an illusion.

Barriers May Be Reduced From Closely Connected Industries

The other issue when assessing entry barriers is that your starting point matters.

If you already have relationships with the prospective customers, a well known brand which is portable to this new market or you have the supply capabilities, your ability to enter a new market successfully is very different from a totally new company.

Can You Increase The Barriers To Entry?

To make your industry analysis better and to protect your business from the threats of new entrants, can you find ways to move these factors in your favour?

Are you doing everything you could to capitalise on your cumulative experience so that you find better ways to provide your product or service?

Can you find ways to increase customer loyalty so that they are unlikely to be tempted away by new entrants or existing rivals?

Is your patent protection as strong as it could be?

Overcoming Barriers To Entry

The entire issue of the threat of new entrants and the issue of barriers to entry all depends on where you are coming from.

If you are already in the industry you want high barriers but if you are outside looking to get in, ideally you want low barriers for you but high barriers for every other possible entrant.

So after you have identified the potential barriers to entry for your industry, put yourself in the shoes of a new competitor eager to enter the market.

Ask yourself how you would get around the barriers.

Can you reconstruct the industry?

Traditional High Street operations like banks and insurance brokers have been disrupted by first telephone and then Internet technologies.

Amazon have done the same with books, CDs and DVDs replacing a bricks and mortar presence with a huge website with many more products and product reviews.

Can you separate out the constraining area and subcontract to tyake advantage of other companies economies of scale and learning?

Can you license trademarks, patents and products so that you colloborate with a key player and help them compete against the other competitors?

Your Thoughts On Barriers To Entry and the Threat of New Entrants

It will be great if you can share you thoughts about barriers to entry? When have they protected your business or a business you know?

How have you managed to work around traditional barriers to entry which looked formidable?

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Business Strategy

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Financial Training: The Importance Of Cash & Cash Flow Forecasts

There is an old banking mantra which sums up the very essence of financial control:

"Turnover is vanity, profit is sanity but cash is reality"

Business owners and managers often make the mistake of focusing on sales growth thinking that it will automatically lead to profit, only to discover at the end of the year that price reductions have caused the margins to collapse.

Even more serious is that as a business grows it often consumes rather than generates cash.

More stock is needed if goods are sold. Debtors/accounts receivable increase much faster than creditors/accounts payable. Extra capital expenditure may be needed to provide the extra infrastructure and equipment for the growth.

It works the other way around as well.

As a business contracts and sales get smaller, the business can incur losses but generate cash.

Financial Control - Turnover, Profit & Cash

You can't use your turnover as a reliable guide to your financial health and that's why the banking mantra tells you to look at profit and cash.

For information about profit, you look at the Profit & Loss Account. For more information, read Understanding Financial Statements although I will be looking at the Profit & Loss Account in more detail in future articles.

Today you will learn to understand, monitor and control the cash aspects of your business.

As with Profit, you should look at historical cash flows and also try to predict the future with a cash flow forecast.

There are two main formats:

1. Receipts & Payments
    
2. Reconciliation from the Profit (this will be covered in a separate article)

The receipts and payments format is the easiest to understand and the best for day to day control of cash although the other format explains the common question "We made a profit but where has all the cash gone?"

Receipts & Payments

The format is simple.

Receipts minus Payments equals Cash Flow.

Cash Flow plus the Bank Balance at the start of the period equals the Bank Balance at the end of the period.

Sources Of Receipts

1. Receipts from cash sales which may also include debit card and credit card sales
    
2. Receipts from credit sales which you will collect from your trade debtors/accounts receivable after a credit period
    
3. New bank loans
    
4. New cash introduced from the business owners, either as equity or loans
    
5. Sundry receipts

The credit sales are the items which cause the timing of cash flow to differ from sales by a period which is often between 30 and 90 days and sometimes even longer.

Credit control is a subject of a different article but the amount of credit you give to your customers is a critical factor and must be tightly managed. Sales people should not have the authority to agree delayed terms because they are not in a position to understand the consequences.

In general I have a dislike of bank loans since they can be used to cover up symptoms of poor profitability and bad cash management. Banks also expect security for their money and this puts the business owner's personal assets at risk. If you need a bank loan, I recommend an ebook "The Secrets of Getting Your Bank Manager To Say Yes"

Sources of Payments

In many ways payments are the opposite of receipts but payments are made to a wide variety of stakeholders like suppliers, employees and the government.

1. Cash payments including debit and credit card payments
    
2. Periodic payments, standing orders and direct debits
    
3. Payments to creditors/accounts payable which will reflect the credit you take from your suppliers/vendors
    
4. Net wages and salaries paid to employees
    
5. Payment of employee taxes, social security and benefits
    
6. Business tax payments on the profit of the business
    
7. Value added tax / sales tax
    
8. Capital expenditure
    
9. Interest payments on bank loans and overdrafts
    
10. Repayments of bank loans
     
11. Dividends payable to the business owners
     
12. Other payments

Credit will be available from suppliers but extended terms often require careful negotiation as it may be seen as a sign of financial weakness.

Payments for employees in the UK are split between the net payment made to employees in the month and the associated PAYE tax and national insurance/social security which is paid by the 19th of the following month.

Value added tax is an issue if your company is over the VAT limit and will have to be added to your sales but the VAT charged and paid on your purchases can be reclaimed.

Unless much of your sales are outside of the scope of VAT (eg insurance), zero rated (e.g. basic food) or you export, your VAT on sales (known as output VAT) will be more than your input VAT (on purchases) and this has to be paid to the taxman. There are a number of different schemes so you need to talk to your accountant or HM Customs & Excise to make sure that you use the scheme which best suits your business.

Corporation tax or business tax is easily forgotten about in the rush to make a profit. Again talk to your accountant about arranging your tax affairs in the most beneficial way whilst staying on the right side of the law.

Forecasting Cash Flows

Cash needs to be managed and it is best done by using a cash flow forecast to make sure that you have cash available throughout the year.

It is far better to talk to the bank about an increase in overdraft or an extra loan well in advance of the need for the money. Going to your bank manager at the last minute when you have found out you can't make the payroll payment this month sends out a clear message "You are not in control of your cash." This is not something you want to be telling your bank manager and you will have a very difficult meeting.

Long Term Cash Forecasting

I like a long term cash forecast which is linked to a forecast Profit & Loss Account for the next twelve months. It is also best to have a Forecast Balance Sheet to complete the picture and check for errors and inconsistencies.

The long term cash flow forecast will be for 12 months and you should prepare it before the year starts and then update it periodically if the underlying forecasts prove to be inaccurate.

The long term cash forecast is particularly important if you have a business where sales fluctuate sharply across the seasons or where you have very "lumpy" payments and/or receipts.

It is less important if your transactions are small and regular and one month is very much like another and if you have plenty of cash, you may be able to use simpler controls.

Short Term Cash Forecasting

I like the discipline of short term cash forecasting to cover the next one to three months where you can take the information from your sales ledger/accounts receivable and purchase ledger/accounts payable together with current payroll expectations and other known payments.

The level of detail required will depend on the level of cash crisis. I like to see a forecast by week but if your business is in a cash crunch, the forecast will have to be daily to make sure you don't commit yourself to non-priority payments on the assumption that receipts may come to allow you to meet the payroll.

The next step is to monitor how the actual receipts and payments compare with your forecasts for the month. Building up a monthly record of actual payments and receipts together with notes on unusual items, helps you to prpeare your long term forecast the following year.

The short term cash flow gives you the ability to manage your cash on a day to day basis and if customers are paying slower than expected, you can decide to hold back your payments to your suppliers.

Cash Is King

I am writing about business turnaround in other articles around this one so it is always important to remember that a business is bankrupt when it runs out of cash and can no longer make the payroll or pay suppliers.

Cash is also black and white and not the shades of grey which Profit can be.

Profit depends on estimates and the accounting policies which are used so talk to five accountants and they may give you five different profit numbers.

Cash is reality and you can see it in the receipts and payments.

To Your Success

Paul Simister

Your Profit Coach, business coaching for customer focused entrepreneurs

© Planning & Control Solutions Ltd 2008 All Rights Reserved

Related postings: Finance,

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Business Turnaround: To Thine Own Self Be True

This is my Day 1 review of the Mark Joyner & Simpleology 7 Day Business Turnaround Kit and the Shakespeare's quote seems particularly relevant.

If your business is going in trouble but you are want to turn it around, it all has to start by being brutally realistic.

Mark Joyner's title for Day 1 is:

Grab Your Gut, Stare Down Reality, Map the Road Ahead

In this first day we have an animated 6 minute video which overviews the entire program and motivates you to take action. This is then followed by a quiz to make sure that you have retained and understood the important points.

The course is structured around a course check list and workbook, backed up the the 7 Day Business Turnaround Kit Virtuosity Book (the theory) and the memory joggers to keep you focused on the essentials.

The workbook for Day 1 focuses on your motivations and emotions. What the survival of your business means to you and your family.

If you remember, the turnaround is separated into a four stage process:

1. Stop the bleeding - both time and money.
    
2. Stop the stress - move from uncertainty to clarity.
    
3. Inject the business with cash - Mark Joyner's tip is to aim for 2 months of operating expenses to give you time to breathe.
    
4. Refocus the business.

Day 1 is the time for reflection and you will complete analyses which look in detail at the time and money aspects of your business.

The first step is knowledge.

You cannot operate in a position of uncertainty when you don't know the facts about your business and to this extent the 7 Day Business Turnaround Kit follow my own Eight Pillars of Business Prosperity model where the first pillar is knowing your key numbers.

Some businesses I come into contact with have very poor book-keeping systems and getting the house in order can take months so:

a) Don't let yourself fall into that trap if you are just starting out

b) Start improving your record keeping if you are not in a crisis. Find an outsourced book-keeping service to help you.

c) If you are in crisis and you are not up-to-date, you don't have the time to put in the systems so you will have to make the best estimates you can. This is not a good position to be in because without proper records it is very difficult to see exactly what is going on in a business.

When you have your cost details, you will go through and identify which you will keep and which you will stop. The decisions are hard but you can sleep on it overnight. Brian Tracy uses a great technique called zero based thinking for making difficult decisions which I highly recommend.

Day 1 ends with three videos of very contrasting styles from three gurus -

• Larry Winget who tells you to accept that you are responsible for the problems but to get over it and move on,
   
• Joe Vitale who takes a much softer approach and calls on the Law of Attraction to focus on the positives
   
• Ted Nicholas who gives you practical advice to help you work with the right mentality, deal with creditors, cut costs and find a cash injection.

There are also a series of coaching calls which Mark Joyner did with a number of people trialing the system (he calls them Space Monkeys) which allow for questions to be raised and answered. As these are not on the official 7 Day Turnaround Program, my intention is to review these calls at the end but they are there to help.

Assessment of Day 1

By the end of the day, you will be clear on just how important it is to fight for the survival of your business and the bald facts about your current business.

It will take a few hours to get this done but nothing is more important than to clarify your position and face up to your situation.

7 Day Business Turnaround Kit sales letter

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Business turnaround, Mark Joyner & Simpleology

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Global Marketing: Geert Hofstede's Cultural Dimensions

I am delighted to have the second article from Global Guerrilla Marketing Coach, Alexa Ronngren and today she explains Geert Hofstede's techniques for analysing the cultural differences between countries.

I covered the Hostede theory in my MBA program and since then I have watched with interest as aspects of the cultural dimensions reveal themselves to me when I meet people from different backgrounds.

While I am filing this under Global Marketing, as each country becomes more multi-cultural, these factors will influence the success of your negotiations and relationships even if you never export.

Over to Alexa.

Who is Geert Hofstede?

Born 1928 in the Netherlands, Geert Hofstede started out his professional journey studying engineering.  Some time between 1945 and 1947, he went through a year-long internship that included a trip to Indonesia as an Assistant Ship Engineer.  World War II ended in 1945 and the world was full of change and possibilities.  We can only imagine how intriguing the dramatically different Indonesian culture must have been to this young Dutch student! 

Hofstede returned home and completed a Masters of Science in Mechanical Engineering and a tour of duty as a technical officer in the Dutch army.

After a few managerial jobs in industrial companies, he went back to school part-time to earn a Doctorate of Social Science.  This was when he got a job with IBM Europe to found and manage their Personnel Research Department. 

This position would lead him to become one of the world's utmost experts on culture and its influence on the workplace.

Since then, Hofstede has been dedicated to research and dissemination of his theories on culture.  He is a world renowned Professor Emeritus on the subject and has received countless honors within the intellectual community.  His books, which are often used as study material in international management classes, include:

• Culture's Consequences: Comparing Values, Behaviors, Institutions, and Organizations Across Nations (2001)
   
• Cultures and Organizations: Software of the Mind (2004), Exploring Culture. Exercises, Stories and Synthetic cultures (2002)
   
• Uncommon Sense About Organizations: Cases, Studies, and Field Observations (1994) 
   
• Masculinity and Femininity: The Taboo Dimension of National Cultures (Cross Cultural Psychology)  (1998)
   
• Culture's Consequences, International Differences in Work-Related Values (Cross Cultural Research and Methodology)  (1980)

What are the Geert Hofstede Cultural Dimensions?

At IBM, Hofstede's job involved research and analysis on how culture affects the work place.  He had access to a large database of employees from over 70 countries. 

He started off by examining the 40 largest countries and uncovered four dimensions that separate cultures.  Later, the scope expanded to 50 countries and three regions.  In 2001, he combined data from other researchers to expand the reach to a full 74 countries.

Initially, he uncovered four dimensions:

• Power Distance Index (PDI),
   
• Individualism (IDV),
   
• Masculinity (MAS), and
   
• Uncertainty Avoidance Index (UAI). 

Recently, he added a fifth dimension, Long-Term Orientation (LTO). 

Since the inception of Hofstede's Cultural Dimensions, other cross-cultural studies have verified his results.  These studies include a group of commercial airline pilots and students in 23 countries, a set of civil service managers in 14 countries, and two sets of premium consumer studies in 15 and 19 countries.

Let us take a look at each of these dimensions and how they hold up to scrutiny. 

In order to create a good reference point for readers, each explanation is followed by a chart created with raw data from Geert Hofstede's Cultural Dimensions.  I have chosen ten countries for our reference, including those where most of the visitors of this blog come from. [Thanks Alexa]

Power Distance Index (PDI)

Who decides who gets to be boss? 

Is it the authoritarian him or herself?  Or is it those who follow the ruler? 

According to Hofstede's research, the distance between the powerful and the less powerful is determined from the bottom up. 

So Power Distance (PDI) is a measure of how much "the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally."

Every society has some level of inequality, but that level varies greatly from one country to another.  The higher the value on this index, the more accepting the lower classes are of inequality in power.

 

My personal experience fits well with the results of this index.  Although inequality exists almost anywhere, the countries with a high PDI tend to have a more stringent hierarchy system.

Individualism (IDV)

Do people prefer to integrate in groups and organizations, or are they more prone to self-sufficiency?

The higher the score on Individualism (IDV), the looser the ties between people, and the more people in those cultures are expected to look after themselves. 

English speaking countries tend to rate very high on individualism.  In the US, for example, people are supposed to succeed based on their own personal efforts and merits. 

This stands in stark contrast to collectivist societies which have very low IDV scores.  In those societies, people are expected to help and protect each other and have strong group affiliations.  Often, these societies have a strong family bond that includes extended family, such as aunts, uncles, cousins, grandparents, in-laws, and so on.  Oriental societies generally score low on IDV.  This shows in the way business is often conducted as a family affair.

Masculinity (MAS)

In this dimension, qualities such as assertiveness and competitiveness are linked to masculinity, while modesty and caring is considered feminine qualities. 

According to Hofstede, "The IBM studies revealed that (a) women's values differ less among societies than men's values; (b) men's values from one country to another contain a dimension from very assertive and competitive and maximally different from women's values on the one side, to modest and caring and similar to women's values on the other." 

So Masculinity (MAS) is a measure of the distribution of roles between genders.  The higher the MAS score, the more competitive and assertive women are within that society.  Whereas in lower score countries, men tend to take on the more "feminine" qualities of caring and modesty.
 
 

The definition of the MAS dimension does fit with the results as I have experienced through my travels.  For example, in the US, "masculine" values such as competitiveness are instilled in children early on.  While in Sweden, a strong social system proves "feminine" values like caring.

Uncertainty Avoidance Index (UAI)

Uncertainty Avoidance (UAI) is a measure of how comfortable society is with uncertainty and ambiguity. 

Cultures with high UAI scores socialize their members to feel uncomfortable with unstructured situations. 

Hofstede explains that these cultures "try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; 'there can only be one Truth and we have it'."  People in these countries tend to be more emotional. 

On the other side of the spectrum are cultures that have a higher tolerance for change and provide less structure within society.  Low UAI societies lean toward relativism in religion and are more contemplative and less emotional.

There is some controversy with this index. 

Geert Hofstede's son, Gert Jan Hofstede, has continued and expanded upon his father's work.  He co-authored Culture and Organizations with Hofstede and is an Associate Professor at Universitair Hoofddocent in the Netherlands.  On his website, the younger Hofstede addresses an email he received stating that the UAI scores must be reversed.  He argues against this being the case, and tries to explain the scores as society's search for truth.  You can read it here:  http://www.info.wau.nl/people/Gertjan/understanding_dimensions.htm 

After living in over a dozen countries and visiting a few others, I think the situation is more complicated than that. 

I believe that Hofstede tried to correlate too many values into this index.  The countries scoring high UAI numbers tend to be more religious and emotional than low scores on this index.  However, my experience shows that some of the lower scoring countries are actually the ones with more rules and regulations.  Therefore, those societies are less tolerant of uncertainty and expect more structure.

Look at, for example, my two native countries of Brazil and the US. 

Brazilians are indeed more emotional than Americans.  Decisions are more often based on gut instinct and relationships rather than calculations and research.  However, Brazilian society has many less rules than Americans.  Also, rules within that society are looser and more prone to interpretation. 

In contrast, Americans tend to be more pragmatic.  However, US society is regulated in many ways.  Beginning at the neighborhood level there are rules and regulations governing what a person can and can not do on their own property.  Americans operate on a strict time frame.  In the US, rules are often fixed and exceptions are clearly forecasted and built into the regulations.  So, if a new condition arises, Americans are less likely to bend or break the rules. 

Brazilians look at things on a more emotional level.  If a new situation arises that has an emotional appeal against the rules, they will be bent or broken.

Long-Term Orientation (LTO)

This dimension was added based on results from a Chinese study of students in 23 countries.  This study was based on the teachings of Confucius, a Chinese philosopher from around 500 B.C.  However, the dimension is also relevant to countries which were not heavily influenced by the teachings of Confucius. 

Long Term Orientation (LTO) refers to the level of thriftiness and perseverance within a society.

Hofstede explains that a low LTO score, meaning the society has a Short-Term Orientation, represents "respect for tradition, fulfilling social obligations, and protecting one's 'face'."  The higher the score, the more a society is prone to saving and planning for the future.  In the chart below, scores were not available for Spain or the Arab World.

 

Here also, I think Hofstede used too many values in one dimension.  From my experience, the chart looks backwards, as the Chinese are very concerned with 'saving face' and have a deep respect for tradition.  Meanwhile, countries that are ranked low in this dimension are societies where planning and perseverance are common. 

You can read about the index and find the raw data at ITIM International's website.  It is a consulting company who has received permission from Dr. Hofstede to use his name and brand.   http://www.geert-hofstede.com/   

So far, I have covered the aspects that make up culture and the Geert Hofstede Cultural Dimensions in my first two posts as a guest blogger.  The final article of this triage will give advice on how to deal with and overcome cultural challenges.  You can find them all here on The Business Coach Blog.

Alexa Ronngren is the Global Guerrilla Marketing Coach.  She has almost two decades of experience, a BS in Business Marketing, a certification in Pricing, and is a certified Guerrilla Marketing Coach.  She is currently writing Global Guerrilla Marketing: Crossing borders & leaping over the cultural divide.  In addition, she is a big fan of the Business Coaching Blog!  Check out her website: www.aldeia-marketing.com

Thanks Alexa.

A very interesting article and I see that you are being controversial and challenging Geert Hofstede's ideas.

If Alexa hasn't featured your country in the graphs, I can recommend the http://www.geert-hofstede.com/ website as the major countries are listed down the left hand side and you can just click and see how your country rates.

When I was first introduced to these ideas, I found it difficult to imagine how countries could be so different but as you become more familiar with the concepts, you will start seeing these factors come through in your dealings with the different nationalities.

Both Alexa and I would love to read your comments but watch out for the confirmation box. It is a bit sneaky in Typepad blogs but you do have to prove that you are human and not a computer spam generator.

Do you have stories to share about how you have experienced these cultural dimensions?

Follow this link if you missed Alexa's first article Global Marketing Understanding Culture & Customs

To Your Success

Your Profit Coach

Paul Simister

Related postings: Global Marketing, Guerrilla Marketing Coach

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Online Business Success 8

Here are the recent updates from my Online Profits blog to help you to achieve online business success.

StomperNet & Stomper SiteSeer

StomperNet are releasing another Going Natural 3 video today and if you have seen the earlier Going Natural videos you will know that quality of video and information is always high.

Today they are promoting some new software they have developed which is supposed to give you the lowdown on your website and find the gaps where potential visitors are crawling through your web and landing on competitors sites.

I have a lot of confidence in StomperNet so I do recommend that you catch the video. I have been told that Stomper SiteSeer will be "Indispensable - something *your* business can't be without."  So StomperNet says they are going to make it so NO business has to be without.

If you haven't seen the Ad words triangulation video, I recommend that you opt in because that will allow you to download it together with highlights from previous Going Natural videos.

Stomper SiteSeer (on the Online Profits blog)

To Your Success

Paul Simister

Your Profit Coach, business coaching for customer focused entrepreneurs

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Online Business Success,

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Business Turnaround: Seven Day Business Turnaround Kit - Simpleology

Over the next two weeks or so I will be testing and reviewing the Seven Day Business Turnaround Kit from Mark Joyner and Simpleology.

I am taking longer to go through this course than the seven days because;

a) my business is not in a crisis so the program is not my highest priority

b) I am having to write the reviews as well as work my way through the materials and

c) I don't want my blog to be taken over completely by the Seven Day Business Turnaround Kit in particular or business turnaround in general.

Scary Times Could Be Ahead

Each year tens of thousands of small businesses in the UK fail and many more struggle to survive while operating at little more than a subsistence level.

Working harder, longer hours for less money seems to be the curse of many entrepreneurs and owners of small businesses.

But I am gloomy about the UK and Western world economies for the next eighteen months. With disposable incomes down and credit more difficult to find, consumer spending has to reduce.

If it is tough to build a sustainable business in the good years, just imagine the problems there will be in a recession.

This will be my first recession with my own business, even though I have been trading for thirteen years but I remember the 1990-92 recession when I was a senior manager of a much bigger business. I told the story in Business coaching in a recession.

I had never seen profit fall out of a business so quickly. We had a six month swing from making £100k profit per month to at the worst stage losing £90k in on month before employee termination costs and other restructuring.

A Time Of Unbelievable Pressure & Strain

If you find yourself in the situation where your business is failing and it may only have weeks to survive and recover, you will know just how much pressure and stress you can face.

Often it is not just the business at stake.

Business loans are secured on personal assets like your house.

Business worries become personal worries about how you can provide the basics for your family.

You are scared and confused.

You may have times when you rush around like a headless chicken, starting one task and then another but never finishing any.

But at other times you may be paralysed by fear. Your mind freezes and you can't think straight.

You are overwhelmed by what has to be done but you don't know what has to be done first.

You need help!

You Are One Of Many

It's easy to see your business problems as all your fault and that you are alone.

But many other people are going through exactly the same problems and emotions at the moment.

Some will take action and turnaround their business but many won't. The fact that you are reading this says that you are an action taker who is looking for guidance.

That's a great start to rescuing your business.

The Seven Day Business Turnaround Kit

I want to introduce you to the 7 Day Business Turnaround Kit from Mark Joyner and Simpleology.

It could be just what you are looking for to provide focus and clarity to your actions so that you do what is necessary while you still have a chance to save your business.

You could pop straight over to the 7 Day Business Turnaround Kit sales letter and read it for yourself or you could carry on reading as I try to highlight some of the important points from the letter.

Mark Joyner Is A Great Copywriter

Mark Joyner is the author of Mind Control Marketing, The Irresistible Offer and The Great Formula and has probably forgotten more about marketing than I'll ever know

but

I think he has slipped up with his headline (although Mark may still be testing and you may see a different headline) so please don't be put off if you read:

"How Does A Full Time 2nd Grade Teacher Struggling To Make $417 A Month Online. Triple It in 4 Days... And Eliminate Worry About Having A Cash Crunch Again?"

My problem is that the headline may not pass the relevancy test for you and you may dismiss the 7 Day Business Turnaround Kit without properly reading the copy because you're not a teacher, your problems are much bigger than $417 per month and because you don't market on the Internet.

I believe that would be a big mistake.

Later on in the letter it says about the program:

"It's the same thing a Fortune 500 would do, just made so bloody simple a 2nd grade teacher could do it" and yes, there is a testimonial from the teacher.

I bet your business is somewhere in between the teacher and the Fortune 500 (the largest companies on the US stock market).

The Generic Business Turnaround Process

Whatever the size of your business, there are four things that you have to do:

1. Stop the bleeding - both time and money.
    
2. Stop the stress - move from uncertainty to clarity.
    
3. Inject the business with cash - Mark Joyner's tip is to aim for 2 months of operating expenses to give you time to breathe.
    
4. Refocus the business.

Read the list again.

Doesn't that make sense to you even though you don't know how to do each stage?

That's what a turnaround is and the 7 Day Business Turnaround Kit has been developed to help you do it.

Look Who Has The Risk

When your business is in trouble, we both know that you can't afford to take any risks and at the moment you have two major risks:

1. Wasting time when you should be taking purposeful action.
   
   I like the idea that the 7 Day Business Turnaround Lot is intensive but it is designed to be completed in a very short time period. It creates a momentum of its own but it's a manageable amount of time.
    
2. Wasting money you can't afford.
   
   It's one thing buying something as a gamble when you have a stash of cash but I admire Mark Joyner's approach to his marketing of the 7 Day Business Turnaround Kit.
   
   Yes you have to surrender your payments details but you get to experience the 7 day program before the money is paid AND you have a 90 day money back guarantee (please check the sales letter - it is correct at the time of writing but these things can change as Simpleology test the offer).
   
   It's also a terrific price if it does succeed.
   
   No downside and virtually unlimited upside.
   
   This is a deal that is only possible because the program is systematised and man-hours have been designed out of it.

The Next Review

If you can wait because your business isn't in crisis, then my next review will appear in a few days time.

If you are already in a crisis but you're not ready to give up the fight until you've had one final throw of the dice, the 7 Day Business Turnaround Kit could be exactly what you are looking for.

It's an interesting idea isn't it? Try it, then buy it.

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Business turnaround, Mark Joyner & Simpleology

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Michael Porter Five Forces Model of Industry Analysis

I previously looked at What Is Industry Analysis and promised that I would tell you more about Michael Porter's famous Five Forces Model which is a centre point of his classic "Competitive Strategy" book.

The principle behind Michael Porter's ideas is that profit only comes from two sources:

1. Operating in an industry with an attractive structure as defined by the five forces model
    
2. Having a sustainable competitive advantage

Michael Porter argues that the Five Forces model identifies the key factors which determine the average profitability of an industry.

The five forces are:

1. The threat of new entrants
    
2. The bargaining power of customers
    
3. The bargaining power of suppliers
    
4. The threat of substitutes
    
5. The rivalry among existing firms.

Customers, suppliers and competitors compete for value created by the industry which is limited by substitutes or alternative solutions to the underlying customer need.

The ideal industry is one where both suppliers and customers are weak, any new companies would find it very difficult to enter the market effectively and competitors focus on enlarging the total industry profits rather than competing away profits unnecessarily through crazy pricing because there are no viable substitutes.

I believe that the Five Forces model often gives more insight when you are considering entering a new market than for small businesses already firmly entrenched in existing markets. This is because it helps to identify the threats to making superior profits.

This problem of putting the Five Forces model to work has led to people struggling to gain much insight about what to do next in their current markets.

The options are limited:

1. Can the business influence the five forces? Most small businesses can't.
    
2. Can the business protect itself from any damaging forces or take advantage of opportunities that come from favourable changes?
    
3. Can the business move to into an area of the market where the forces are less of an issue?
    
4. Should the business exit this market and move its attention and resources elsewhere?

However I do believe that any business that occupies a strategic position in its market should periodically work through the five forces model and see what new insights it brings.

All industries and local economies are constantly evolving and Michael Porter's Five Forces model is a proven technique for analysing industries and markets so that you identify threats and opportunities early.

Without a framework like the Five Forces Model, it is very difficult to identify all the issues that are changing and I will be looking at the threat of new entrants, buyer and supplier power, substitutes and competitive rivalry in more detail. 

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Business Strategy

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The Irresistible Offer From Mark Joyner

Several years ago top author and marketer Mark Joyner wrote a book called "The Irresistible Offer: How To Sell Your Product Or Service In Three Seconds Or Less".

In a surprising move, Mark Joyner is now making an irresistible offer - he is giving away free copies of the Irresitible Offer ebook.

Just click on this link below and sign up:

The Irresistible Offer

"The Irresitible Offer" has been one of the top selling marketing books since it was published.

The premise is simple.

Your customers are going to give you three seconds to make the sale.

So do you know what to say in those three seconds?

The marketing methods of the past are losing effectiveness as consumers are getting smarter and smarter and have less and less time. What is needed is a new way of doing business-a method that is simultaneously socially responsible and far more effective than ""old"" marketing.

What Is The Irrestible Offer?

An “irresistible offer” has three elements:

• High ROI offer - a customer will get more value from owning your product than they would keeping their money in their pocket or buying someone else’s product
   
• A touchstone - something that quickly explains what you’re selling, how much it costs and why the customer should buy
   
• Believability - if the offer looks too good to be true, it probably is

What Do Other People Think?

I own "The Irresistible Offer" but I have not read it yet. I have read Mark Joyner's follow up book, "The Great Formula" which reprised the basics of the irresistible offer.

Over at Amazon.com we have 77 reviews so far which break down into:

5 Stars 57

4 Stars 14

3 Stars 5

2 Stars 0

1 Star 1

Why not check for yourself and you will see that The Irresitible Offer is worth your time registering, downloading and reading. With so much evidence, it would be crazy to pass this opportunity up, wouldn't it?

The overwhelming opinion is that you have to read "The Irresistible Offer" and now you can, for free thanks to Mark Joyner's generosity and his ability to persuade his publishers that he isn't crazy.

Download The Irresistible Offer

I said the other day in How To Become A Successful Author that I have become quite a fan of Mark Joyner and I will be reviewing his 7 Day Business Turnaround Kit very soon.

So Why Is Mark Joyner Making The Irresistible Offer?

It's simple really.

He knows that you will be impressed with "The Irresistible Offer" and you will want to know more about his ideas for marketing and personal development. You may buy one or more of his other Simpleology courses.

This is the nice thing about ebooks. They can be easily given away as a lead generation tool because there is no cost.

In fact Mark Joyner has a history of doing the unpredictable and he is still giving away free copies of his multi-media blogging course as well. You have to do a little bit of work to get it by making a post on a blog but that is no hardship.

So has Mark Joyner made you an Irresistible Offer? Are you going to sign up and download the book?

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Marketing, Mark Joyner & Simpleology

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Peter Thomson Achievers Edge - Cargo Or Crew

I have told you before how highly I regard the Achievers Edge monthly audio newsletter by Peter Thomson so let us take a look at the latest issue I have received.

Are You Part Of The Cargo Or Crew?

This is a pretty blunt question to ask but it does make you think.

Have you noticed how some people have a history of being made redundant. Every time it is necessary to make cutbacks, they are picked.

It's because they are seen as part of the cargo which has to be carried by the business.

There are two types of people:

• Those who earn more than they cost. These people add value to the business which will fight to keep them.
   
• Those who cost more than they earn. These people may survive out of convenience and management's desire for an easy life but as soon as the going gets tough, the business can no longer afford to carry them like cargo.

It's easiest to see an example and one of the most results oriented areas is sales.

Many years ago I was involved in as a young accountant in a large business start up. As well as the two directors, from day 1 we recruited a sales manager and four salesmen. There was no luxury of an established customer base and an order book. Everyone was starting from the same place - zero.

Obviously it would take some time but two of the salespeople quickly picked up orders and were covering their costs after a couple of months and moved into clear profit and helped to pay the business overhead. These two salesmen were part of the crew.

The other two sales people struggled. They found it difficult to open accounts and when they did, the orders were small and we found it difficult to get payback. Even after six months, the margin on their sales didn't even cover the costs of their salary, car and travelling. They had to go because they were part of the cargo and expected to business to keep carrying them.

It is easier to see how the cargo or crew analogy works for sales people but what about:

A secretary who doesn't save her boss time because of all the errors in her shorthand typing?

Or a credit controller who fails to follow the approved procedure and allows overdue accounts receivable/debtors to increase?

Or a customer service representative who upsets customers by his attitude and rudeness?

So Peter Thomson in this Achievers Edge encourages us to take a self employed attitude - we should only expect to work if we can demonstrate that we are effective, we add value and do more good than we cost.

So how can you take this idea and decide whether you are part of the crew?

How can you add more value to the company? Where can you show initiative and find improvements?

Thoughtprovoking isn't it as much of the Achievers Edge is.

Contents of the Achievers Edge

This will let you see how wide and varied the Achievers Edge is because I believe many people are nervous about buying into a monthly purchase program.

If you are like me you have probably been tempted into a music club, a book club or a wine club in the past by a great opening offer only to find that the best came first but you would never have bought the later products which automatocally appear.

So my intention is to show you the contents of the Achievers Edge each month so that you can see for yourself just what you are missing.

So in volume 1 issue 12 we have:

1. Personal Development - Peter Thomson gives us a few tips on how to start a conversation with a stranger using one of his proven communication techniques.
    
2. In Control Your Life, Peter asks are you cargo or crew and then offers tips on how you can be part of the crew, add value and help to carry the cargo.
    
3. In the Edge of the Month, Peter uses two problems or conundrums to help show you how to be more creative in your problem solving.
    
4. In Customer Service, Peter asks "how was your steak" and then questions whether we really listen to the feedback our customers give us.
    
5. The Guest Interview of the month is Barry Hearn, sports agent and promoter, probably most famous for his work with world snooker champion Steve Davis, boxer Chris Eubank and we learn tips on management and communication.
    
6. The Guest Presenter is Nancy Slessenger and I blogged about her thoughts about dealing with difficult people last month. This time Nancy gives us tips on how to manage the rhinos, the thick skinned people who are brunt, rude, loud and don't seem to take any subtle hints to change.
    
7. Finally the Audio Excerpt of the month is by Steven K. Scott and taken from his "Mentored by a Millionaire" program. In this excerpt we learn how important the skills of persuasion have been in creating millions of dollars of revenue for Steven K. Scott and the important difference between persuasion and manipulation.

As you can see, The Achievers Edge is a varied program which brings tips for our business and personal lives.

It's good that the Nancy Slessenger presentation is the first of six so I can learn more about the different types of difficult people.

Click on the link to learn more about the Achievers Edge and you will see that Peter makes a great offer to sign up.

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Peter Thomson

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Michael Gerber Awakening The Entrepreneur Within 2 Stars

I am a big fan of Michael Gerber and the ideas that have built E Myth Worldwide into one of the largest and most respecting business coaching firms in the world.

In March 2008 Michael Gerber released his new book, "Awakening The Entrepreneur Within: How Ordinary People Can Create Extraordinary Companies" and it is released in the UK in June.

I am very disappointed in "Awakening The Entrepreneur Within".

I expected a great book. I had attended a Dreaming Room back in October 2006 and expected the book to have a clear process for helping entrepreneurs to find and develop their dream. I also expected stories of success from the Dreaming Rooms.

Instead we had a few ideas that have been applied to the creation of E Myth Worldwide and a made up story of "Who Is Manny Espanosa?"

Find out why the book made me angry but I still think that you have to read it.

See my Awakening The Entrepreneur Within review

To Your Success

Paul Simister

Your Profit Coach, business coaching for the customer focused entrepreneur

© Planning & Control Solutions Ltd 2007-2008 All Rights Reserved

Related postings: Michael Gerber E Myth, Entrepreneurs

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