Deal Business Consulting and JD Deal Online Marketing, Santa Cruz and Scotts Valley, CA

Business Plan and Business Plan Development

• Location: Santa Cruz
• it's NOT ok to contact this poster with services or other commercial interests

Posted by Jack D. Deal at 08:23 AM | Permalink | Comments (0)

Drywall: Small Jobs, Side Jobs, Patch Jobs, Cracks (Santa Cruz)

• Location: Santa Cruz
• it's NOT ok to contact this poster with services or other commercial interests

Posted by Jack D. Deal at 12:22 PM | Permalink | Comments (0)

• Location: Santa Cruz
• it's NOT ok to contact this poster with services or other commercial interests

Posted by Jack D. Deal at 09:27 AM | Permalink | Comments (0)

• Location: Santa Cruz
• it's NOT ok to contact this poster with services or other commercial interests

Posted by Jack D. Deal at 09:12 AM | Permalink | Comments (0)

The nasty word 'spying' conjures up images of hidden cameras, microphones and James Bond.  "Hey, watcha doin', spying on me"?  For some reason one is supposed to feel very much intimidated by being spied upon.  A big social issue in the United States is how much surveillance should be "allowed" by government and business?
 
Certainly in business big thefts do occur.  Employees sell trade secrets, foreign spies dig through dumpsters and hackers break into computer networks.  But for most businesses, all that is Hollywood, James Bond and Technobabble.
   
What isn't Hollywood is that all businesses need to know certain information and data such as their current market position.  To obtain this information one has to have data about the competition, something many competitors will not give out freely or willingly.
 
But no need to bother Mr. Bond at the roulette table as most of the information you need can be had by simply looking. 

Seek and ye shall find or, if it sounds more intriguing, you can call it spying. Most of the information you need is available but you just need a way to access it.
 
First you have to know clearly what information you need.  If the information is not relevant, it isn't of value.  Once you know what is needed you can develop a plan.
 
Go first for the easiest and quickest which is the Internet.  What you need to know may be posted on a website or blog.   Easy, fast and efficient.  Google and Yahoo the business and personal names of your competitors.   Try some other search engines or meta search sites but start with the big two.
 
Make a digital file folder where you can put the information and keep it handy and available.   A spy's worst nightmare is to have important information but not know where it came from.
 
After going online, pick up your phone.  The phone is a great way to find specific information quickly.  When you need a specific bit of information, try phoning. 

It's also a good way to help you 'fill in the dots' when trying to determine a competitor's strategy.  Always make sure you look at pricing and staffing; simply looking at pricing and strategy often reveals strategy.
   
Surprisingly, many employees will freely tell you whatever you want to know.   Learn from this and make sure your people don't dish out confidential information.   Make sure you know what your people are saying and they know what not to say.
 
If you are looking at a competitor's strategy, put the pieces you can get and see if you can fill in the blanks and connect the dots to form the strategic plan.   Look at each competitor as a project and build your intelligence over time.   You will be amazed at what you can learn in several months.
  
You will also be amazed at how quickly information can become obsolete.  The rule is everything changes and the relevancy of your information dates from your last update so keep working on it whenever you can.  Online it is called a 'refresh'.
 
Oh, and by the way, while you just happen to have your five senses directly focused why not see if you can learn something too.  Maybe it's a marketing trick or sales approach or different way of packaging your product and service. 

If you find a better way of doing things, do it.  He who hesitates here is lost in mediocrity...or someplace like that.
 
Now that we have opened up Pandora's Box you might as well jump in.  Jumping is the key to successful entrepreneurship.  Call it curiosity or call it spying or call it whatever you like but knowledge is power and knowledge can give you an edge.
 
And if you really think about it, what's not to like about having an edge?

Posted by Jack D. Deal at 05:05 PM | Permalink | Comments (0)

If you sell a product or service you will get complaints.  

Resolution is the word used when we describe the process of successfully handling those complaints.  The complaint process you set up determines how successfully your company resolves complaints.
   
The first step is to develop an attitude that complaints are problems that often are a symptom of some type of flaw or defect.  Because it can be very subjective, complaint resolution is not always a matter of right or wrong. 

Some complaints are groundless but others can reveal internal problems that may be costing your company.
 
Time is a key in dealing with any complaint.   In general, complaints that are dealt with rapidly tend to get resolved rapidly.   A rapidly resolved complaint is a cheaper complaint.  

Quick responses can often avoid confrontation and confrontations are seldom good for business.
 
First, listen to the complainer's side of the story.   Put special emphasis on how they feel.  This can provide another perspective on your business.   Even though it may be difficult, try to show empathy even if you do not admit guilt.
 
Ask them what you can do to make them happy.   Often their solution is the cheapest and it might give you insight on how to fix a business defect.  Also they really can't complain if you follow their suggestion.  

Who can complain when you give them what they want?
 
Determine how the problem happened and how it can be prevented.  Don't jump to conclusions before you have all the facts.  

Don't assume the customer is crazy or wrong just because they complain; keep an open mind to the remote possibility that by golly it just might be your fault.
 
Don't take it personally...look at the issues objectively and control your emotions.   This can be difficult if someone is questioning your integrity and calling your mother nasty names.
 
The fact is customers can be jerks.   Some appear to get their jollies by complaining and giving you a hard time.  Whatever you do or say is not enough.  They hold their noses as if they can't stand the smell, even though they are smelling their own feet.
 
You know the kind; they want to get into an argument with you about why the manufacturer doesn't make just what they want.
 
It's not as if these jerks have anything else in their depraved, petty lives they could be doing other than pestering you. 

Why in the world is this nitwit arguing with you about the engineering of a product and all you do is carry it?  Get a life, pea brain.

You can't control the fact that some people are jerks.  All you can do is control how you react to jerks.  If you get upset and angry then you lose.  The jerk has won.
 
Words might also be hurtful but the reaction to them can be controlled. Take it with a grain of salt and for your sanity maybe deflect it with some humor.
 
"Why sir, let me see if I can get their engineering department on the phone right now to address your concerns though I think they are all asleep in China right now."  Nitwits.
 
Laugh it off and don't get jaded.  Don't let the jerk determine how you will react to the next customer.   That is what we see in today's marketplace; too many distressed and depressed employees.
  
But most people are OK; they just want to be treated fairly whereas the jerk wants to be treated special.   How about a 75% surcharge on all parts and labor for the 'jerk factor.'
 
We all get behind these jerks in the check out line.   They want to argue with the poor clerk over something the clerk has no control.  But fortunately most of us aren't that way because if we were no one would ever make it out of the store.
 
There also comes a point in every business' development when they have to simply say "we chose to not do business with you because we always lose money whenever we deal with you.  Besides, you are a big jerk and a pain in the posterior.  Have a nice day."

Is there a law against it?

This one simple tactic can do more to reduce headaches and improve the bottom line than any complaint resolution process.  Maybe it's time you just stood up and fired all jerk customers.
    
Handling that complaint professionally can make your business run more smoothly and keep your hard earned customers...if you get really skilled at dealing with complaints you might even bring in some new business.
 
Just make sure to stay close to the chase and take the pulse of your customers regularly.   After all, most customers don't complain, they just go somewhere else.

Posted by Jack D. Deal at 11:27 AM | Permalink | Comments (0)

The new entrepreneur is not content with just buying a job; her business and personal goal is not to work hard and make a living in the 'traditional' sense.  She understand that it's better to become an employee of someone else than to run a mediocre, stressful and problematic business.   Besides, mediocre business is no fun. 

Mediocre is just not interesting and not acceptable; much pain, little gain.  With little or no potential, why even bother?  Thus the appeal and potential of the new hybrid business models which are based on results and not just working harder. 

These new business models can be called hybrids because they evolve and combine more than just one business idea or concept. The success of companies in the future will depend on their ability to utilize and adapt multiple ideas and concepts at once to create value. 

The bad news is the hybrids are more complex and the strategies more tedious to implement; the good news is a world of new marketing opportunities opens up.      

In terms of the model infrastructure, technology is the key driver.   The capability to creatively combine technologies for new applications in the marketplace is creating a new series of 'hybrid' business tools for the entrepreneur.  This open way of thinking helps owners and managers apply new methods to old processes and gain competitive advantage, even on a local level.   Public Relations is being replaced by internal marketing. 

The clearest advantage of a hybrid model is low cost expansion of the targeted market.   No longer relegated to just local sales and marketing, the new hybrid models look to a mix of local, regional and world markets.   Success is now defined as the matrix of the right mix and match across markets for profitability and growth.  The new hybrid models all look to new and expanding revenue streams; it's all about strategy and process. 

These hybrid models are not only proactive but also results driven.   If a marketing campaign is not working, the new model says either fix or replace it.   

Since traditional media are bringing in a reduced return on investment (ROI), more internal, guerrilla and Internet based marketing is used.   The new entrepreneurs do not contract out all marketing because they create most of the marketing themselves.   

These hybrid business models are designed to grow and expand.  By leveraging technology the new entrepreneurs make sure they get the data and information they need when they need it. 

And since they just are not content with 10% gross margins, these hybrid models have built in feedback and ongoing research looking for ways to expand and grow with minimal capital and debt.  Many of these companies can plan expansion with little capital outlay.   The quest is constantly one of tapping into opportunities and for new and expanding revenue streams.   

This growth may also require diversifying into new products/services or expanding into new locations but not necessarily major franchising, maybe three or four locations.   Slow and steady is the course and these new models are a bit averse to rapid and unwarranted risk. 

Since working capital is often used, expansion is OK if it is a sure thing or as sure a thing as one can anticipate in business.   Each small expansion is a calculated winner. 

Almost all these of these new models have mix and match products and services to fit specific customer/client's needs, a customization the customer cannot get elsewhere.   As this creativity drives customer value an increasingly clear distinction is made from the competition.   

If the perception is relayed successfully to the target market and the price versus cost analysis is positive, then the conditions are conducive for a successful sale and transaction.   

But the new hybrids also bring new challenges. 

Not all employees are appropriate for these new models so the new entrepreneurs look for employees that 'fit'; they understand a good employee is a productive employee and not just a time and space physical presence.   

The key is to provide opportunity and the chance to learn and develop especially by developing those skills needed in the new hybrid business models; for example, working with computers and dealing professionally with prospects and customers at the same time.   

The bad news is the new hybrid models are multidimensional and are also driven by a time factor meaning they can be unwieldy and at times very frustrating.   The good news is a good hybrid business model can offer a powerful series of strategic advantages enabling today's entrepreneur to develop new products, services and combinations to deliver increasing value across an expanding marketplace. 

What's not to like about that?

Posted by Jack D. Deal at 05:17 AM | Permalink | Comments (0)

Like many Silicon Valley entrepreneurs Joe had a dream.  Joe's dream had been incubating for a decade and he was finally ready to move.   He had his infrastructure set, his marketing plan complete and he had done his homework.  Joe's dream was a plan ready to be executed. 

Like many others, Joe's dream involved selling his products by e-commerce on the Internet.    As we mapped out Joe's strategy we also did some preliminary budgeting, especially for the e-commerce site.  I knew a good site could run $5,000 up if designed from the ground up.   Many e-commerce services, such as those offered by Yahoo, run from about $30 a month up.  Not bad but not much flash.  Since Joe was in the design industry, flash was important.

We had even whiteboarded out how he could sell online and each transaction would be automated into QuickBooks and his profit and loss reports.   As his profits rose exponentially his biggest concern was how to keep track of his profits.  I cautioned Joe about reality but did not want to dampen his dream.  It was his passion. 

Joe's current business would support him through this transition but his available working capital was limited since he rented a rather large office and production floor.   His high overhead was one reason he wanted to sell online.   But with limited capital he had to make every dollar he spent work. 

When I last spoke with Joe we had pretty much nailed it all down for his new online e-commerce venture and except for some of the marketing collateral, he had a viable plan.  I left for another project, Joe to his good fortune and did not hear back from him for several months. 

When he called he apologized for not having been up and running.  I laughed and said it's his business, not mine so no need to apologize.   He said he had the bright idea of going offshore to India to get a cheaper deal on an e-commerce website design.   He did contract with an Indian firm for a little less than half what a Silicon Valley e-commerce designer would charge. 

Joe paid the full amount by credit card before the work had begun.   Mistake number one but for Joe it was 'cheap'; it wasn't even for him a matter of price vs. cost.  For almost two months they strung him along but in the end produced nothing and refused to return his money.

What could Joe do?  He could file a fraud complaint with his credit card company and they could pursue it through the credit card system.   But if in fact the web design company was simply a front, then they will scam all they can and when the law gets too close just shut their scam down and reopen under another name and another merchant account.  For Joe to pursue his case in India would probably cost him more than the fraudulent web design fees he paid.  

Eventually Joe may get his credit card company to shut down the fraudulent merchant account but these scams are set up to shut down and restart.  How do you go after a non-existent company in another country with lax laws?   Unfortunately it's a bit late after the fraudulent transaction has occurred.  

Joe will recover.  He will work extra hard to replace his working capital but the whole scam will prove a costly one.  It will set his project back two or three months and in e-commerce time is money.   

Joe clearly made several mistakes in trying to save money.  Had he only made just an initial payment his loss would not have been so much.   Joe was impressed with a fancy website and fancy fake demos.  Had he done a bit more research on his scam outsourcer he would have seen the light quicker.  

But Joe was a bit greedy and felt he could leverage his investment and get more Return on Investment (ROI).   He learned the hard way.  There are probably several hundred companies within 20 miles of Joe's factory that could have done the job for him.  True, at two or three times the price but the actual cost would be less.  Joe's mistake was not taking a little more time and examining a good development plan with a reputable company.   This process is commonly known as 'due diligence'. 

Joe learned that a great scam is not only too good to be true but a 100% loss.

Posted by Jack D. Deal at 11:23 AM | Permalink | Comments (0)

Most businesses start with an idea that involves doing something for a profit.  When one does something for a profit, technically one is in business.  

Someone figures how to do something better, quicker, cheaper, faster.  The basics or underlying dynamics of how this business idea works is called the business model.  A more explicit and detailed description of the model is called a business plan. 

The first step is the model and it is the most crucial.  If the business model cannot generate profitability, it won't work.  If the assumptions of the model are wrong, it won't work.  If the model is incomplete, it won't work.  If the model needs financing and has no way to get it, it won't work.  And so on. 

So getting this first step right is imperative.   Get it wrong and the business goes in the wrong direction and probably all is for naught.

On the other hand, if all goes well and business plan looks viable, the new venture is off.   Most businesses start small with the owners working and maybe adding an employee when needed.  As a problem is encountered, it is solved and the quest continues. 

Layer upon layer of solutions and process are thrown together and at some point it becomes obvious it is a mish mash and there has to be a better way without reinventing the wheel.   And there is.

It's called best practices and it means the best way of doing something.  It's what successful businesses know and do making them more efficient and effective in delivering value.   Those businesses that do things less efficiently and effectively deliver less value, are less competitive and eventually go out of business.  They don't get to play the game.

Best practices is sometimes also known as infrastructure and it simply is all the support systems and processes needed to carry out the company mission and business plan.   These can include communications, technology, software, accounting, human resources, sales and marketing, strategy, etc.  

Businesses that do their homework well and join together their business model with good infrastructure and best practices create the potential to grow.  It's as if getting the business model and the infrastructure right is a ticket to play in the big game.  Whether you agree or not, those are the facts.

But also note that nothing is guaranteed.  Nor implied.  Simply being in a position to grow does not mean growth and success.   But at least at this point one gets a ticket to play the game. 

Conversely, if a business does not get the model and infrastructure right it cannot grow and generate significant assets.   If profitable, it will only be marginally so. 

This company does not get to play the game.  If your company is stuck in the business model or infrastructure black hole and can't get out it's probably best to consider downsizing and reducing costs.   Stay with quality and there will be some margin.   Not much growth potential, but hopefully some margin.  Or look for a job.

But if you and your model are savvy enough to get to this point you will then want to develop your growth strategy.     

The emphasis on growth almost always focuses on marketing and human resources.  

In the marketing strategy there has to be a feedback loop to let management know what customers and clients are thinking.  This feedback loop creates the basis for innovation and delivering more value.    

In human resources the issue is productivity and how to reward it.

Relax.  All of this is really not so complicated. 

What is deceptive is how much perseverance it requires to execute a business plan.  The sheer volume of problems and obstacles makes it more of an endurance test than an obstacle test. 

But not to worry.  Breaking each problem down into components and working on each component is a very quick way to get results.  Piece by piece.

It is especially important to manage your cash flow in this growth mode.  Watch the receivables.  Many is the company whose growth was out of sight but poor cash flow did them in.  If you are on a path to fast growth, be sure your projections include end of month cash balances.  

It is also helpful to run through some scenario plans.  What is the best case and worst case scenario for your strategy?   Usually the end result is somewhere in the middle.  Usually.   Often by looking at scenarios you gain insight so it is well worth the effort.

Managing this growth you have created is the next stage.  It can be fun, exciting, profitable, frustrating, impossible and fruitless; and sometimes all at once.  Managing growth is a series of juggling acts that attempt to keep many balls up in the air at once. 

As unappealing as it sometimes seems growth is where it's at in business.   Growth is good.  Growth is fun.

How long until your company can reach the growth stage?

Some newer tech and Internet companies can mature to a growth stage in several years.   Older, traditional service businesses may take a decade or more in the trenches before hitting a solid growth stage. 

But even with growth in the end there is always the end.  The owner that anticipates how she would like to step out of the business is the one that is not surprised in the end at what happens.   By not focusing on your outcome from the beginning you simply take your chances.  There is no middle ground. 

As the competition thins, strategy is where the real competitors duke it out.  Those companies that align their model, infrastructure and strategy in place hit the market sweet spot.  Their growth can be exponential.  It is not only possible but probable since they have done the basics well.   They have the foundation.  If their business model is solid they are off to the races.   It becomes a matter of executing the business plan.

At any rate, there you have it.   It doesn't always work this way but it usually does.   Each business is unique and circumstances may vary.   This is the way the percentages break out.  Like or not, those are the odds.    

First find out where you are.  Then what do you want, and then how do you get from here to there? 

Posted by Jack D. Deal at 05:53 PM | Permalink | Comments (0)

Few words bring such strong negative reactions as 'business meeting'.   As companies analyze their meeting times against results they often throw up their hands in disgust and conclude that meetings are a waste of time and of no use.    

Not so fast.  While it is true that not having a meeting may be better than having a bad meeting, it does not follow that the business meeting itself is to blame. 

No matter how good the idea, if those that execute the plan fail then the project itself fails.

'It's a bother, it's a pain, so little gets done, same old stuff,  nothing ever happens, it's always a bore, it lasts too long, and all we do is sit and listen to one or two people drone on about the company's woes.'   Whine, whine, whine.  Case closed. 

And that's the most difficult part; overcoming apathy and boredom from employees and managers that are jaded after continued exposure to bad meetings.  It makes starting a meeting difficult and gaining momentum from that meeting even more difficult.     

The best place to start is to determine what results you would like to have from the meeting.   This will guide you in determining the agenda. 

The agenda should be written with a time allotted to each item.   Meetings should rarely go over an hour especially if they start on time.  Start exactly on time and you will ensure promptness at the next meeting.

After each agenda item put the person responsible for reporting or moderating that agenda item so that someone 'owns' that agenda item.  If you are first starting business meetings make it a goal to spread the agenda items out to different meeting participants.

The first agenda item should be something light and not nuts and bolts financial.  I like to bring up items such as image and attitude here.   The last agenda item should be the next meeting's time and place.

Don't overload the agenda with too many items or too many heavy stress items if that is avoidable.   If the business meeting becomes too negative it can dampen whatever enthusiasm it generates.

Some agenda items can be 'rolled' over into the next agenda.   Try to vary your agenda items for each meeting to keep the agenda fresh.   That also means you should be discussing relevant and current topics.

Plan your agenda to end on an upbeat note.   You really want the last impression of the meeting to be a positive one.   If the meeting ends on a sour note it will leave a sour taste.

If participation is important try to get each person present in the meeting to say something.   This may be difficult at large meetings but in smaller groups it creates the impression of being a part of the meeting.  Meeting participation can be a goal itself.

Some people tend to speak more than others so don’t let one or two people do all the talking.  Especially you. 

It is best to have a moderator or leader.   This person is responsible for opening and closing the meeting as well as making certain the agenda moves along in a timely manner. 

It is possible to rotate moderators from meeting to meeting.   This depends on the meeting participants, their capabilities and their willingness to participate.  

Do not expect too much change too fast.  It has been my experience that it might take several months of weekly meetings to reach desired results.  And it is best not to create unrealistic expectations up front as they may sabotage your efforts.  

It's OK to disagree and disagreements often make for excellent meetings.   As the moderator, it is your job to maintain calm and control.   If everyone is yawning a good disagreement might even wake them up. 

After each meeting do a self-evaluation on how the meeting went.   What could have done better?  What went right?   What did not go as expected? 

And stay persistent.  It is very hard to change either individual or group behavior and that's what meetings are mostly about.   Some call it behavior modification but perhaps changing the range of behaviors is more appropriate.  Some call it training or education.  And sometimes it's art and sometimes it's science but seldom is it predictable.    

Often it doesn't always work as planned.  If you have a bad meeting shrug it off and see how you can improve the next one.   Also try to stay in the right frame of mind and perspective so you don't get frustrated too quickly.    

There is no right or wrong way to have a meeting; just ways that make meetings more effective.   The best strategy to make your meeting effective is to open it up, do what it takes to get participation and work through a relevant and prioritized agenda.

Go with your gut and don't be afraid of taking small risks to keep momentum.  Even if you flop folks will see you are sincere and good things will happen. 

The results just might surprise you.

Posted by Jack D. Deal at 11:57 AM | Permalink | Comments (0)

Spying.   The word conjures up images of hidden cameras, microphones and James Bond.  In business this  sort of thing does happen.   Employees sell trade secrets, spies dig through dumpster and hackers break into computer networks.  But for most businesses, all that is Hollywood. 

What isn't Hollywood is all businesses should know their market position.  To know this one has to have information about the competition, something many competitors will not give out freely.  But no need to call Mr. Bond just yet.

Most of the information you need is available but you just need a way to access it.   You also have to know clearly what information is of interest.  Once you know what is needed you can develop a plan. 

Search the Internet first and look at what is public knowledge.   You may find all or part of what you need online.   

Next, if you are on speaking terms with your competitors, you might just ask them what you need to know.   Take them to lunch.  If you are a nice and pleasant person you may instill confidence and make staff relaxed.   

You might try the telephone.  The phone is a great way to find specific information quickly.  Additionally, many employees will freely tell you whatever you want to know.   Learn from this and make sure your people don't dish out confidential information.   Make sure you know what your people are saying. 

Build your intelligence over time.   You will be amazed at what you can learn in several months.   You will also be amazed at how quickly information can become obsolete. 

If you are looking at a competitor's strategy, it is relatively easy to take the pieces and come up with a strategic  plan.   Keys to service are pricing and service quality. 

Keep anything that is printed for future reference.

Look for process; how they answer the phone, how do their people approach a prospect, what kind of computer technologies do they have in place. 

And finally, practice, practice and practice.  Business intelligence does not have to be a cloak and dagger affair.  Most information is  readily available for the taking.

What you don't know can potentially beat you.  Forewarned is forearmed. 

Jack D. Deal

Posted by Jack D. Deal at 09:12 AM | Permalink | Comments (0)

    The start-up phase is arguably the most critical; if new ventures flounder they normally don't  make it.   Usually this is a result of poor strategy and execution and this is why so many new businesses fail.

     Once the business is established and supporting itself there is often a period of steady growth.  This is due to newness, pricing, energy level, etc.  If the strategy is correct this growth is natural and surprisingly easy.  Many owners and managers get lulled into the impression they are so good it will always be easy...

     A critical point is reached when this natural growth stalls.   Many companies literally suddenly growing and continue business with their current markets.  At this point ownership and management become very articulate at explaining why things cannot be improved.   A comfort level is reached and a slow downward decline begins...

     At some point this decline begins to be felt in ways such as cash flow problems and employee discontent.  The dynamics that have brought the company to this point have changed.   Owners that let their businesses decline are in essence buying back their own equity.  The status quo simply erodes equity.  At this point ownership has two options: sell or exit the company or redesign it to become competitive.   

     Sometimes hard decisions must be made.   One of those is what to do with employees that have been loyal but no longer are appropriate.   Management must take decisive action to reach a tipping point...

     A reorganization or 'retooling' may bring growth and competitiveness back to the company.    This will continue until another crisis point is reached.    The ultimate measure of success is how the company deals with these opportunities and threats...

     If you are the owner, it's your equity...

Jack D. Deal

Posted by Jack D. Deal at 03:48 PM | Permalink | Comments (0)

Once a year you should do a thorough analysis or review of your company to make sure you are staying on track. As a general outline you can follow these 10 categories:

1)Management and Administration: your strategy, supervision, delegation, accountability, accounting, human resources, payroll and benefits, risk, legal, cost controls, decision making, growth, data and records, responsibilities

Posted by Jack D. Deal at 04:52 PM | Permalink | Comments (0)

The fact that we are undergoing a full-blown business revolution is obvious. Only those lost on a desert island could have missed this simple fact. A good example is an industry most of us use as consumers - insurance. Even if you find no appeal at all in insurance -- it still might prove very useful to see how fundamental changes in the business world are affecting one of our largest industries. Although insurance is one of the most profitable industries with net profits running up to 30% and beyond, not everyone is making that kind of margin. The transformation of the industry means that a strategy ten, five or even one year old may be obsolete. Obsolete strategies often mean poor margins.

In the old days your local agent pushed auto insurance as the main product in their portfolio. That is no longer the case. Even in states like California where auto insurance is mandatory -- brutal competition, regulations, and continuing changes have made auto insurance less profitable for companies. Those agents that used to make a good living selling auto insurance now find themselves with slimmer margins and increased operating costs.

Simply providing a quote for auto insurance has become a cost factor. If you call an agent they will often require a series of documents and information before giving a quote. Since many prospects are shopping for price, many agents will no longer give out 'public' quotes -- you have to have a current policy with them before they will give a quote. Or they may do a phone interview to 'screen' out prospects that waste their time. Since they don't make much selling auto insurance, they don't push it. Others have taken the approach of using auto insurance as a 'loss leader' to get to more lucrative types of policies such as homeowners, life or commercial insurance.

Some agents have found it is best to use a number of different carriers allowing them to offer the best plan for their customers. By providing the best value and service agents are beginning to build their businesses around what is best for their customers -- not the individual insurance company. So, if you call an agent and ask what type of auto insurance they sell, they may not tell you or they may tell you 'we carry a number of different lines to best fit your needs'. This is causing some concern as better agents tell companies they are not going to exclusively carry their insurance. This is putting pressure on the companies to rethink their old policies - maybe exclusivity is not the best plan for the future. At least for some companies.

Infrastructure and support costs are also hitting agents very hard - just as in the legal and medical professions. Don't be surprised to go into a 'big office' and find no one there. Some agents, like many professionals, have decided the costs are too high and have reduced their staffs and offices in an attempt to reduce costs. So you may call an agent and get a recording. If you speak to an agent you may find you cannot 'drop by' because they are 'closed' and do not have walk-in traffic.

So how do agents conduct their 'new' business? 'Differently' will often be the response. Many agents resisted the on-line technology until it became a 'problem'. The 'problem' is many companies now can give quotes on-line to prospects all over the world. Also many companies now conduct their actual business on-line so the customer does not have to go to an office. An on-line presence used to be a 'frill' but now it is a necessity and not optional. Agents that don't have e-mail are finding their potential increasingly restricted.

Since smaller agencies have found operating costs to be excessive, many are forming alliances. Others are simply buying each other out. This is called consolidation and may mean the ultimate demise of the smaller agent. This economy of scale may mean that a small agent can no longer deliver upper end service in a cost-effective manner.

These bigger agencies are now looking at offering more options for their customers. Since auto insurance is not that profitable, they are looking for ways of diversifying their products and getting into areas such as risk management - areas that just a few years back would have seemed ludicrous.

And it's not just the agents. The insurance companies themselves are facing great changes. In an attempt to reduce their own costs, companies are devising what are called 'Direct Repair Programs (DRP)' for their auto policyholders. These DRPs mean that if you are in an accident, you are directed to an autobody shop that is on their authorized direct repair program. The shop will do an inspection, write an estimate, take a digital picture and upload that information to the insurance company. On-site adjusters will become a rarity. Not only does the insurance company save on adjusters; the autobody shop also agrees to do a great deal of the paperwork. This allows the insurance companies to reorganize their regional offices to reduce costs. It is not easy maintaining a 30% net!

Insurance people are uneasy. The degree of change in the past few years has been astounding. Most agree the next few years will be at least as turbulent and surprising. If banks and other organizations are allowed to sell insurance then the industry will undergo further transformation. If grocery stores can become branch banks. why shouldn't banks sell insurance?

'Ha', you might think, 'glad I'm not in the insurance industry.' Maybe so. The lesson -- and the question to ask is -' what transformations are happening in my industry'?

The next logical question to ask might be - 'when will insurance agents be selling my products and services?'

Posted by Jack D. Deal at 05:43 AM | Permalink | Comments (0)

• Free and inquiring minds chase rainbows and build dreams.   The closed mind only remembers the past and somehow hopes it will return. 
• Inquiring minds take more risks and subsequently fail more often.   They also succeed more often.   
• A  closed mind has fewer headaches in the short term but more migraines in the long term. 
• The inquiring mind gets more decision making practice and consequently develops better decision making skills.   Successful businesses consistently make good decisions. 
• The closed mind is not only more sluggish but also tends to restrict options and miss opportunities.  Today those companies that don't take advantage of opportunities will eventually fail.   
• The free and inquiring mind is better adapted to facing new circumstances.   The closed mind  is more likely to ignore the new until it becomes painful and overwhelming.   In today's markets those that ignore the new rapidly become the obsolete.
• Inquiring minds tend to hire inquiring  minds; close minds often hire those that are less capable and pose less of a threat.   
• Inquiring minds hit upon more breakthrough strategies.   Closed minds tend to trade on what they always have traded on...
• Inquiring minds become more adept at facing realities while closed minds try to make realities fit their perceptions.   
• Inquiring minds seek challenge and the satisfaction of meeting a challenge.   Closed minds avoid the difficult and are constantly seeking a comfort zone.
• Inquiring minds thrive on intellectual stimulation while closed minds go with the tried and true they already know.
• Inquiring minds look for potential and improvements.   Closed minds look to habit and precedent.   
• Inquiring minds view failure as the path to success.   Closed minds avoid failure since all failure is perceived as risk.

     So often it is a thin perceptual line between success and failure.   One has to wonder if all those businesses that go under had simply made a few perceptual adjustments, their outcomes would have been different.   

Jack D. Deal

Posted by Jack D. Deal at 03:41 PM | Permalink | Comments (0)