It’s reported that the CNMI population has dropped from 65,927 people in 2006 to an estimated 46,000. Most of those are probably associated with the demise of the garment industry, but there are also many U.S. citizens who are seeking browner pastures elsewhere – you can’t get much greener than Saipan with all the rain we’ve been having.
The biggest factor why individuals leave is to improve their economic standing. It’s no surprise that the CNMI revenue has been in freefall for the last few years. We’re seeing the impact with ongoing salary cuts, and budget cuts. The retirement fund was hosed for several years by the government and now it’s predicted to last only another three years. So it won’t be surprising when the estimated revenue for the next fiscal year is announced that more individuals will be packing for the mainland.
Oh, I forgot, we’ve been told that casinos will be our saving grace. “If you build it, they will come” is the popular line from The Field of Dreams movie. Well, if our field of dreams are tied up in casinos, we’ll probably strike out because the mecca of gambling in the U.S. has been hard-hit lately. In fact, Las Vegas has been named as the nation’s foreclosure capital with one in every 99 homes receiving a foreclosure notice in July, according to residential data tracking firm RealtyTrac. One in every seven Nevada homes is currently vacant and nearly two-thirds of existing Vegas homes sold for a loss to owners between April and June. In addition, they’re suffering from a 13.8 percent unemployment rate, as of June this year, and the jobless number is likely to worsen.
What happens in Vegas isn’t staying in Vegas as other cities and states are feeling the pinch. That won’t stop many from trying their luck elsewhere as budgets are cut further, salaries are squeezed more, and businesses are forced to shut their doors. With the federal debt becoming a major issue and ARRA funds drying up next month, we’re not going to see more federal dollars flowing into the Commonwealth. “We accept food stamp” banners will become even more prevalent as more and more people are in need of a limited amount of federal assistance.
This is a depressing scenario, but one that has been foretold numerous times by myself and other columnists. The sky has fallen and most of us are lost in the fog. What can we do? Even though too little has been done too late, there’s never a better time than now to take action.
For business owners, you need to go where there is a market for your products. Examine the potential customers that still exist on Saipan, and determine if it is enough to sustain your business. There are numerous other ways to get your products to those who need and can afford them. The Internet has allowed many companies to sell globally. Going global expands your offering to a larger target market. This can be done through exporting to foreign countries, foreign licensing, and joint ventures. It also involves developing a global strategy. If you have a product that is unique, you may be able to form a strategic alliance with a well-established distributor in another country.
Location is an important factor to consider when deciding where to locate your business. When I lived in Logan, Utah, one of my clients was a videographer, specializing in wedding videos. His top end video cost about $600 and he was only making enough to pay for his expenses. After a few months of working with him, he doubled his sales, but I told him that if he wanted to make more money he was going to have to move to a larger city. I was thinking of Salt Lake City, but he was even thinking bigger and moved to a retirement community in southern Florida. There he was able to sell similar videos he made in Logan, but he charged $3,000 or more for them. That’s five times the amount for the same product. Not only was he able to earn more per client, but there were more clients willing to pay his fees.
Before you decide to move, realize that Saipan still has untapped potential. There are opportunities in every challenge. It takes some innovative thinkers to help uncover them, and leaders to make those ideas become a reality. The grass may be greener on the other side of the world, but you need to do your homework before you move so you won’t be moving to browner pastures.
Tuesday, August 23, 2011
Wednesday, August 17, 2011
Stakeholder Management
Can you identify the key individuals whose support is essential for your organization to exist?
These individuals or groups are known as stakeholders because they hold a valuable stake in your business. The origin of a business stakeholder can be traced back to 1963, when the term appeared in an international memorandum at the Stanford Research Institute and was defined as “those groups without whose support the organization would cease to exist.”
Supporting your stakeholders and receiving their ongoing support creates a symbiotic relationship that ideally benefits all parties. Therefore, it makes sense to identify them, understand their needs, and then determine how you can best manage the various relationships for maximum reciprocal benefit.
Broadly speaking, your stakeholders include all the people affected by your organization’s actions, and in turn have some impact on your company. You have both internal and external stakeholders. The internal stakeholders are all of the people on your payroll who depend on your company for their livelihood, which includes executive managers, supervisors, and employees. Those groups and individuals that are external to your organization include your suppliers, stockholders, community, bankers/lenders, government leaders, customers, and competitors.
Yes, your competitors are impacted by your business, just as they can affect your margins and sustainability. It is possible to manage the relationship you have with your competitors so you work collaboratively instead the competitive, cost-cutting relationship that most develop.
Let’s look at the specific individuals or groups that can have the biggest impact on your organization. The most obvious are your customers. Without their support through purchases, your company could not exist. Even though it’s obvious that they are important stakeholders, it’s surprising how many businesses do not have a plan to effectively manage their customers for maximum value. They can’t tell you basic metrics such as how many prospects, on average, visit their store, what percentage of those convert into paying customers, the average purchase value, or how many return and how often. They often lack policies, procedures, and practices that create greater customer satisfaction and loyalty. Going deeper, most business owners haven’t taken the time to delve into the psyche of their customers to better understand what makes them tick, why they buy, or what specific benefits will keep them coming back.
The same could be said about your other important stakeholder – your employees. These individuals have chosen your company as the place to spend much of their waking hours to earn a living. They expect a safe working environment, reasonable compensation, and they want to be treated with respect. They can be managed to earn greater profits for the company, but have you considered managing them so they have greater life fulfillment working with your firm? This again requires you to delve into the psychological factors that motivate them to perform at their best and want to remain with your company. Their overall satisfaction as an employ has a direct impact on the satisfaction of your customers, and lowered costs due to turnover and waste.
Focusing on and taking care of your customers and employees will help overcome the majority of challenges your business faces now and in the future. Other important stakeholders include your suppliers, those people who provide the goods and services that allow you to operate your business efficiently and effectively. Often, price is the major consideration in choosing a vendor, but other factors should be considered to develop and manage long-term relationships with vendors who work well with your company. If you walk into any McDonald’s restaurant in the world you will never see Pepsi products sold. The reason why is because when Ray Kroc was cash poor trying to expand the franchise, Coke offered him generous credit terms that allowed the company to remain solvent. Because of this, the company made a lifetime commitment to the vendor. Many other major corporations have strong ties with their suppliers that help them maintain a competitive advantage.
It’s possible to create a win-win situation with all of your stakeholders so that your organization continues to prosper. Your challenge as a business owner is to learn how to identify your most important stakeholders and to balance, as much as possible, their needs for mutual benefit. For example, the need for your business to earn a profit needs to be balanced against the needs of your employees to earn a sufficient income, and the needs of your customers to gain as much value as possible from your company. Managing and balancing all the stakeholder relationships within and without your organization will go a long ways to enable your organization to remain profitable and to create greater fulfillment in the lives of all those you touch.
These individuals or groups are known as stakeholders because they hold a valuable stake in your business. The origin of a business stakeholder can be traced back to 1963, when the term appeared in an international memorandum at the Stanford Research Institute and was defined as “those groups without whose support the organization would cease to exist.”
Supporting your stakeholders and receiving their ongoing support creates a symbiotic relationship that ideally benefits all parties. Therefore, it makes sense to identify them, understand their needs, and then determine how you can best manage the various relationships for maximum reciprocal benefit.
Broadly speaking, your stakeholders include all the people affected by your organization’s actions, and in turn have some impact on your company. You have both internal and external stakeholders. The internal stakeholders are all of the people on your payroll who depend on your company for their livelihood, which includes executive managers, supervisors, and employees. Those groups and individuals that are external to your organization include your suppliers, stockholders, community, bankers/lenders, government leaders, customers, and competitors.
Yes, your competitors are impacted by your business, just as they can affect your margins and sustainability. It is possible to manage the relationship you have with your competitors so you work collaboratively instead the competitive, cost-cutting relationship that most develop.
Let’s look at the specific individuals or groups that can have the biggest impact on your organization. The most obvious are your customers. Without their support through purchases, your company could not exist. Even though it’s obvious that they are important stakeholders, it’s surprising how many businesses do not have a plan to effectively manage their customers for maximum value. They can’t tell you basic metrics such as how many prospects, on average, visit their store, what percentage of those convert into paying customers, the average purchase value, or how many return and how often. They often lack policies, procedures, and practices that create greater customer satisfaction and loyalty. Going deeper, most business owners haven’t taken the time to delve into the psyche of their customers to better understand what makes them tick, why they buy, or what specific benefits will keep them coming back.
The same could be said about your other important stakeholder – your employees. These individuals have chosen your company as the place to spend much of their waking hours to earn a living. They expect a safe working environment, reasonable compensation, and they want to be treated with respect. They can be managed to earn greater profits for the company, but have you considered managing them so they have greater life fulfillment working with your firm? This again requires you to delve into the psychological factors that motivate them to perform at their best and want to remain with your company. Their overall satisfaction as an employ has a direct impact on the satisfaction of your customers, and lowered costs due to turnover and waste.
Focusing on and taking care of your customers and employees will help overcome the majority of challenges your business faces now and in the future. Other important stakeholders include your suppliers, those people who provide the goods and services that allow you to operate your business efficiently and effectively. Often, price is the major consideration in choosing a vendor, but other factors should be considered to develop and manage long-term relationships with vendors who work well with your company. If you walk into any McDonald’s restaurant in the world you will never see Pepsi products sold. The reason why is because when Ray Kroc was cash poor trying to expand the franchise, Coke offered him generous credit terms that allowed the company to remain solvent. Because of this, the company made a lifetime commitment to the vendor. Many other major corporations have strong ties with their suppliers that help them maintain a competitive advantage.
It’s possible to create a win-win situation with all of your stakeholders so that your organization continues to prosper. Your challenge as a business owner is to learn how to identify your most important stakeholders and to balance, as much as possible, their needs for mutual benefit. For example, the need for your business to earn a profit needs to be balanced against the needs of your employees to earn a sufficient income, and the needs of your customers to gain as much value as possible from your company. Managing and balancing all the stakeholder relationships within and without your organization will go a long ways to enable your organization to remain profitable and to create greater fulfillment in the lives of all those you touch.
Cluster Alliances
Many business owners tend to spend less money and effort on marketing in a tough economy, which only exacerbates an already difficult situation. There are many ways to market your business more effectively without spending more money and one of the most effective methods is to develop a strategic alliance.
Strategic alliances follow the principle of using other people’s assets, in a mutually beneficial way. The two companies that work together are not competitive, but complimentary. These companies can be at a different stage in the purchasing process, as in the case with someone remodeling a home. They may need a plumber and carpenter to complete their project so the two businesses can work together by sharing their leads or customers.
Other companies may have an advanced distribution system, products, or manufacturing methods that they can leverage to work with other companies. You see these partnerships all the time. For example, when you go to a McDonald’s restaurant, it is common for them to have decorations or Happy Meal toys that are from a newly released movie. McDonald’s benefits by having popular toys that attract young customers, and the movie benefits by getting more publicity and word-of-mouth exposure when the child takes the toy over to a friend’s house. By working together, these companies are able to save time and money, as well as increase sales.
Rick was a client who owned a jewelry store and much of his business came from engaged couples, particularly the soon-to-be groom who purchased an engagement ring. His challenge was to effectively market to couples who were in the market for a ring. He felt his only solution was to spend a lot of money on mass media to keep the name of his store on the minds of couples. This was not only expensive, but it was difficult to track and know which of the media was more effective.
As I brainstormed with him, I realized that a lot of my other clients also had engaged couples as their target market. These were businesses such as photographers, caterers, a bridal gown store, and a cake decorator. My solution for him was to form multiple strategic alliances with other businesses that clustered around the specific target market of engaged couples. I call this model a cluster alliance. I approached many of my clients as well as new businesses that would form a good fit for the concept. The initial project worked okay, but it needed to be fine-tuned to make it more effective.
It took several months, but I finally perfected a method that easily and effectively captured the leads of couples and then those leads were shared with my clients. Initially, there were over 20 businesses in the cluster alliance, and they each paid a monthly fee to be a part of the group. It was so effective that practically no one left. The concept was eventually expanded in two other areas with more than 50 businesses participating.
People create informal cluster alliances through networking groups or because they’ve formed friendships with other business owners who can benefit from some asset they control. What if you could purposefully create a cluster alliance that was mutually beneficial to all who participated? The group could meet regularly to share leads, or there could be a formal agreement to pay a commission on any sale from the lead of one of the alliance members.
Think of your different customer groups and what they have in common. Next, think about other businesses that are complimentary to your own, and that have the same target market. Get together for lunch and explain the cluster alliance concept and brainstorm some ideas about the best way to share your leads with each other. You may also want to discuss the best method of compensation if a lead results in a sale. Be sure to treat each business as an equal and make the compensation fair to everyone.
Encourage each participating business to recommend participating businesses to each other. If you want to keep it simple, you can purchase a rack that displays several business cards, collect the business cards from each participant, and then display the cards of each business at the point of sale.
I can tell you that a cluster alliance, whether it’s formal or informal, will be the most cost-effective marketing strategies you can use to effectively attract your customers to your business. It can be ongoing and provide leads for many years if you set it up right from the beginning.
Strategic alliances follow the principle of using other people’s assets, in a mutually beneficial way. The two companies that work together are not competitive, but complimentary. These companies can be at a different stage in the purchasing process, as in the case with someone remodeling a home. They may need a plumber and carpenter to complete their project so the two businesses can work together by sharing their leads or customers.
Other companies may have an advanced distribution system, products, or manufacturing methods that they can leverage to work with other companies. You see these partnerships all the time. For example, when you go to a McDonald’s restaurant, it is common for them to have decorations or Happy Meal toys that are from a newly released movie. McDonald’s benefits by having popular toys that attract young customers, and the movie benefits by getting more publicity and word-of-mouth exposure when the child takes the toy over to a friend’s house. By working together, these companies are able to save time and money, as well as increase sales.
Rick was a client who owned a jewelry store and much of his business came from engaged couples, particularly the soon-to-be groom who purchased an engagement ring. His challenge was to effectively market to couples who were in the market for a ring. He felt his only solution was to spend a lot of money on mass media to keep the name of his store on the minds of couples. This was not only expensive, but it was difficult to track and know which of the media was more effective.
As I brainstormed with him, I realized that a lot of my other clients also had engaged couples as their target market. These were businesses such as photographers, caterers, a bridal gown store, and a cake decorator. My solution for him was to form multiple strategic alliances with other businesses that clustered around the specific target market of engaged couples. I call this model a cluster alliance. I approached many of my clients as well as new businesses that would form a good fit for the concept. The initial project worked okay, but it needed to be fine-tuned to make it more effective.
It took several months, but I finally perfected a method that easily and effectively captured the leads of couples and then those leads were shared with my clients. Initially, there were over 20 businesses in the cluster alliance, and they each paid a monthly fee to be a part of the group. It was so effective that practically no one left. The concept was eventually expanded in two other areas with more than 50 businesses participating.
People create informal cluster alliances through networking groups or because they’ve formed friendships with other business owners who can benefit from some asset they control. What if you could purposefully create a cluster alliance that was mutually beneficial to all who participated? The group could meet regularly to share leads, or there could be a formal agreement to pay a commission on any sale from the lead of one of the alliance members.
Think of your different customer groups and what they have in common. Next, think about other businesses that are complimentary to your own, and that have the same target market. Get together for lunch and explain the cluster alliance concept and brainstorm some ideas about the best way to share your leads with each other. You may also want to discuss the best method of compensation if a lead results in a sale. Be sure to treat each business as an equal and make the compensation fair to everyone.
Encourage each participating business to recommend participating businesses to each other. If you want to keep it simple, you can purchase a rack that displays several business cards, collect the business cards from each participant, and then display the cards of each business at the point of sale.
I can tell you that a cluster alliance, whether it’s formal or informal, will be the most cost-effective marketing strategies you can use to effectively attract your customers to your business. It can be ongoing and provide leads for many years if you set it up right from the beginning.
Wednesday, August 3, 2011
Turning Lemons into Lemonade
A prominent businessman had developed agriculturally related businesses and was doing well locally. He was located on an island in the Pacific that didn’t have a lot of air traffic, and he planned to expand his distribution outside his small geographic area for more sales. However, the cost of shipping was prohibitively high and forced his marked up prices to not be as competitive as some suppliers.
At this point, the average person would just give up and consign themselves to sell their goods locally, and keep their current operations small to save on overhead. However, Tony Pellegrino is anything but average and he has demonstrated his willingness to take bold steps to overcome obstacles that have stopped others in their tracks. His Cargo Air Bridge, or CAB, is an innovative project that has the goal to reduce shipping cost both to other places, and also back to Saipan. In other words, it will not only benefit farmers, but it will also help reduce the costs of numerous other products that are priced higher on Saipan due to high shipping costs.
When Tony introduced his concept at a lunch meeting I held with several leaders in the community, I could immediately see the benefit and decided to split the BizGrowth Challenge seminar into two days so that one day could be focused for farmers, and Tony could publicly announce his concept at the event.
CAB will benefit not only Saipan, but also Tinian, and Rota farmers, and it will hopefully spur more people to farm their land, as well as get current farmers to expand their operations. If it goes as well as some predict, it could create the second industry that Saipan desperately needs. There is already a local base of farmers that can provide produce to satisfy the growing demand on Guam, and it should encourage more people to start farming their land to reap the benefits offered by the CAB. This means it is a sustainable business with great future potential, and best of all, it is not as susceptible to external factors, such as tourism, garment factories, and the newly resurrected casino initiative.
Business owners face many challenges that stand as obstacles between them and their goals to grow their business. Some see these obstacles as “lemons” that leaves them sour. Those with the right mindset and strategy know how to turn those lemons into lemonade, or take a challenge and turn it into an opportunity.
The first step is to be clear about the challenge and what’s holding you back. Without that clarity, it is difficult to focus on solutions because you will tend to pursue various problems and apply whatever tactics that look good at the moment. Having a fixed challenge in your mind allows you to stay focused and then direct your resources more effectively.
Once you identify your biggest challenge, turn it into a statement or question that will allow you and your brainstorming group to focus on the minor obstacles you face to overcome the biggest challenge. Using the above example, if you grow vegetables and want to sell to another location, but your are unable to sell them competitively because the shipping costs puts your produce at a higher price than the competition, you could turn your challenge into this question: How can I gain a competitive advantage and sell more of my products in a larger market?
Now you can list the obstacles that are in your way. These might include: I don’t have enough goods to get lower bulk shipping rates, there is no union or group effort to negotiate better prices and solve major concerns, shipping costs are too high, I don’t have equipment to improve the efficiency of my operations, etc.
The next step is to turn each obstacle into a goal by restating the obstacles as if you’ve already achieved them. In the above example, the obstacles would be restated as follows: I grow a large enough amount of produce that allows me to get lower shipping rates, I work with a group of other farmers to negotiate better prices and solve major concerns, shipping costs have been lowered, and I have access to the equipment that allows me to improve the efficiency of my operations.
Now you need to rearrange the list in the right order, and ask questions such as: What if my goals were three times bigger, what if I had to accomplish this in half the time, what would need to change? By asking questions that cause you to think outside of the box, you’ll find shortcuts that will allow you to find solutions that are much better and possibly take care of several obstacles/goals at once.
It’s obvious that Tony came up with one solution by securing an aircraft that is dedicated to shipping cargo back and forth at a much reduced costs. However, the next challenge will be for the farmers to step up and grow more produce to improve the efficiency of operations so the aircraft is filled to capacity on each flight. The solutions to achieve the other goals could be: Create a farmer’s coop that coordinates the efforts of the major producers, and get a grant or have farmers pool their money to collectively purchase a tractor with other equipment that can be shared through the coop. These may still be in the works, and once they are resolved, it will hopefully mark an initial turning point in the economy.
At this point, the average person would just give up and consign themselves to sell their goods locally, and keep their current operations small to save on overhead. However, Tony Pellegrino is anything but average and he has demonstrated his willingness to take bold steps to overcome obstacles that have stopped others in their tracks. His Cargo Air Bridge, or CAB, is an innovative project that has the goal to reduce shipping cost both to other places, and also back to Saipan. In other words, it will not only benefit farmers, but it will also help reduce the costs of numerous other products that are priced higher on Saipan due to high shipping costs.
When Tony introduced his concept at a lunch meeting I held with several leaders in the community, I could immediately see the benefit and decided to split the BizGrowth Challenge seminar into two days so that one day could be focused for farmers, and Tony could publicly announce his concept at the event.
CAB will benefit not only Saipan, but also Tinian, and Rota farmers, and it will hopefully spur more people to farm their land, as well as get current farmers to expand their operations. If it goes as well as some predict, it could create the second industry that Saipan desperately needs. There is already a local base of farmers that can provide produce to satisfy the growing demand on Guam, and it should encourage more people to start farming their land to reap the benefits offered by the CAB. This means it is a sustainable business with great future potential, and best of all, it is not as susceptible to external factors, such as tourism, garment factories, and the newly resurrected casino initiative.
Business owners face many challenges that stand as obstacles between them and their goals to grow their business. Some see these obstacles as “lemons” that leaves them sour. Those with the right mindset and strategy know how to turn those lemons into lemonade, or take a challenge and turn it into an opportunity.
The first step is to be clear about the challenge and what’s holding you back. Without that clarity, it is difficult to focus on solutions because you will tend to pursue various problems and apply whatever tactics that look good at the moment. Having a fixed challenge in your mind allows you to stay focused and then direct your resources more effectively.
Once you identify your biggest challenge, turn it into a statement or question that will allow you and your brainstorming group to focus on the minor obstacles you face to overcome the biggest challenge. Using the above example, if you grow vegetables and want to sell to another location, but your are unable to sell them competitively because the shipping costs puts your produce at a higher price than the competition, you could turn your challenge into this question: How can I gain a competitive advantage and sell more of my products in a larger market?
Now you can list the obstacles that are in your way. These might include: I don’t have enough goods to get lower bulk shipping rates, there is no union or group effort to negotiate better prices and solve major concerns, shipping costs are too high, I don’t have equipment to improve the efficiency of my operations, etc.
The next step is to turn each obstacle into a goal by restating the obstacles as if you’ve already achieved them. In the above example, the obstacles would be restated as follows: I grow a large enough amount of produce that allows me to get lower shipping rates, I work with a group of other farmers to negotiate better prices and solve major concerns, shipping costs have been lowered, and I have access to the equipment that allows me to improve the efficiency of my operations.
Now you need to rearrange the list in the right order, and ask questions such as: What if my goals were three times bigger, what if I had to accomplish this in half the time, what would need to change? By asking questions that cause you to think outside of the box, you’ll find shortcuts that will allow you to find solutions that are much better and possibly take care of several obstacles/goals at once.
It’s obvious that Tony came up with one solution by securing an aircraft that is dedicated to shipping cargo back and forth at a much reduced costs. However, the next challenge will be for the farmers to step up and grow more produce to improve the efficiency of operations so the aircraft is filled to capacity on each flight. The solutions to achieve the other goals could be: Create a farmer’s coop that coordinates the efforts of the major producers, and get a grant or have farmers pool their money to collectively purchase a tractor with other equipment that can be shared through the coop. These may still be in the works, and once they are resolved, it will hopefully mark an initial turning point in the economy.
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