2008 – Did you achieve your objectives?

So as another year draws to a rather chilly end, it’s a good time to check back and see if the 2008 business strategy really did come to fruition. As a marketing strategist I’m fervent about focusing my clients on their short and medium term objectives, ensuring that they always have clear but challenging financial goals to get them out of bed each day.

This year has been a year of change for Corve Consultancy. As from January 1st, the focus of the business finally moved away from North East Wales and a new strategy was implemented to reposition providing business support in Manchester, Cheshire and the North West of England. It was a natural progression. A long standing contract with the Welsh Assembly Government had run its course which meant that Corve Consultancy no longer had to be domiciled in the Principality.

Reluctantly we vacated the offices in Rhosllanerchrugog’s beautiful STIWT Theatre and finally took possession of the new office built into the garden of the house in Cheshire and affectionately nicknamed by the children as The Hut. Then it was down to the serious stuff. With one exception, all the Welsh work was terminated and so Corve Consultancy had an almost clean slate to develop new contacts and a new client base - almost like starting again from scratch!

So time to employ the advice that I give to so many other SMEs, about doing a few simple things well, to get the new business ball rolling. I scoured the Cheshire area for a business club to join. I’m not a big fan of the BNI set up, just my opinion, it’s very popular and obviously does a good job for many, but its format is not for me.

So I was delighted to discover the County Business Club based at Edgeley Park, the home of Stockport County – a ground where I’ve never seen my team (Wolves) lose! This is a good club with around 40 members who turn up regularly every Thursday morning to network, refer business and have a bit of fun. As I’ve said before, networking is about the people you can meet through the people you meet.

And while some of the members at CBC have referred business to me directly and have also used my services themselves, it is the people I have met as a result of introductions from them that have been the real contributors to establishing Corve Consultancy as a North West facing business.

Whenever I’ve been involved in networking clubs, I’ve always tried to discover early on who the prodigious networkers are and unashamedly try and leverage the extra work they do at the array of other clubs and meetings they attend. Anyway as a result of my involvement at CBC I’ve now replaced the Welsh Assembly Government work with my involvement in the delivery of a high growth programme for SMEs under the ultimate aegis of the North West Development Agency.

As a Chartered Marketer, I’m listed in the Consultants Database on the CIM website. It took a while for the CIM to get up to speed in terms of offering this service – they were a long way behind the Chartered Institutes that represent accountants and solicitors. But two years or so on, the database has been another excellent source of new business for Corve Consultancy.

It’s a nice payback, because as the CIM’s SME Ambassador for Greater Manchester, I do considerable unpaid work to promote the institute and further the cause of making high level marketing strategy and marketing communications available to SMEs. This involves providing marketing clinics at business fairs and shows across the North West and Cheshire as well as undertaking one off evening events for groups of SMEs who just want more information about business strategy in these difficult times.

So why do these times seem more difficult than the other recessions I’ve experienced in my working lifetime and what does that mean for the profile of marketing and business strategy?

Well in the recessions of the early 1990’s, the 80’s and the seventies there was still an ocean of lending around to help businesses weather the storm. I was working in business finance during each of those eras and we prospered as there was a greater demand for borrowing from home and abroad.

Today, as we all know, after laying waste the last generation of proper lenders and replacing them with children who do some form of credit scoring and call it analysis, the banking chickens have well and truly come home to roost. Hardly surprising really – lending is an art not a science and machines programmed by the inexperienced will never get right.

So today business finance is at a premium and while it is available in small pockets, here and there, if you know where to look and how to apply, the well has almost run dry and businesses are having to face up to the fact that using additional working capital to paper over the cracks of a poor business strategy is no longer and option.

What I’m seeing, is more and more owner managers turning to Chartered Marketers to take advice on marketing strategy because this is the way to reorganize and secure the right future for a business rather than hiding the inadequacies under a carpet of additional business finance.

But how has that helped my 2008 strategy to reposition Corve Consultancy as a North West facing business. Well it wouldn’t have done, if I had become more visible in the area where I put most of my promotional resources – online.

With the right web and online strategy partner, SMEs can achieve solid visibility through natural ranking, without paying some cowboy a small fortune to ‘unnaturally’ boost your position. Online strategy has always played a big part in my work with SMEs and without the right technical support I’d be nowhere near as confident in the results as I am.

So it was nightmare when Dewi, my erstwhile all things online associate packed it all in and got a proper job last autumn. But as one door closes another opens and as Dewi had been North Wales based, it presented an opportunity to strike up a new and if possible even stronger partnership in Greater Manchester.

Enter Darren at RedStar in Manchester, who came highly recommended through Business Link and who has worked wonders on some of my clients sites not to mention galvanising me into sustaining the kind of online presence we can all achieve by doing a few important things very well and regularly.

So as 2008 draws to a close I’m delighted that Corve Consultancy is now firmly repositioned as I planned. It was April when the last Welsh based client ran its course and much I loved my work with them in Neath, you can’t get much further away from Bramhall! Now we have 2009 to look forward to and a new series of objectives to achieve.

Stuck in the middle with you?

When I first started studying marketing, I was overwhelmed by the number of theories and models, developed by “experts” to explain why businesses are less successful than they should be. The more I read, the more I realised most have been developed to serve the needs of book publishers and that they have no relevance whatsoever for real businesses, owner managed small and medium sized enterprises who want to understand business and marketing strategy and planning.

But then I have read a lot of books!

And some of the theories and models developed by the great and the good of marketing are absolute belters and are as relevant to SMEs as they are to the multi-nationals they were designed for. I’ve built a toolbox out of them, with nearly 40 different components, that has been invaluable when working with Corve Consultancy’s clients.

So which one is hot at the moment? Well it’s number 16, the rather grandly titled Porter’s Generic Strategies. (Don’t glaze over yet – it’s good!)

Business guru Michael Porter believes that while a company may have loads of strengths and weaknesses relative to its competitors, there are only three types of real competitive advantage you can develop, by being the cost leader, by serving niche markets or by sustained differentiation.

Lots of SMEs that I talk to are not consciously developing their business with one of these strategies in mind and are (if you view the three options as points of a triangle) floundering about somewhere in the middle.

So what do they all mean?

Being the cost leader is about being the lowest cost producer in the industry. Companies who do this often have a broad scope and serve many different industry segments. Companies can get a cost advantage because they achieve economies of scale; have proprietary technologies, or an advantage in accessing key (raw) materials. Cost leaders are often selling a standard product with no frills and they place considerable emphasis on size, economies of scale and cost advantages from all sources.

It’s a difficult long term position to sustain you are always vulnerable to being undercut and having the closest scrutiny on your price offering as the market tries to catch you out. Ryanair is a good example of this type of business. It’s difficult for SMEs to choose and sustain this position. Our resources usually mean that we have low marketing budgets which are vulnerable to competitors and a s re-seller online trading client of mine is discovering, someone else can always procure cheaper using a bigger budget for bulk purchases, and undercut you.

Serving niche markets is all about becoming a specialist to a specific sector. This is something SMEs do particularly well. We develop a specialist reputation concentrating on one or a small number of segments to the exclusion of all others. This allows us to focus and concentrate our efforts to get a deep understanding of our target segments and become acknowledged as the experts. The greater our expertise and the more we demonstrate our effective affinity with the segments, the higher we make the barrier to entry for others.

If possible we want to choose highly specialised niches which are easier to defend against local or international competition than less specialised ones. The difficulty we can face with this strategy is that to serve niche segments in a market leader position SMEs have to provide high customer and technical support, which can be resource intensive.

Sustained differentiation is where a company selects one or more things that many buyers in an industry perceive as important and then uniquely positions itself to meet those needs. The reward is a premium price! You can base differentiation on product attributes, service levels, the method of distribution, even your marketing campaign. But the trick is to make sure the cost of this unique differentiation does not exceed the value of the price premium it commands.

Delivering the groceries to my house in a stretch limo as opposed to a white van may be a unique proposition, but the marginal price is unlikely to recover the marginal cost! Sustaining differentiation can be hard, but SMEs have the flexibility, adaptability and responsiveness to customer needs to be successful with this strategy.

What’s the most obvious downside? Over time, as a market becomes mature, it can be increasingly hard to sustain true and meaningful differentiation.

Many SMEs that I meet are stuck in the middle, trying each strategy but failing to achieve any of them. As a result, they have established no competitive advantage and they are usually performing below average. In these cases, the SME will only earn profits if the structure of its industry is highly favourable (i.e. the conditions are such that it’s nigh on impossible NOT to make money – Ice cream vans in a hot summer, pubs during the world cup??) or if all your competitors are also stuck in the middle (what an opportunity!).

Businesses become stuck in the middle because they can’t decide how to compete, or don’t know how to make the choices. What have you decided to do?