However, sacrificing margin in the short-term can have long-term implications on business value.  For starters, it can be extremely difficult to negotiate rates upwards once a client has become accustomed to more generous levels.  Unfortunately, boutique recruitment agencies cannot rely upon high enough barriers of entry to influence broader pricing, and as we know it is a highly competitive industry.

In my daily dealings with business sellers and buyers, it is evident that margins are held dear to the acquirer’s heart.  And why wouldn’t they be?  If there is an expectation to take on a sizeable temp/contractor book, net margin from the enterprise needs to more than cover the costs of funding it, particularly in the case of weekly or fortnightly payroll runs. 

Consider a business running 100 contractors on a weekly payroll and invoicing cycle.  This equates to somewhere in the vicinity of $300,000-$500,000 per week in additional payroll costs.  As the purchaser will not receive funds from the client for 30 days, they could well be funding three or four payrolls before income is received.  This $1-$2 million capital requirement has to come from somewhere – either from working capital, retained earnings or a debtor finance facility – and costs more than a few basis points.  The normal assumption is a minimum 10% cost of capital, and this comes straight out of the net margin.

Any wonder, then, that buyers often turn tail at the sight of low margins on temps/contractors.  Whilst the revenue may look great, the cost of funding such a payroll can far outweigh any benefit received from this income stream.  And where is the point in taking on the risk for little or no actual return?

So when setting a company up for an eventual sale, protect your margins.  Not only will this make the business easier and more profitable to run in the interim, but it will be significantly more appealing when the time comes to sell.

Article by Andrew Cassin – Acquisiti – www.acquisiti.com

How to stop being held over a barrel by your staff and create your exit strategy for the business

I had an interesting conversation with a client just yesterday.  He runs a small business and has one of his staff members asking him for a significant pay increase.  They’re already paid well above industry’s standards, and really, for what they’re doing, they’re at the limit of what they should be getting paid.

His problem is this, their position isn’t systemized.

There are no instructions, no procedures that would allow anyone else to do that job. At the moment, even though it’s all amicable, to some degree he feels he’s being held over a barrel. He feels he’s got few options but to pay more because he can’t afford to lose the person he’s got. Sounds familiar? 

Well, the big news is this, it’s his fault.  No one, including yourself is irreplaceable in your business.  When you design your business, so that people just go about doing their work and keep all their knowledge about their role in their head, you are always going to be victim to a situation like this.

The answer to this of course is good systems, which will allow you to priorities procedures in an efficient and systemized way.

1.) A back up plan if people leave - Your systems make it so that if someone leaves your business for whatever reason, it’s less traumatic than it needs to be. Other team members can step into the breach and take over easily until you get a replacement.

2.) Makes it easier and more effortless for new people to get up and speed fast - Your systems become a core of your training for people. The step by step instructions they provide give you a structure to walk them through, something to work with without you having to sit over their shoulder, and a constant reference point for all those questions they have when they are learning the ropes.

3.) It sets a standard - By listing out how things are done, you can also list out the level that needs to be done to. That way you don’t need to constantly engage in those annoying questions about how well something was done or not, it’s there in black and white.

4.) It’s easier to improve what you can see - It’s a lot easier to sit back and work with someone else to find out how to make it easier, simpler, better for everyone involved. After all, the whole process is sitting there in front of you. 

Don’t be held hostage to invaluable people just because you don’t know what they do. Your business is far too important to rely on any one person including yourself.

Get Moving: Write a long list of all those tasks that gets done on a regular basis. This is your starting point to create your procedures manual.  

Article by – Steve Smit – Reality Conulting - www.realityconsulting.com.au

A small business employer, for the purpose of determining redundancy pay under the NES, is an employer who employs fewer than 15 employees. This is based on a simple head count of employees immediately before the relevant person was terminated, or at the time when the person was given notice of termination (whichever happened first).

When calculating the number of employees employed at a particular time, all the following factors are to be taken into account:

• all employees employed by the employer at that time are to be counted
• a casual employee is not be counted unless, at that time, he or she has been employed by the employer on a regular and systematic basis
• associated entities are taken to be one entity
• the employee being terminated, and any other employees being terminated at that time are counted.

What is redundancy?

Redundancy under the NES occurs when an employer either:

• decides they no longer want an employee’s job to be done by anyone and terminates their employment (except in cases of ordinary and customary turnover of labour), or
• becomes insolvent or bankrupt.

Redundancy may happen when:

• the job someone has been doing is replaced due to the employer introducing new technology (i.e. it can be done by a machine)
• business slows down due to lower sales or production
• the business relocates
• a merger or takeover happens
• the business restructures or reorganises.

Genuine redundancy or unfair dismissal?

If a dismissal is a genuine redundancy it will not be an unfair dismissal.

Under Commonwealth workplace laws, a person’s dismissal is a ‘genuine redundancy’ if:

• the employer no longer needs the person’s job to be done by anyone because of changes in the operational requirements of the business, and
• the employer followed any consultation requirements in the modern award, enterprise agreement or other industrial instrument that applies.

A dismissal is not a genuine redundancy if it would have been reasonable in the circumstances for the employee to be redeployed within the employer’s enterprise or an associated entity.

Payouts and Notice Periods

The following table highlights redundancy pay periods

The following table highlights notice periods

Article by – Lauren Smith – The Quinn Group – www.quinns.com.au

Have you ever felt like this?

I had a session with a client last week and he wanted to know how to get more focused. He has 23 projects on the boil that he wanted to FOCUS on.

See the irony of that!  It’s not called focus when you’ve got 23 things to do, it’s called business A.D.D.

So how do you get off the treadmill of distractions and lift your performance?

How To Increase Your Focus

I could give you a whole bunch of things to do. Hmmm, but come to think of it, that  would just add some more things to your list, and isn’t THAT part of the problem.

Step 1 – Stop the Interruptions

“Every interruption is doing you damage”. Studies have shown there is an average of 6 minutes spent on each interruption, from handling it, to getting back on track again.

Closed Door Policy – Simple, if you have a team, learn to shut your door. If you are feeling guilty about being out of touch, run a regular once a week team meeting.

Turn Off The Phone – How could you?? Well before the days of answering mobile phones on trains and in bathrooms, we used to survive quite well without having someone calling us at the drop of a hat. Break your phone addiction.

Avoid email in the morning, do it in batch – Email is a killer for some businesses. Please use it responsibly.

Step 2 – Stop Playing the Martyr

Resign your position as the sole manager of the universe and start letting go.

Take Your Time Before Saying Yes – Or Just Say No as by default. Most people say “Yes” to anything without really thinking of the impact. Don’t make yourself an easy target for other peoples problems. 

Create a Someday Maybe File – Stalled on whether you should or shouldn’t, throw it in the file and worry about it when it gets important.

Step 3 – Increase Your Focal Point – Work Out What Is Important 

If you know what is important, then you know what to stop doing and start doing.

Have Goals, Set Targets and Make A One Page Plan – You need to have your eyes on the prize. And keep them there.

Prioritise Between Urgent and Important – Know the difference. Work on the important in front of the urgent as much as you can. Even if it hurts.

Step 4 – Get Organised

Block Out Time With Yourself – Tell people you aren’t available. Train your gatekeepers to protect your time ferociously. Book one hour meetings with yourself to get things done.

To Do Lists – Yes, if you don’t have a list of the top 3 things you need to move your business forward today then you need to.

Tick em off and see the results.

GET MOVING: Block out an hour tomorrow to get started. Remember you can make more money but you can’t make more time.

Article by- Steve Smit at Reality Consulting - www.realityconsulting.com.au

You already know that running a business is at about getting things done and making things happen. How you do that is by managing … well to be honest it’s about controlling things. Things and people. Peoples efforts, where they spend their time, what they should be doing and how they do it.

Your business needs control otherwise important things don’t’ get done. But how much can you do if all the important things are done with your own two hands?

The Holy Grail for any business owner is the perfect team member who not only knows what you want, can do what you want but also deliver it without having to be watched.  Anyway … let’s just open your eyes for a second, kill the harp music and stop the fantasy right there … let’s talk about reality.

The 2 Limiting Excuses

With that fantasy team member unlikely to happen for you, you’ve got to look at the alternatives. You have to work with imperfect people and that takes effort. It requires you to delegate.

Now there is a lot of resistance in most business owners to this idea. Because when it comes down to it, delegation is about letting go of some control. The 2 most common excuses I hear are:
“It’d just be quicker if I did it myself”

“Nobody does it as good as me”
Both of those excuses may be true at that moment in time but let’s look at both of them in the big scheme of things.

“It Would Be Quicker If I Did It Myself”

Besides it only takes 10 minutes. 10 minutes x 5 days x 48 weeks = 2400 minutes. 2400 minutes = 40 hours a year. 5 Working Days!! Is it really quicker?

How much of your day is consumed by 10 minute tasks or phone calls that should be handled by someone else?

“Nobody Does It As Good As Me”

Well you may be right. But face it, you weren’t born with it. You had to learn it. And that took time. And there is the problem, your impatience.

The Choice

So you can choose, instant gratification, get it done the way you want, and you stay chained to the wheel. Or put in the effort, develop someone, accept their imperfections, correct them, and set yourself free. Your choice.
 
I think it was Henry Ford (who brought motor car to the masses) who said it best; “I prefer to have 1% of a hundred people’s efforts rather than 100% of one person’s effort”.

Resign Your Position as Master of the Universe

Unlike money, time is the only resource in your business that you can’t make more of.  Time to build your business, time to plan a path, time to lead a team, time to grow your business.

If the keys areas in your business are restricted by what you can do with your two hands then you have a choice to make.

GET MOVING: Commit to staying hands on OR make a start in developing your team. Either way, get off the fence starting today.

Article Contribution by – Steve Smit – Reality Consulting- www.realityconsulting.com.au

1. The increased need for on-hired staff: in merger or acquisition situations, permanent headcount freezes are often put in place whilst the necessary organisational restructuring is undertaken.  The integration process, however, yields an above average number of projects (notably in IT and accounting/finance), a key driver of the need for temporary or contract workers to bring in specialist expertise and fill the gaps in the existing workforce.
2. Outplacement: large-scale organisational restructures usually result in a high number of redundancies, particularly at an Executive level (and especially among the ranks of the smaller company in the acquisition or merger).  Not only does this create a need for professional outplacement services, but also an opportunity for Executive or Search consultants to find opportunities for the displaced executives.
3. Supply Agreements: corporate change more often than not begets supply chain change, with supplier contracts rationalised, consolidated or completely overhauled to suit the needs of the new, larger organisation.  Smart recruiters will be building relationships at HR, Procurement and Executive level as proactively as possible to ensure a seat at the table when the inevitable tender is issued.
4. Geographical growth: when a recruitment firm has a strong relationship with a major company, the firms’ growth can often mirror that of the client’s.  A large-scale organisational initiative that grows the client’s business beyond its existing footprint can act as a catalyst for the recruiter to also expand into new regions.
5. Other M&A stakeholders: when corporate activity increases, so too does the demand for the professionals and financiers so integral to the process.   Specialist lawyers, commercial and investment bankers, accountants, analysts, data room providers and corporate advisors rapidly exhaust their internal resource pool and look externally to find additional, capable staff to keep up with demand.

Remember, where this is chaos, opportunity lives.  M&A activity is a boon for professional recruiters and whilst there has been a post-GFC hiatus, it is better to be prepared for the inevitable upswing than completely oblivious and caught napping when the floodgates open once more.

Article Source – Andrew Cassin – Acquisiti – www.acquisiti.com

Are Corporate Recruiters Capable of Hiring Top Passive Candidates?
In my mind, there are four types of corporate recruiting styles. These are shown below. In fact, I’ll contend (and attempt to prove in this article) that this style directly impacts the quality of people brought into an organization. If quality of hire matters, recruiting leaders need to take this “recruiting style” issue into account as they build and develop their recruiting teams.

The Four Primary Recruiting Styles and the Impact on Quality of Hire

1) The “Farmer” — aka the “post and pray” or the Dilbert model. This type of recruiter reposts the job description with the hope a good person will apply, does not challenge hiring managers to understand real job needs, has only basic knowledge of the company and industry, uses skills and experiences to screen candidates, follows the rules, and makes excuses when someone complains about not seeing enough good people. The primary target in this case is the active candidate who somehow found the posting. If you have a strong employer brand and candidate supply exceeds demand, this style can actually work.

2) The “Transactional” — aka the used car salesman – makes lots and lots of calls, looks for someone with almost the exact skills as the job description, and hopes someone says yes. This is the aggressive variation of the Farmer, with a focus on harder-to-find candidates that requires some recruiting skills to influence the candidate. The prey here is some candidate between active and passive who meets the basic skills of the job.

While not too efficient, this style can actually work as a result of sheer effort and audacity. If there is a good candidate with the right skills somewhere out there, the “Transactional” will eventually find the person. My primary concern with the Transactional is that top people — those in the top-half of the top-half — move at a far slower speed than the transactional recruiter wants, and are often missed in the rush to make the next call.

3) The “Technocrat” — aka the technocrat — is up on all of the latest cool sourcing tools and Boolean search techniques and is profound in his or her wisdom, but down deep is more a sophisticated Farmer with a GPS and iPad on the tractor. The prey here is a candidate on the margin who has just decided to look, or has some deeply buried resume just waiting to be found. While Technocrats can unearth some great talent, few are able to personally draw them into the fold and get them hired without the help of a strong employer brand, a great hiring manager, or a great recruiter. Quite frankly, I have no problem with this type of tag-team approach, if that’s what it takes to make the great hire.

If a company, due to factors like employer brand or industry buzz, can attract top performers, then the types of recruiters described above are more than sufficient. On the other hand, if the supply of top talent is far less than the demand, or if the company must proactively seek hard-to-find people, than the above recruiting styles will prove ineffective. In this case, the company must either rely on the Corporate Headhunter style as the recruiting model of choice. This fourth recruiting style is defined below:

4) The “Corporate Headhunter” — aka the go-to recruiter who gets the job done — this person is a strong networker, gets great referrals, is up on all of the latest company and industry news, challenges the hiring manager when taking the assignments, screens on potential not skills, keeps the best engaged throughout the process, and can close by balancing compensation with opportunity.

This complete corporate headhunter bag of tricks is not required for every job or every organization. From an organizational standpoint it’s more important whenever the company’s self-attracting power is weak. From a job standpoint, it’s particularly well-suited when top talent is required to fill critical positions or when candidate supply is far less than demand.

Yet even with a solid brand and a talent-rich market, there are two core skills all corporate recruiters should learn in order to improve their performance on a Quality of Hire basis. (Note: in a recent ERE article I defined Quality of Hire as how well the new hire met the performance needs of the job.) In my mind, overreliance on the job description in combination with an inability to differentiate between the high potential and fully-qualified is a key weakness of most corporate recruiters, regardless of their dominant style.

The problem I have with job descriptions is that they define average performance and average performers. Early in their careers, the best people tend to get promoted more quickly or get assigned bigger projects. As a result, they tend to be lighter on a years-of-experience basis and get overlooked using a traditional skills/experience resume screening process. This effect is worsened when job descriptions are used as advertising, since even fully qualified top people won’t apply since they aren’t interested in a lateral transfer. High-potential candidates won’t apply either since they are apparently “not qualified” on an absolute level of skills basis.

To remedy this dilemma, I suggest that recruiters ask hiring managers what the person would need to do over the course of the first year in order to get into the top half of the top half. I refer to this list of 5-6 performance objectives as a performance profile. Then ask the hiring manager if he or she would at least be willing to see a person who has achieved similar results, even if their skills and experience aren’t exactly what’s described in the job spec. Few managers resist this.

Tossing the job description aside also requires a different approach to screening. For this I suggest a two-step approach, first determining if the person is in the top-half of the top-half and second, if the person is a reasonable fit for the job. Each step takes about 15 minutes on the phone.

To quickly determine if the person is in the top-half of the top-half, I’ve created what I call a super competency. It combines all competencies into one big competency. In this case it’s called the Achiever pattern. The idea behind this is that rather than look for a bunch of hard-to-measure individual competencies, look for the results or impact of these competencies as part of the work history review. High-potential people get promoted more rapidly, get more recognition, get bigger bonuses, are assigned to more important projects, have more visibility with upper management, have more patents, write more whitepapers, take on more leadership roles, and are more well-known in the industry, among other similar indicators. This is the Achiever pattern. Since the pattern starts becoming evident in high school and college, you can use this filter regardless of the position level.

Once I find the Achiever pattern I then ask the candidate to describe the biggest task, project, or accomplishment they’ve handled most related to what’s described in the performance profile. If it’s comparable from a scope and complexity standpoint, I present the candidate to the hiring manager as a high-potential person worth meeting. Getting the hiring manager to meet the candidate is where most recruiters fall short. That’s why the performance profile is so important. It switches the criteria from skills to performance.

Hiring more Achievers should be the primary goal of all recruiters. It starts by becoming a Corporate Headhunter. If you’re a recruiting leader I’d suggest start hiring recruiters who can challenge hiring managers, who are willing to call people who aren’t looking and engage with them in a career discussion, and who can fight hard for their candidates who are Achievers, especially those who have a different mix of skills than listed on the job description. In the long run these are the people who will be running your company in the future.

Written by Lou Adler and posted to The Adler Group on 21^st October 2010

Reprinted from The Adler Group with permission from Lou Adler, author of Hire With Your Head. All rights reserved.

This article originally was published in the Electronic Recruiters Exchange (www.erexchange.com). Check out the ER Exchange for more great recruiting information.

Social Media (Zero cost)

This includes the most commonly used sites for business promotion: Linked In, Facebook, Twitter, You Tube and your blog.

Ask an expert or your techie VA to set it up so that all you need to do is send a message from one of these platforms, and it will automatically update your profile on all sites.

I personally think Twitter is the biggest waste of time this century, but I do have to say that when I regularly tweet, it does drive traffic to my site. That’s the objective.

Final point: have a series of messages lined up and ready to send at regular intervals. Make them business related and interesting. Offer tips and useful information, provide links to others’ sites that are of interest, provide links to your own site and offer some value, invite people to attend an event or sign up for something that offers real value, and ask questions to interact on a different level with your followers.

Your marketing program cannot exclude social media so get with the program!

Electronic Newsletter (Zero cost)

Like this one. If you don’t have one, have someone create it for you and send it regularly on your behalf. I use this newsletter as well as Bossmentor® Renaissance Magazine, delivered online, to stay in touch and attract subscribers.

Write for your subscribers and give them tips and ideas that are relevant to what they need and want. Build relationships through your newsletter and let people get to know you as well.

Everyone can choose not to open it, but those who do on a regular basis are your real followers.

Podcasts  (Zero cost)

Give interviews online. There are many radio on demand shows online that will help raise your profile if you provide content frequently. It’s just like ‘regular’ radio, but you listen via your browser not your radio. The ‘regular’ radio stations of course provide online streaming of their programs, but I’m referring to radio that only exists online. Of course, you have to make sure that it matches your target market, as with any marketing activity. Have a look at www.venturevoice.com to get some ideas. There are lots of sites, many associated with networking or membership groups, but they just take a while to find.

Online Article Marketing (Zero cost)

This is the practice of repurposing your articles. Write one for your newsletter, then send it out to sites that act as libraries of millions of articles online. The very best is www.ezinearticles.com . According to the current stats, this site receives about 2.89 million global unique visitors daily. That’s a big audience! Send your articles there (or preferably have someone do it for you) and you’re bound to see traffic referred to your website as a result.

You have to be vetted when you first join, to make sure that you can write and that you can provide some interesting and valuable content. It’s a great reference site for those searching for answers and info! Remember to allow people to re-use your article as long as they include your copyright statement in the footer, ensuring that you are referenced as the owner and creator of the article.

Advertising on Others’ Websites & Ezines (Starts with zero cost, then goes upwards from there!)

You may venture into this gently by advertising or promoting your products and services on a friend’s or colleague’s site. Test it out and see how it works.

You may advertise in someone’s newsletter (like this one) for a relatively low fee (if those newsletters allow advertising), and this is a good strategy if the newsletter goes out to a large list, and if that subscriber base is your target market.

You may receive a newsletter that you’d like to advertise in, or you may search. I recommend using www.directoryofezines.com as it lists just about every ezine on earth! You can search for ezines by many different criteria including content, list size, target market etc. It’s a really great resource.

Online PR (Zero cost)

Use online sites to issue press releases globally. I recommend these sites in particular: www.prweb.com and www.prlog.org which can also narrow down the release to Australia and by state. These sites are subscribed to by thousands of journalists, and have vast distribution. They are indexed by the search engines and are potentially a very good source of generating traffic to your site.

Teleseminars (Zero cost)

Build traffic through running teleseminars and promoting them in all of the above places! We will start doing this very soon to add value to our existing subscribers as well as attract new subscribers. The value is in the message that you deliver through the teleseminars, as well as the opportunity to make special offers for your listeners to sign up for at the end of the teleseminars.

You may run them yourself, like we do for our Bossmentor® Club members, or you may be a guest on someone else’s teleseminars which gives their list an opportunity to get to know you, and visit your site.

You can also promote your teleseminars on www.seminarannouncer.com !

When you use these strategies in a coordinated way, reinforcing key messages and delivering consistent value, they will increase the traffic to your site, raise your profile and attract new subscribers.

Next issue I’ll deliver more strategies for marketing your business online. I hope these seven get you started, or give you some new ideas to your existing program!

Jenny Stilwell is the Managing Director of BOSSMENTOR®, a consultancy providing advice on strategy and business growth for professional, lifestyle-oriented owners of service-based businesses who want to grow their businesses and ultimately spend less time in them. Jenny will help you through the challenges of growth, as well as help you grow the value in your business: http://www.bossgroup.com.au

The primary objective of the earn-out is risk mitigation, in which the vendor of the business is required to remain involved for an extended period of time to ensure that the value is retained.  The payment structure involves a series of deferred payments that are normally performance-based, and total consideration is generally capped.

Private equity tends to utilise earn-outs as a way to bridge the gap between the vendor’s expectations and the PE buyer’s valuation of the business.

However, earn-outs are not a perfect model.   Negative aspects include:

• The purchaser owns 100% of the business and in a legal sense, as complete control. The problem however is the vendor requires control of the business during the earn-out to ensure performance.
• Material changes cannot generally be made to the business during the earn-out period by the buyer without triggering the full earn-out payment.
• The earn-out is open to abuse by both parties:
• The vendor can drive down costs to maximise EBIT or the buyer can increase operating costs to decrease the effective EBIT
• More cynical purchasers may attempt to fund the entire acquisition through proceeds from the business during the earn out – which leaves the vendor with low acquisition premium and in many cases worse of than if they simply retained the business for the same duration.
• It is often a one-sided and antagonistic relationship that ensues: the purchaser after all owns 100% of the business and the vendor is instantly put in a subordinate role.  Trust issues can come into play fairly quickly and transparency (or a lack thereof) becomes a concern for the vendor.

There is an alternative, which is in many ways superior to the earn-out.  We call it a staged buy-out.

In a staged buy-out, the parties agree on a time period (like an earn-out) and the underlying valuation of the business.  The buyer then purchases a certain percentage of the equity in either the existing entity (OldCo) if the risk profile is appropriate, or the NewCo into which OldCo’s assets are transferred at Settlement.

Benefits of a staged buy-out include:

• The vendor receives cash up front, and in the latter case, shares in NewCo.
• Put options are set in place to cover the sale of the vendor’s remaining shareholdings to the purchaser. This could be split into a number of tranches, each of which vests at a specific time.
• The options give the vendor the right (not the obligation) to sell that portion of their shareholdings at that time.
• The equity is valued using the same formula as that utilised at the beginning of the transaction (generally a goodwill + NTA formula).
• Call options may also be in place so that the purchaser has the right to purchase these same shares upon vesting.
• Unlike an earn-out structure, the vendor retains a seat on the Board and is not obliged to a set sell-out timetable.
• Once the options vest they can be exercised, but the vendor may choose not to and opt to remain with the business instead.  Likewise, the purchaser may choose not to exercise their Call Option should the relationship be working well and the vendor’s continued involvement is desired.
• One of the most important characteristics of the staged buy-out is that material changes can be made to the business at any time, as long as such changes are agreed to within the parameters set out in the Shareholder Agreement.
• The staged buy-out is a much more congenial arrangement than an earn-out, as both parties are committed to working together for mutual benefit. As the vendors maintain an equitable interest in the company, the level of commitment and care is naturally significantly heightened compare with an earn-out structure.

In so many ways, the staged buy-out is a superior transaction model to an earn-out.  I have found some purchasers reluctant to consider it, but generally the response from both vendor and buyer is positive, as it is easy it see how risks can be mitigated and value enhanced for both parties under this structure.  It should definitely be worth a look when considering your next transaction.

Andrew Cassin is an Exit Advisor and Business Broker licensed in Queensland, New South Wales and Victoria. His company, Acquisiti is premium business brokerage and advisory firm, providing services aimed at maximising the exit result for its clients. Andrew holds a Bachelor of Business and has pursued post-graduate studies in financial services, corporate governance, mergers & acquisitions, and change management. For more information contact Andrew via email at enquiry@acquisiti.com

1. Would any of your clients betray you?
2. Would you have any warning?
3. Why would they betray you?

I want to take this opportunity to outline a way to help optimize your core business in a difficult market.

A global tier one consulting firm developed a score called the NPS – Net Promoter Score. They use it with their multinational clients to determine how close they are to their clients and therefore how secure that relationship is. The essence of it is, how well would your clients really speak of you to others and how important are you to their business.

A high rating with customers is essential if your business is to successfully ride the recession. It is now more important than ever to have a strategic focus to protect your greatest asset – your customers.

We have done several surveys on behalf of our clients to determine their ‘Customer Relevance Score’. We use six questions and their associated feedback to deliver results that will enable you to constantly stay ahead of the pack in servicing your customers. The end result is a score you can track that effectively ‘protects’ your position with your key customers and continues to make you relevant to their business.

It is also a great customer service tool from the client’s perspective, just because your have taken the time to ask what they think, want and need. And, some of the results that are uncovered include feedback on how to strengthen your relevance to your client’s business, and what you need to do to build or maintain secure relationships.

For companies that deal with retailers, there are many competitors jockeying for shelf space and working to replace you. For those who deal with corporate clients, the competition is just as intense to secure as much as possible of corporate spending budgets.

Clients don’t always complain if your service is no longer relevant to them. They just ‘go’.

If you don’t ask, you may be exposing your business to a potential risk. Isn’t it worth asking the question?

There are many benefits in identifying your Customer Relevance Score now:

• If you don’t take the time to do it, your competitors will – it will be good for your customers to see you take the lead

• In a difficult market, you want insightful information on what really strengthens your business position with your customers – this is the best way to get it

• You can get feedback from more than one contact in the organisation, providing a more holistic perspective of your company

• It’s the best way to discover if you could be lifting your game, and in what way

• It can be done quickly, in a way that is convenient for your customers, and at minimal cost to you

Once you have this information – your score – you can use it in your business as a KPI that is measured each year.

One of my clients, always mindful of minimising risk in their business, and adopting innovation in everything they do, now uses this score and what it tells them to stay as close to their clients as possible. There is limited room for a competitor to take their place and they want to keep it that way!

If your business targets high net worth individuals, for example, this is especially important, as the level of service these clients receive must be of a very high level in line with their fees!

I undertook this exercise on behalf of a business advisor and a financial advisor, and both received very low scores. The potential risk of their clients moving to another firm was high. For both firms, the level of service they received was not of high perceived value and for both again, their service offerings were confusing and as such, seen as not particularly relevant. Needless to say, they weren’t happy with their respective results, but at least we could then put a plan of action in place to address these risk exposures.

If you are in a highly competitive market where competitors are always pitching to win your clients over, for example in PR, recruitment, design and branding firms, this is an essential tool.

You can do this exercise yourself or you could approach us to do it for you. Either way, if you have high value clients in particular, just make sure you do something to assess and protect your relationship with them!

Jenny Stilwell is the Managing Director of BOSSMENTOR®, a consultancy providing advice on strategy and business growth for professional, lifestyle-oriented owners of service-based businesses who want to grow their businesses and ultimately spend less time in them. Jenny will help you through the challenges of growth, as well as help you grow the value in your business: http://www.bossgroup.com.au