Shrouded in the drumbeat of negativity that passes as international business reporting these days has been the bursting growth in U.S. Service Exports – increasingly from U.S. startups and small businesses.
Contrary to the image of imports and exports being only “stuff” flowing in and out of places like the Port of Long Beach, last month the Census Bureau noted that services accounted for 32%, or $60.3 billion of total U.S. exports in August. And unlike our huge “hard goods” trade deficit, in the value of U.S. service exports is 47% greater than that of imports, and growing.
Business, professional, and technical services are now the fourth largest U.S. export category, and represent close to 15% of global commercial service exports, making America hands-down the world’s dominant service exporter.
Of many, let me flag three main drivers:
1. Purchasing Power Parity. Purchasing Power Parity (PPP) posits that with free-flowing markets wages and prices worldwide approach parity.
Protectionist types interpret this to mean that “our wages will get pushed down to “their” levels – or more viscerally, “if this keeps up we’ll all soon be making $2 dollars per hour.”
Well, let’s leave for now the huge economic fallacy of this thinking and concentrate on the fact that the narrowing of the relative wealth differential between the U.S. and the rest of the world has allowed for phenomena like a Ukranian manufacturing company hiring U.S. advisors to help them define strategic growth opportunities in Poland and Eastern Europe
2. U.S. Services are Increasingly Exportable. The drumbeat always goes on how “we here in the U.S. don’t “make anything.” Well, beyond the fact, that as I note in my “Made In China” post that very few Americans dream that their children will grow-up and work in a factory, we here in America “make” the most important stuff that has ever existed and we do it better than any society has ever done so.
That stuff? Ideas and Innovations. Strategies. Or more prosaically, Brands. Websites. Entertainments in all their wondrous forms – Movies, Video Games, Social Networks.
Even our favorite whipping boy industry – financial services – continues to bring us world-bettering innovations like Venture Philanthropy (i.e. applying market principles to solve the world’s humanitarian challenges), Super Angel Funds (overcoming the “outlier” or “Black Swan” conundrum of startup investing) and Crowdfunding (democratizing fund-raising and investing in ways never before even dreamed possible.)
3. We are all Transparent. Perhaps my favorite, namely that business best practices worldwide are visible and replicable to and for all. And the corollary, the really screwed-up and ineffective ways of doing things are totally transparent too.
From lists like the “Most Business Friendly” countries to California now having a portal where parents can see teacher’s ratings to the U.S. Senate studying Chinese Technocrats to the simple reality that the Internet makes it crystal-clear to all who is winning and losing in the world (see North Korea, Iran, etc.), transparency breeds competition which breeds innovation which breeds the cream rising.
And who, when it comes down to doing business right, is the richest cream, the sweetest soup?
It is, of course, U.S. startups and smaller and emerging companies.
And as they, like the U.S. economy as a whole, continue to become increasingly services-focused, the best of them will continue to profit handsomely from the world of selling opportunities growing all around them.
2016 is just 30 days away.
And if you want to make 2016 your best year ever, you need to start planning now. So come January 1st, you’ll be off to the races.
To help you succeed, I’m hosting a complimentary Webinar this Thursday, December 3rd at two times:
12pm Eastern / 9am Pacific - Register Here
8pm Eastern / 5pm Pacific - Register Here
The webinar is called "How to Make 2016 Your Best Year Ever!" and I’m hosting it with Growthink's co-Founder and President, Dave Lavinsky.
On the webinar you will learn:
• How to dramatically increase your sales and profits in 2016
• The precise way to figure out the best opportunities to pursue in 2016
• How to set your 2016 goals so they are attainable and lead to your long-term success
• My #1 tactic for ensuring your breakthrough success in 2016
• And much, much more!
You can expect to hear a positive, motivating message loaded with golden nuggets to make 2016 an incredible year.
Click below to save your spot:
12pm Eastern / 9am Pacific - Register Here
8pm Eastern / 5pm Pacific - Register Here
P.S. Whenever I host a Webinar, I get a lot of emails asking if there will be a replay. Right now I don’t have any plans to do a replay -- so my advice is to be on the Webinar LIVE!
Last week, in Austin I had the opportunity to participate in a 2 - day “Mastermind-type” meeting with a gathering of technology and Internet entrepreneurs and executives from around the globe.
It was an impressive group - leaders of companies with average sales of $8 million and competing and prospering in industries that run the gamut - from consumer products, to healthcare IT, to energy and entertainment, to mobile apps and wearable technologies, to real estate, and more.
To those who have never participated in a business mastermind, you don’t know what you’re missing! Originally conceived by legendary personal development guru Napoleon Hill, a Mastermind is a gathering of like-minded professionals that meet regularly and over time develop a productive, high-trust dynamic through which to attain breakthroughs of insight and accountability around and about strategic, tactical, and management challenges.
Mastermind groups, both generic ones as I attended in Austin, branded versions like Vistage and YPO, and informal versions as organized by trained facilitators, are where the hard, methodical work of entrepreneurial business - building and growth gets done.
The “table topic” for our meeting was best practices as to data-driven decision making and strategic planning.
It is obviously a very timely one - as Big Data and Business Intelligence (BI) tools and software are at the center of vast swaths of venture capital financings and strategic and managerial best practices for companies of all types and sizes.
We talked about how the companies getting the highest “BI ROI” connect the dots between their "old" and "new" school strategic planning and thinking.
They are old school (in the absolute best, non-pejorative sense of the term) in that they recognize that strategy…
…arrived at through Mastermind get-togethers, through board and advisory board meetings, through strategic planning processes led either internally or by an outside consultant - remains fundamental in attaining and maintaining long-term business success.
And they are new school in their leveraging the very many best-of-breed business application software as services to arrive at this strategy.
Tools like CapitalIQ, Sage, KISSmetrics, AWeber, SurveyMonkey, RingCentral, Campaign Monitor, Zoho, Marketo, CAKE, FuseDesk, Maropost, and Hubspot that automate and optimize traditionally laborious and repetitive business functions.
And, as they do, collect massive reams on the marketing, sales, operations, finance and managerial performance of a business.
And, as importantly, the technology has finally matured to where all of this collected data can be organized, analyzed, and benchmarked against comparable - but better performing - companies from around the globe.
This “New School” data wizardry, when combined with old school Masterminding, risk-taking, and a ton of hard work…
…is what allows companies to both run more day to day efficiently and profitably, and more in strategic alignment with their missions and long-term goals than ever before.
It is not hyperbole to define a successful organization as one that finds the balance between a) making the right changes at the right time and b) having the discipline to “keep on keeping on” and just doing more of what is working.
Note well that b) is particularly hard to maintain when the tasks and activities that ARE working become repetitive and lack in excitement and drama.
So how does an organization find this balance - between thinking laterally and creatively and just keeping their heads down and plowing forward?
Well, luckily in the past few years a large and impressive business literature has sprung up that codifies best practices of how to balance this need to incorporate change in an organization with that to maintain doing “more of the good same.”
This thinking can best be summarized by the phrase “Immersion plus Spaced Repetition” and goes like this:
1. Everything, of course, begins with ideas, and the best, business ones normally arise from a series of individually and organizationally introspective strategic planning and goal-setting sessions that clarify objectives and the obstacles standing in the way of their accomplishment.
This immersive process - done at least annually but at organizations with ambition quarterly - both defines what needs to be done and inspires all of the participants to take on the hard and often painful work of getting it done.
The latter point here cannot be underestimated – Thomas Edison famously said that “genius was 99% perspiration and 1% inspiration” but that 1% “spark” is uber-critical in propelling an organization through the first threshold of change.
2. But, as anyone that attended an exciting or invigorating conference or strategic planning session can attest (and as I am sure Mr. Edison reflected on often during long nights at the lab), inspiration fades over time.
Even worse, when the inspiration is not followed through on, cynicism can set in and actually leave an organization worse off than if the planning sessions were never done in the first place!
So how to avoid this distressing fate?
3. Well, by keeping the ideas, goals, and objectives of the planning session alive through their regular review and adjustment.
Think of it this way - if a well-run strategic planning session is the essence of good leadership, then well run, spaced and repetitive goals and objectives reviews are the essence of good management.
Great managers check in with their teams as often as daily – if only for 5 or 10 minutes – to review the day’s objectives and to keep the shorter term work flow aligned with the longer term planning and mission objectives.
The old adage that the only way to eat an elephant is one bite at a time is never more true than when it comes to these spaced and repetitive management check-ins. When done right, they measure, acknowledge, and reward incremental progress and prevent the desire for the perfect from getting in the way of the doable and the done.
Now, at least annually and preferably quarterly, the entire organization needs to reconvene to review actual progress versus stated goals, to assess what worked and what got off track, and then to refine and define updated goals and objectives.
And after this next round of strategic planning sessions, what is to be done?
Well, the spaced and repetitive management check-ins begin anew. Wood is chopped, water is carried.
Following this simple but disciplined formula, over time great ideas become great realities, businesses are built, and legacies and fortunes are made.
And for investors, far more than technology it is these “above the line” leadership and management disciplines that separate the well-run companies to back from the haphazardly ones to avoid.
It is remarkable how large the accountability gap has grown between what is considered normal and expected in the world of business and private enterprise…
…and the profound lack of accountability that sadly we have become so accustomed to and from the other major Institutions of our society - Government, Education, Healthcare, Religion, Etc.
It goes like this: Businesses must deliver daily on their product and service promises or a) Customers just stop buying and b) significant reputational damage is effected in this “Online Star Rating” world of ours.
For everybody else? Not so much.
Imagine, with its 9% approval rating, what Congress’ ’“Yelp” / “Trip Advisor” star rating would be?
Or, for that matter, what it would be for our local high school, community college, or hospital?
And, at the risk of controversy, I think most religious leaders would seriously shirk from having their institutions’ reputational scores widely shared with the general public.
Now, one could say that - because the intents of most businesses are so different from these other institutions - that this is an unfair comparison.
Or that we can’t define “accountability” for these other institutions because of the legitimate “values” disagreements within them - i.e. for education is the accountability around teaching say - hard work or creativity?
For government is it about liberty or equality? For healthcare longevity or wellness?
To this I say poppycock!
Like for $50,000 per year for average private school tuition, how much hard work and / or creativity are universities really teaching our young?
Or for the 35% of the wealth of our society that local, state, and federal governments appropriate, how much freedom and how much equality are we really getting? Or more prosaically, for what we are paying for it how high is the quality of our airports, roads, schools, and parks?
Or how much wellness are we getting for that $2,600 MRI?
Or that $30,000(!) average hospital stay cost?
The answer, of course, is that if even the most mediocre of businesses were given access to the resources that these other institutions have that the value and customer ROI delivered per dollar spent would increase dramatically.
So how can the ambitious entrepreneur and executive leverage this accountability gap to their advantage and gain?
Well, for starters, step out more and shout from the rooftops how proud you are to be In Business – both in general and specifically as to the value your business delivers.
It is good for our personal psyches, and is inspirational for all when some of the spotlight and attention is taken away by "the other guys."
And then, reflect long hard on the connection between the experiences of your customer, the accountability mindset within your organization, and your business's online reputational scores.
Improving any of them is almost always dependent on improving all of them.
Through this Kaizen - this commitment to constant improvement - will not just further widen the accountability gap between business and all of the other institutions of our society…
…but that between our tightly measured and always improving enterprises and our more “fuzzily run” competition.
I recently shared why business intelligence dashboards are now a must have for executives seeking to better understand, leverage, and ultimately profit from the treasure troves of data surrounding their businesses.
This data includes insight from their companies’ web and social media traffic, from its e-mail send and open rates, from its lead tracking systems and sales logs, from its product fulfillment records, and from its accounting software as it records revenues, expenses, and cash flows.
Pretty basic stuff, eh?
Well, maybe when viewed one source at a time, and/or over a limited time period with just a few data points, but given that a business doing as little as $1 million in revenues now has on average more than 20 data sources – from software services like Google Analytics, Salesforce, Quickbooks, ZenDesk, to dozens of Excel files and spreadsheets of every type and purpose, figuring what to do with it all quickly gets overwhelming.
And in business, when something gets overwhelming, what happens?
Yes, all of these treasure troves of data, insight, and intelligence just gets ignored.
Reports aren’t run. Or when they are run, they aren't read.
And when they are read, they are not really mined for insight, for “aha” moments and breakthroughs, for competitive advantage.
This sad state of affairs is the unfortunate reality for most executives in this information-overloaded business world of ours.
But not for everybody.
There are a select few that as opposed to being overwhelmed, are energized by all of this precious and unprecedented data.
That use it to both inform and confirm their "gut."
And when the data and their guts disagree? Well, more often than not they let the data hold the trump card.
These executives worship at the altars of both big and little things.
Big things like strategy, mission, vision, values, and culture.
But little things too like form conversion stats, proposal close ratios, page bounce rates, call hold times, quick ratios, and net margin growth to name a few.
How do they do it?
Well, first per the above, they have a functional relationship with data. They don’t whine about it nor are they consumed with how much of it there is.
And secondly, they don’t try to sift through and make sense of it by themselves.
They let technology do a lot of work for them. Both predictive analytics technologies like Civis, Kxen, Foresee, Angoss, and Verisium.
And strategic and business intelligence dashboard technologies like Domo, Pentaho, Birst, GoodData, and my firm Guiding Metrics.
Technologies that find the signals in the noise, and that help them win both the big and little games of modern business.
So now, how about you?
To Your Success,
P.S. Like to demo our dashboard offering? Then Click Here to learn more.
I recently shared the depressing statistic on how less than 1 out of 5 companies marketed for sale are able to find a buyer and to consummate a successful sale transaction.
And how even this depressing statistic vastly under-estimates how few companies are able to attain a successful exit, as the great majority of the over 6 million U.S. business owners because of how they are structured and run can’t even contemplate commencing a “business-for-sale” process.
What did they do / do they have that your company does not?
Well, from my more than 15 years of helping companies of all types and sizes breakthrough to new plateaus of growth and value, I have discovered three universal truths:
1. Most entrepreneurs and executives make the same strategic and tactical errors over and over again.
2. These are simple errors and easy to quickly correct.
3. When they are corrected, immediately an enormous amount of latent business value is untapped and unleashed.
Webinar Invitation: The Five Steps to Maximize Your Valuation
I would like to cordially invite you to join me on Thursday, October 22nd at 1 pm ET / 10 am PT for an invitation only webinar - The 5 Steps to Maximize Your Valuation - where I'll reveal the 5 steps you can take to dramatically increase the sale price of your business, and dramatically decrease the time needed to achieve it, including:
• The 3 Mistakes that most Entrepreneurs and Executives make that effectively render their businesses unsellable
• The 5 things that all business that sell for high valuations have and do
• A simple formula to determine how much your business could be worth if you execute the right plan
I assembled this webinar presentation in conjunction with both the Growthink Research team, which over the past year has performed industry, market, and competitive analyses for hundreds of high growth companies…
…and with the predictive analytics team at Guiding Metrics, who have are currently working with dozens of companies in automating and optimizing their key marketing, sales, operational and financial metrics.
The combined statistical insights of all of this “on-the-ground” business fieldwork are the basis of the to-be presented webinar findings and insights.
Market and economic conditions will probably never be better than they are right now. I encourage all leaders of companies frustrated with their low growth rate and unclear pathways to exit to attend, listen intently, and then act on this awesome webinar content.
Sign up Here:
"Why don't my prospects buy? “Even after - especially after - I demonstrate (and they agree!) such awesome ROI from purchasing my offerings?
This palatable lament has been expressed by entrepreneurs and salespeople since time immemorial, but perhaps never so consistently and discouragingly as in this "Buyer Power" Internet Era of ours.
Yes, no matter what product or service we are selling these days, it is quite likely being received in the market by some frustrating combination of apathy, distraction, and a “commoditized” pricing pressure response.
As I have written before, statistics show that this phenomenon is accelerating and for sellers becoming even more vexing because - quite simply - buyers are just spending so much time and energy on their mobile phones to pay attention to anything else!
The result - especially for higher-priced offerings - is buyers not having the attention span to "Stay with Us" through a Problem Definition, Solution Scoping, and Work Proposal as is typical and necessary in a complex sales process.
So, in spite of the speed of communication being quicker than ever, paradoxically decision-making timelines are stretched and even more frustratingly, buyers are giving sellers “More of that Maddening Thing” than ever before: Radio Silence.
Radio Silence, or Buyer Non-Response has driven even the mentally toughest of us to a dark, philosophical place from which the only way out is by being far stronger and more committed to the value of our products and services then we are empathetic to the trials, tribulations, and competing commitments (of time and energy and everything else) of our buyers.
Yes, in the infamous words of David Mamet’s Glengarry Glen Ross’ character Ricky Roma, anyone that has “Spent a Day in their Life” can attest that only through this kind of mental toughness can we truly “Breakthrough” and get our message Heard and Bought.
Now, a bit more idealistically, this mental toughness need has another key dimension: Getting Fully Comfortable with Full Transparency.
Buyers - with quick swipes of their thumbs and clicks of their mouses - can find out just about everything about us and the value, real and perceived, that our customers have gotten/are getting from our offerings.
They can find out directly - and painfully - from the very many product and seller Rating Sites and indirectly but as powerfully via the quantity and quality of traffic and interest that our websites and social media postings receive and garner.
And when the reviews are bad and web traffic and social media non-existent?
Well, as opposed to cursing to the Internet Gods about the unfairness of it all, the Effective Executive instead takes these on as both challenges and as Charges to Keep.
A challenge to get one's happy clients to digitally share their experiences.
And a challenge to deliver and develop value-added Thought Leadership Content (No more sales schmaltz!) that shows (not tells!) our unique value-add.
And a Charge to Keep because if we can't get happy customers to talk about us or if we can’t share ideas of value to our target audience, well then it is time to roll up our sleeves and to work harder and smarter so we can and do.
And as we do this, we will develop a conviction so deep that no amount of distraction and/or apathy can shake or stand against it.
And then that palatable lament of "Why Aren't They Buying" will turn to that wonderful spirit and sense of possibility when the sale is made and the deal done.
"It was the best of times, it was the worst of times…it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.”
There is no better imagery of what it is like to compete in modern business than this famous opening paragraph from Charles Dickens' The Tale of Two Cities.
On the one hand, it truly is the best of times - never has it been so easy to market to and service a global clientele, and to leverage Free and Open Source technologies, and intelligence to design and deliver best of class products and services and thereby level the playing field with far bigger competitors.
And it is the worst of times, as never have customers been as informed with and empowered by “Compare and Contrast” buying options to almost any offering we as business sellers might conjure up.
The result too often is a “Race to the Bottom” on pricing, and perhaps more discouragingly, an increasingly “transactional” business culture and a devaluing of long-term relationships.
For many types of businesses - electronics retailers, travel agencies, and book stores to name a few - these “Worst of Times” dynamics have proven too great to overcome, and the right economic choice has been to abandon these pursuits as they are highly unlikely to ever again yield positive ROI.
Most of us, however, in so many aspects of our strategies and tactics dance daily on this “Go/No Go” Edge of the Business Knife.
Marketing and sales strategies like Paid Search, Direct Mail, Telemarketing, operational strategies like Leasing Office Space, Hiring Employees, and customer service strategies like Live Support and Dedicated Account Managers just may no longer be feasible for our business case.
And to the degree we stay with these strategies for too long - out of routine or just because we can't come up with anything new or better to do - we run the significant risk of trapping ourselves in high cost, inefficient structures that's sooner rather than later will inevitably meet their digital demise.
So how does the Effective Executive manage and decide in this environment?
To focus as the great Peter Drucker guides us on "Opportunities not Problems" yes, but to also not be Pollyanna nor delusional that we are in any way immune and protected from the severe competitive pressures of our Internet Business World?
Well, a good place to start is to take as our motto the the unofficial meaning of the acronym for the National Football League (NFL) when it comes to its players (average tenure 3.3 Years) and its coaches (average tenure 3.2 years).
Not For Long.
Yes, I think what the most successful, long term businesses of our digital age - Google, Amazon, Apple, Facebook - demonstrate that no matter how big, influential, and currently profitable a company maybe today, essential to their strategic sense and cultural ethos must be Innovation and Re-Invention above all else.
Now, in these “nimbleness” dimensions smaller companies should have a decided advantage over these multi-tens of thousands of people, cumbersome and bureaucratic organizations.
But unfortunately, my experience from working with dozens of them has too often been the opposite.
Whether because of family business dynamics, lack of technological know-how, too much work expended working “In” versus “On” the business causing atrophied strategic sensibilities, when it comes to innovation, small and mid-sized businesses way too often are like the proverbial deer in the face of the oncoming digital train.
Stuck. Frozen. Petrified.
And about to be run over and killed.
It doesn't - and shouldn't - have to be this way, as building good innovation momentum really starts with just some small acts and decisions.
Like letting go of an “institutionalized” employee - one resistant to change and growth (And yes, even if they are a family member).
Or giving up on a once tried and true marketing strategy whose time has just passed (Like the aforementioned paid search, telemarketing, etc.).
Or being honest with ourselves and looking at our product and service offerings as our customers might see them: undifferentiated, middling in value, anachronistic.
And my favorite, accepting that our Business Guts aren't really built for the digital age, and that we need to trust them less and the numbers more when it comes to deciding the right strategies and tactics to pursue.
In some ways it doesn't matter what our innovation decisions and actions are only that we develop the muscle of making and taking them quickly and often.
And then measuring - not guessing - which are working, which are not, adjusting as appropriate, and rinsing and repeating.
Do this for just a month or two - or hire an advisor to help you - and watch that Winter of your Business Despair turn magically to the Spring of its Hope.
According to statistics from BizBuySell, less than 1 out of 5 of businesses marketed for sale are able to find a buyer and to consummate a successful transaction.
Even this depressing statistic vastly under-estimates how few companies are able to attain a successful exit, as the great majority of the over 6 million U.S. business owners are never able to even consider listing their companies for sale.
That’s a lot of blood, sweat, and tears expended on work and businesses that yield comparatively very little.
Even more viscerally, working hard and long on a business that doesn't get to an exit is, far more often than not, a profound form of losing.
And losing sucks.
Now, there are always reasons and excuses as to why better and faster progress is not made: Cheap, overseas competition, difficulty in attracting and retaining talent, taxes, regulations, and perhaps my favorite the lament that one's struggles are caused by customers that don't “get” how awesome our products and services really are.
These reasons and excuses are just that. For every one of them, there are infinitely more possibilities and opportunities that with just a little refocusing of effort and action can turn declining or flat-lining business vectors into solid and sustainable growth trajectories.
Here are three of them:
1. Always Ask This One Question. The great Charlie Munger, Warren Buffet's partner at Berkshire Hathaway for over 50 years and one of the most successful investors of all time, is famous for asking his managers this question when it comes to important operational decisions: "What is the Low Cost, High Quality choice?"
What I love about this question is that no matter the business process - marketing, sales, operational, financial - it forces us to not to make the classic (and lazy!) false choice between cost and quality: we can have and deliver both.
2. Start at the End. Growthink Co-founder Dave Lavinsky’s Small Business and Entrepreneurship best-seller Start at the End should be required reading for any and all executives truly interested in building their companies to a successful exit.
In it, Dave goes into great detail as to the effective practice of business goal-setting far out in the future, and then how to work backward to today’s most important projects, tasks and to-do's.
3. Trust Our Guts Less and the Numbers More. Pioneering work by Nobel Laureate Daniel Kahneman has demonstrated that in almost all business arenas - hiring, marketing initiatives, sales teams, customer satisfaction, financial performance – almost always it is the cold, hard numbers that are right and our warm and fuzzy guts that are wrong.
This has always been true, but now for the first time we can protect ourselves from our guts, utilizing Predictive Analytics (automatically making sense and order of our Big Data world) and Business Intelligence Dashboards (automatically giving us a "Quantified Self" snapshot of where we stand in real time against our goals and what to do about it).
It is simple: Be numbers-driven, define as precisely as possible our long-term objectives, and at every turn make the lower cost, higher-quality choice.
Build these muscles and you will avoid becoming unfortunate destiny of the vast majority of your business peers…