The Entrepreneur's Acid Test

Here, at Skopus Business Consultants, we encounter many entrepreneurs that are in the start-up phase of their planned business.  What always strikes us is how many entrepreneurs, who start up, believe that a big business loan equates to equally big profits.

Consider a case where someone wants to borrow Ten Million Rand over five years at nine percent per annum.  As simple calculation will show that the borrower will have to pay back almost R 208 000-00 (Two Hundred and Eight Thousand Rand) a month!  Over a twelve-month period, such loan will cost the enterprise almost R 2 500 000-00 (Two and a Half Million Rand) per annum.

Assuming that one has meet all the requirements from a bank or an investor and that one has received such an amount of finance, what does it actually mean to the entrepreneur?

It means that one has to sell at least R 208 000-00’s worth of goods just to show a zero profit!  It means that the entrepreneur would have to work extremely hard to sell enough to cover such loan repayment.

At Skopus Business Consultants, we are not pessimists.  Indeed, we know of many cases where entrepreneurs borrowed a large sum of money and where there are success stories on how that risk paid off in the end.  In fact, if the entrepreneur’s business plan convinces the lender or an investor of having potential, such loan could easily be granted.  If such loan is then granted, it stands to reason how the entrepreneur will make enough sales to cover the capital loan, pay all the other costs, and still make a modest profit.

This is the true acid test for the entrepreneur: putting the cleverly sculpted words of the business plan into three hard results:

1.      Sales;

2.      Sales;

3.      Sales.

Many a business plan that we encounter is vague about how hard results will be achieved.  We spend many hours with our clients to clarify and test their sales and marketing plans.  We insist that the business plan is not just a piece of paper to hand in when asking for a loan.  In fact, another perspective of our acid test is that anyone who does not see the business plan as a living document must question his or her capability to make the business plan come true.

Whoever sees his or her business plan as a historical inconvenience has no future to plan for.

This is the official blog of Skopus Business Consultants.  Visit us at www.skopus.co.za

Customer Service Excellence - Part 1

Customer Service Excellence

This is one of the most elusive concepts in many businesses.  Lots of fancy words and Harvard-speak are used to describe service excellence.  Yet, many a company fails dismally to provide good service.

One is tempted to think that big corporations are very good at customer service excellence.  In addition, there is a belief that small enterprises do not have an ability to deliver outstanding customer service.

When asked, “What is the definition of customer service”, organizations find it hard to come up with a clear and crisp definition.  Some believe that superior products are the apex of customer service.  Others believe that the answer can be found in they way they handle customers, while still others believe that they offer superior service because they have been told that for the past forty years.

Remarkably, data about customer service excellence is mostly anecdotal.  Moreover, when hard data exists, there are many voices disputing what the hard data tells.  As an example, if the data suggests that the organization is unresponsive, a protest cry will sound and reams of anecdotal evidence will be offered as a counter argument.

Curiously, organizations hardly ever talk or think about customer service from the perspective of the customer.  Surely, the “voice of the customer” buzz-phrase is strewn around in very intelligent sounding Harvard-speaks. Nevertheless, when customers point out a service failure, not all the Harvard-speak in the world can change one, irrefutable fact:

Quality service lives in the mind of the customer.  

In other words, no matter what a company says or believes will change the mind of the customer – being it to the good, or for the worse.

At the very best, and because it lives in the mind of the customer, the concept of service excellence can be viewed as a highly elusive construct.  If, as an example, a customer experienced a bad day, the best possible service could be viewed as bad.  Conversely, when a customer experienced a good day, questionable service could be tolerated or overlooked by the customer.  There is thus a strong link between the customer’s state of mind and the way that the customer experiences service.

Not all entrepreneurs can say that they have a qualification in psychology so that they can understand the customers’ behaviours or states of mind.  In all honesty, entrepreneurs (or any other business for that matter), need not be behavioural scientists to understand the customer, or how to deliver service excellence.

A few common sense pointers exist in academic and popular literature and the entrepreneur should be aware of those pointers.

Over the next few weeks, some of these pointers will be discussed in detail.  In fact, our service excellence seminars use practical examples to illustrate these pointers.

In the next blog, we will answer the question, “What is customer service?”

This is the official blog of Skopus Business Consultants.  Visit us at www.skopus.co.za