Scary isn’t it? If you’re running a business, it seems that the road ahead is going to give you a bumpy ride. The election is now over, and we’ll soon have a new budget. The chances are that we’re in for some major public spending cuts that will ultimately affect the buying power and patterns of that vast majority of UK citizens and businesses. Some sectors have already seen a significant reduction in sales. Just compare the high-street retail sector now to what it was in 2008. Gone are Woolworths, Borders, Zavvi, Threshers, Land of Leather, Adams, Waterford/Wedgewood – the list is long.

And it’s not just retail or consumer-driven businesses that are suffering. The UK Manufacturing industry ‘fell off a cliff’ in late 2008, and many have not survived to see an upturn.

Of course, it seems obvious doesn’t it? If people have less money to spend, and are worried about their immediate future, then they are less likely to spend, invest; they are less likely to buy. But it’s not just the lack of cash or confidence that is causing businesses to suffer from lack of sales. All recessions tend to sort out the weak from the strong. Businesses with very clear value propositions, that deliver very good products and very good services, with great efficiency and vision tend to survive recessions – many even prosper in this environment.

But this recession is like no others. The reduction in demand for many goods and services is not just down to lack of cash and confidence. The buying patterns of those able to spend have changed. The recession has actually forced people and businesses to do much more research on what they actually need; to search out new solutions and suppliers. Businesses are also now more focused on what they really need, and are prepared to consider many other options and alternatives than perhaps they would have done before 2008 (including the option of doing nothing at all, or using suppliers they would never have chosen a few years ago). The internet is also playing a significant part. Of course we can now search for almost any item or service and find a myriad of suppliers. But social networking and business community sites now also connect together players within a supply chain. Consumers and business are starting to trust these communities more and are now putting their cash where their faith is – and often it’s not with the traditional players.

At the same time, many businesses continue to do what they have always done. They are simply trying to ‘wait out’ the recession; to muddle through until demand picks up again. Some pile on the buying promotions, ramp-up their sales incentives, fire and hire different sales talent and hope that these actions will see them through. Some will make it, many will not.

But while all of this is happening, there are many businesses that are in fact prospering in this new landscape. Those businesses that have been pro-active and re-assessed their sales and marketing are the winners. To be successful in this new landscape you need to re-evaluate your target market. Know in much more detail what your clients are really looking for and why they buy. You may need to adjust your sales approach, your go-to-market strategy. The new sales model is more about creating an environment where people want to buy than pushing a sales cycle towards a reluctant or hesitant buyer. If buying patterns have changed, then has your sales model changed to reflect the new status quo?

It used to be that to be successful at selling you just needed the right sales process, with the right sales talent, the right attitude, the right behaviours and sales measurements. Those are now a given. To be successful at sales in this New Economy you need to fundamentally change your approach to selling.

Guide to High Performance Sales in The New Economy

Vistage is the world’s leading Chief Executive organization, with over 15,000 members around the world. To reflect this new economic landscape we’re now in, we’ve produced a brand new UK Guide to High Performance Sales in The New Economy that tells you what to focus on to improve your sales in the current times. To download your copy, simply visit www.neweconomyblog.co.uk/hps5 and fill in your details.

I wish you the best of luck in growing your sales. I hope that this brief article helps a little, but be sure to request your copy of our new Guide to High Performance Sales in The New Economy – it has much more detail and tips that might help you.

Best of luck

Steve Gilroy
Chief Executive
Vistage International (UK & Ireland)

There are many things that are changing or have renewed focus in this new environment we call ‘The New Economy’. Sales performance is always a concern and area of focus for businesses. The recession has caused businesses to focus even more on this area, but more focus alone is not the answer. The following is a blog posting by Lars Tewes (pronounced ‘Tavis’). Lars is a true sales leader, and delivers very sound advice and guidance to businesses on how to put in place reliable sales processes and behaviours that drive true sales performance. So I post the article below because it contains some very simple but key messages. The business world has truly changed. We need to modify our sales behaviours to reflect The New Economy. The following article gives us some great advice …

“Preparing for the new economy” is a very exciting prospect. However, the reality is that there will be some winners and some losers and the question to ask is what will separate the two? Roger Martin-Fagg described the economy we have just witnessed as the “rentier economy”, saying we are now entering a period when the businesses that survive will be those that truly add value and drive out the less effective and inefficient business models.

If that is true, then the link between the “all important” client relationship and our product/service offerings is the sales function. “Sales culture” and “sales competence” are often the two missing links. (I am naturally referring to professional and ethical selling as opposed to the stereotypical negative image that salespeople have often been tarnished with).  Working with clients in the tougher market of the past 10 months (Vistage members among them), I have been amazed at how many still leave the sales teams’ success to chance. We see thousands, if not millions of pounds, being spent on IT and operational systems to improve efficiency and costs. However, when it comes to the most important link between companies and their clients, we often find them neglecting the front line that represents them – their salespeople, not in terms of commission plans (many of which are generous), but much more real issues.

There is often a view that you are either born with a natural sales talent or not (with phrases such as, “he is a natural salesperson”, “she could sell ice to Eskimos” and “he has the gift of the gab”, being attached to top sales people), rather than selling being a learned skill, so in many cases company culture almost shuns sales. Roger Martin Fagg emphasised that trust and relationships, not transactions will be the key differentiator in the new economy. Those that prosper in the new landscape will be the ones that develop a true sales culture across the organisation.

The second key element is committing to strong sales leadership. Sales Leaders have often been promoted into this position because they were top salespeople not because of their leadership skills, and so are set up to fail because they have not been given the correct structure, training and environment for leading. Talented, experienced salespeople get lazy and miss opportunities, new salespeople arrive motivated but very quickly become demoralised by spending time with the wrong people and do not stand a chance of being successful if they do not have strong leaders.

Therefore if a company is to prosper, they need to give sales managers the structures, measurements and tools to help hold their people accountable to their goals. They must support, encourage and endorse their people to be strong in the following three High Performance Sales Habits:

• Commitment to continual skills development: their own sales skills, the products and services they offer, the market / territory they work in or their client knowledge.
• Commitment to Self Management: discipline, organisation, planning, delegation, team work and, most important, activity.
• Commitment to Self Motivation. Like sports professionals it is essential to consciously work on confidence, self-talk, goals and attitude.

The astute sales leaders have realised that sales is not a numbers’ game, so much as it is a ratios’ game. For example, if you know that it takes five calls to get a meeting and three meetings to get a proposal, and three proposals to get a sale, and the average sale is £2,000, then for the first time you can focus on the areas that need fixing. We call these ratios the Critical Success Factors (CSFs) and when tracked over a period of time, they DO NOT lie. You should work very closely with the salesforce to analyse these ratios, to see what you need to work on at each stage to improve your sales. You cannot manage what you cannot measure and CSFs must be visible in the salesforce and used as a motivator to help show people how they can improve.

In summary, do not leave sales to chance. By having the right systems, training and tools in place, it allows the salesforce to be more flexible in the areas they can add value and show their real talent. At SBR Consulting we believe that those companies that prosper will be those who were committed to “liberating the sales potential” within their organisations.

Case Study

We are working closely with a Vistage member where, initially, the leadership said the sales team were respected and important, however, when we consulted with the other departments, they saw it differently. Other departments were saying things such as; “We don’t know what they do in the sales area, but that’s okay, they are different to us”.  Even more interestingly, there was not a sales leader represented at the weekly director meetings. By firstly helping to distinguish this “us and them” mentality and encouraging the whole company to see themselves as part of the sales culture, we saw immediate change in attitudes and support.

By Lars Tewes

We’ve all seen the headlines. In the current economy, many businesses have tried unsuccessfully to raise finance. Their experiences have varied with lots of “flat no”, some “protracted maybe” and very few “definite yes” responses from lenders. The financing prospect for many businesses looks very bleak:

• Banks continue to strengthen their balance sheets. Lending is available, but is much tougher to achieve with higher rates, more security needed and more ‘setup’ or ‘consultancy’ fees than ever before.
• Government loan schemes have had a very low take-up, with demanding information requirements.
• Reduced trade credit insurance limits have increased debt requirements just to maintain existing trade.
• Venture Capital firms have focused on recovering lost value in their existing portfolios. Many funds have dried up.

According to a recent survey by the Institute of Directors, nearly 60% of UK businesses were refused credit by their banks last year, despite the government’s efforts to boost lending. The survey found that 57% of businesses were denied money, and 20% used credit cards to finance their business. The report contradicts recent claims by banks that they are lending to companies that need finance.  Recent editorial in The Daily Mail took a blunt view with headlines such as ‘SMALL FIRMS LEFT TO STARVE’ and ‘IN PROFIT BUT BANK SAID NO’ and ‘WE’VE HAD ZERO HELP’.

On the 19^th of February, the Bank of England revealed that bank lending to businesses fell by a record 8.1% last year. It also said that lending to businesses ‘fell across all the main sectors’ for the third successive quarter’.

John Wright, national chairman of the federation of small businesses said that many firms faced huge problems in raising capital.

Economists, business associations and some high-profile business leaders seem to agree that 2010 will be no different, and businesses should not expect a return to 2007: businesses need to get used to the new economic environment.

Behind the headlines, the reality is that all of the banks are desperate to lend more money to increase their profits, BUT their credit departments have raised the bar in terms of criteria and commercially they have increased their prices. So, better-presented business cases are essential. In ‘the good times’ perhaps we all got a little sloppy. Banks (and many others) were keen to lend with often just a brief glance at a proposal or business case. You could apply on-line, you could self-certify – it was very easy to apply for credit. So we all got a little lazy, and now we’re back to reality – and what a shock it has been for many businesses. I have seen several examples of business proposals and business cases for funding, and most of the time they have been weak, ill-prepared, full of gaps, badly presented and without key data. I’m not surprised that many businesses get turned down – they seem to put very little effort into their applications. I’m not a huge fan of Alan Sugar, but I think he did have a valid point when he recently said that some business leaders were ‘living in Disney World’ with their applications for business lending.

So what can you do to maximise your chances of raising finance in the new economy?

Well, the general views of those in the finance business seem to be saying that businesses need to get much smarter about where they look for finance and how they ask for finance. The days of simply relying solely on your local bank have gone – you need to be prepared to look at other banks, other options. And whatever options you look at, they all have one thing in common – they are looking for solid business cases, with good data to support your case and evidence of having the right talent in place to achieve your goals. It seems that many business owners are woefully ill-prepared when asking for financial support – from their bank or from any other source. Simply relying on your trading history just doesn’t cut it any more – lenders need to see a good business case and have confidence that you’ll achieve your goals despite the current economic situation. It’s never been more important for your business to stand out from the crowd – so you need to have your case more prepared than ever before.

Guide to Raising Finance in The New Economy

Vistage is the world’s leading Chief Executive organization, with over 15,000 members around the world. To reflect this new economic landscape we’re now in, we’ve produced a brand new UK Guide to Raising Finance in The New Economy that tells you what your options are and how best to present your case for business finance. To download your copy, simply visit www.neweconomyblog.co.uk/rf6 and fill in your details.

I wish you the best of luck if you are currently searching for business finance. I hope that this brief article helps a little, but be sure to request your copy of our new Guide to Raising Finance in The New Economy – it has much more detail and tips that might help you.

Best of luck

Steve Gilroy
Chief Executive
Vistage International (UK & Ireland)

Greetings!

Like many business leaders, I have enjoyed a business career that spans several businesses, both in the UK and internationally. My current role is Chief Executive at Vistage International (UK) – the world’s leading Chief Executive organisation. The past two-three years have been the most challenging that many of us have ever seen. Fundamentals shifts are taking place within our economy and within the business models that we practice. My background and interests are in two areas:

-          What are the business models, opportunities and challenges that we now face, and how are they different?

-          Aside from the economic challenges we now face, what further changes will the use of technology bring about, and what will that mean for current businesses and brand new business opportunities?

And so I’ve started this blog to present ideas, opinions, reflections and comments on what I see around me, and from my work with Vistage members, Vistage Chairmen and Vistage Speakers. The views are my own – so please feel free to challenge me and disagree!

We use the term ‘New Economy’ at Vistage because we do believe that the world has changed. The recession, while it has been very tough and painful for many, has actually forced a new reality for businesses and individuals. Perhaps we’ve all been living a lie for the past few years. Living beyond our means in a reality that was never sustainable. So now, we’re back to the real world with a loud ‘thud’. But the changes, although they were mostly forced upon us have made many businesses realise that there are new ways; that we don’t have to do things just because they ‘have always been’.

And in parallel to everything that has been happening with our economy, the opportunities presented by technology and the internet continue to move forward and change direction. The rules of the game keep changing. Entirely new games have actually appeared, with new players and new playing fields on which we can engage.

So this blog will be a mixture of business and economy content, occasionally complimented with features and commentaries on how technology is changing the rules of the game. I hope you get something out of my entries, and please do respond and let me know your thoughts – conversations are better than monologues!

Regards

Steve Gilroy
Chief Executive
Vistage International (UK) & Ireland)

Prospering in the New Business Landscape.

At Vistage, our role is to make our members better leaders. Below you will find a white paper that we’ve produced that suggest what business leaders should be focused on to succeed in The New Economy. I hope that you will find it valuable in planning the future for your business. I welcome your thoughts, comments and suggestions.

You may have seen the revelation earlier this week by the Recruitment and Employment Confederation and KPMG, in their latest Report on Jobs, that the rise in permanent placements in the UK during December was the highest for nearly two-and-a-half years.

The report also said that December was the fifth successive month in which hiring of permanent employees grew and that temporary staff placements also rose during the period, to a 30-month high. So have we really turned the corner, and is UK PLC now into hiring mode again? I don’t think so.

I’m as happy as anyone at the good news, but I think it’s important to keep these developments in proportion. The reality is that I don’t expect overall unemployment levels to improve markedly in the short-term and, unfortunately, I think we have some further pain to endure in the coming months.

Trends in unemployment tend to lag behind underlying changes in the economy. We’re now hearing news of ‘green shoots’ and the ‘start of the recovery’, prompted by surveys such as that from Deloitte this week which showed confidence among finance directors at its highest for more than two years. However, there are still plenty of businesses out there that may not survive the year or still have tough decisions to make. And, of course, when government spending comes to a crashing halt, as it surely will in the next two years, the ripple effect will add to unemployment levels, especially among public sector workers.

Although, as the Report on Jobs indicates, companies which made deep cuts in their workforces early in the recession may now need to re-staff, I suspect most will do so very carefully – using self-employed, contract and temporary labour where they can.

The number of workers in these categories will therefore grow this year, as they make major contributions in all sectors of industry – this is a trend that I believe will continue.

The days of ‘one job for life’ have now truly gone and many roles can be flexible in their nature. If they’re planned well, new flexible employment arrangements can therefore suit both workers and employers.

One group to benefit from this trend could be the many retired people the recession is prompting to re-join the labour market, as many of them are specifically seeking part-time and flexible roles. Their availability could also be a boon for employers, especially in sectors such as manufacturing, as there are many highly-skilled operators among these aspiring returnees.

At the risk of going off at a slight tangent, it’s also worth pointing out that big changes are taking place in the means of hiring workers. In general, employers are finding that technology, the internet, social networks and personal recommendations or referrals are very effective and much cheaper than traditional methods of recruiting. Specialist recruitment agencies will still have a place in the future, particularly for employers seeking scarce skills or filling niches, but I do foresee a significant move away from traditional print advertising for recruitment in the months ahead.

So what does the next 12-24 months have in store for the UK job market? Do you see employment growing or contracting? And what is your view on new employment formats, and recruitment methods? Has the world really changed, or is it just another cycle of more of the same old things?

Let me have your thoughts, and any specific examples that you have to detract from or backup my points above.

The political events of this week – widely interpreted by experts as the unofficial start of the General Election campaign – have got me thinking about the whole subject of leadership. This is because great generals, whether in business or politics, undoubtedly possess many of the same qualities. I guess that politicians have the added challenge of playing out their roles fully exposed to public view, which let’s be honest, must be a significant challenge in itself. And as the election campaign seems to have started really early, then we’ll all have ample opportunity to review the performance of our prospective new political leaders.

As part of what we at Vistage call the New Economy, we’ve already identified a series of characteristics that brilliant business leaders of the future will have to exhibit. Here are some of them and I though it might be fun for you to assess the extent to which they apply to the prime ministerial candidates vying for our votes…particularly if you haven’t yet decided where to put your cross on the ballot paper.

Setting the Strategy and Vision: These are often confused…but whereas strategy sometimes has to change, the vision should alter only rarely. In tough times, it’s particularly important for leaders to be visible, providing a clear direction and communicating it consistently to their people. Brilliant leaders make it clear that a few diversions won’t stop them reaching the intended destination.

Communicating: Brilliant leaders are top quality communicators, though not necessarily orators.   They get out among their people and show them how their efforts connect and why they matter, reminding them of the benefits achieving the vision will bring to them and other key stakeholders. They interpret current events and place them in a context that’s meaningful, relevant and motivating. In a nutshell, they get out, communicate and inspire.

Demonstrating Priorities: Brilliant leaders demonstrate overall priorities by how they spend their own time. Having articulated the vision, they reinforce it and focus their own efforts on the area in which they can make the biggest contribution to its achievement. They then invite the same discipline of people reporting to them and the behaviour is thus cascaded throughout the organisation.

Establishing Trust and Loyalty: Getting the most from colleagues involves them delivering their best discretionary efforts…which means them being motivated to go beyond supplying the merely compulsory. Brilliant leaders provide the platform for this by developing trust – through openness, fairness, reliability and recognising the contributions of those working alongside them to achieve the vision. By building trust leaders also develop loyalty from their colleagues, and this in turn brings commitment and passion.

Those are just some of the abilities we see making brilliant leaders in the future. If they’ve helped in deciding your political preference, we’ve obviously performed something of a service!

Now, why now let me know your views? No, not about whom you plan to vote for, but whether you agree that all these qualities will be vital in the business leaders of tomorrow and what other qualities you see as being essential in the New Economy.

I look forward to seeing your responses and wish you a very prosperous 2010.

We are all too familiar with the steep rise in unemployment over the last 18 months and, without doubt, many of our members have had to shed some staff to survive. However, it does beg the question of how SMEs are going to respond as recovery slowly ensues – when staff are at lower levels, the slightest of green shoots may be enough to strain the capacity of some businesses. 

Those who did make deep cuts in their workforce early in the recession may now need to re-staff, but with the peaks and troughs of the W-shaped recovery Vistage UK’s top speaker and leading economist Roger Martin-Fagg predicted, it seems many may do so carefully – perhaps using contract and temporary labour where they can.

Indeed, I think these groups will have a major contribution to make to all our industries in the new economy. The days of ‘one job for life’ are becoming a distant memory. Many roles can actually be flexible in their nature, and if planned well, can work for the employee and the employer.

I think we can all expect to see a marked growth in flexible working, part-time, self-employed and contract labour, and from listening to our members, I think we will also start to see more of a shift in the way businesses will recruit – with technology, the internet, social networks and personal recommendations or referrals coming to be seen as cheaper alternatives to traditional means of recruitment.

There is no doubt specialist agencies will still have a place and anyone focusing on a special skill area or niche will still have a role to play but, with the coffers being far from full, traditional print recruitment advertising may become a thing of the past for many businesses – at least for the time being.

What do you think? Do you see any changes in the way you will staff your business?

Remember that old joke about laying all the economists in the world end-to-end and them still not reaching a conclusion?

Very unfair, of course. The fact that we, at Vistage UK, believe in economic forecasting is easy to see – just look at the regular predictions we issue, prepared by Roger Martin-Fagg, one of the best practitioners around.

I was reminded of that old insult, however, when I read reports this week that the Ernst & Young Item Club believes the UK economy is already out of recession. That view is expected to receive backing later this week when the Office for National Statistics announces economic output was either flat or headed upwards in the third quarter of the year.

Before you rush out to celebrate, however, be warned that not even the comparative optimists of the Item Club are suggesting choruses of Happy Days Are Here Again are appropriate yet. They expect the economy will “bump along the bottom” for the next 18 months or so, growing by a mere one per cent next year, compared to the almost unprecedented 4.5 per cent collapse in output during 2009. They also say interest rates will remain very low for many years, as the economy struggles to regain full power, following the recent problems. 

The Item Club’s view does contrast pretty starkly with that of Roger, however, who predicts GDP growth will actually be W-shaped, with a slight recovery this autumn being due to restocking and proving strictly temporary, as households and companies continue reducing their debt in the months ahead. He says that by 2012, the UK economy will be no bigger than in 2005.

If that hasn’t made you depressed enough, Roger also believes that: unemployment, particularly among the under-25s, will keep rising; credit will continue being hard to obtain and expensive, with the era of cheap money not returning until 2017; the high level of business failures will be maintained; and there’ll be no resurgence of commercial or residential property prices. I could go on, but there may be sharp objects around…I think you get the drift.      

There’s therefore clearly a divergence of view between the Item Club and experts like Roger, over the shape of the curve in the foreseeable future. So it would be fascinating to hear how things look from your viewpoint: do you agree with one of them or hold a completely different view? Why not drop us a line and let us know?

Read my article in Further Education Today to question whether the education sector has adapted to the changing needs of employers and potential students and if our education system is fit for purpose in the New Economy.