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January 24, 2011 / Tony Arena

When and How to Fire Your Customers

By Barbara Findlay Schenck

Sooner or later, most businesses reshape their clientele for one of two reasons:

  1. On the proactive side, businesses part with low-profit customers to focus on those who deliver greater bottom-line results.
  2. On the reactive side, businesses sever relationships with customers whose demands abuse company policies and damage business profitability and morale.

Either way, parting requires effort and finesse.

Know which customers are vital to your success
The 80/20 rule, known as the Pareto principle and named for the economist who developed what’s formally called the law of maldistribution, recognizes that in any group, 80 percent of the results come from 20 percent of the participants. In business, that means 20 percent of customers account for 80 percent of sales, while another 20 percent account for 80 percent of problems.

Your job is to focus on the profitable 20 percent while not getting consumed by the demands of the costly few. To accomplish this balancing act, listen to the discontented so you can right wrongs wherever possible. But for every minute you spend putting out fires, spend four minutes nurturing your most content and profitable customers. Otherwise, you’ll tilt your business toward those who may never be entirely happy with your business.

Get proactive: Shift your clientele away from costly customers
Define your best customers — those who are most satisfied and most profitable — so you can nurture and attract more just like them. At the same time, define which customers cost your business time and profitability so you can take these steps:

  • Consider revisions. Determine if you can revise pricing or policies to serve costly clients more profitably.
  • Referrals, referrals. If you can’t serve costly customers profitably, refer them elsewhere. Extending the same friendly service style you’d advance during a sale, summarize your understanding of the customer’s wants and needs and introduce businesses you believe could better provide what the customer is seeking.
  • Follow up. It’s important to keep in touch to see that the referral worked out. Your aim here is twofold: to help the customer and to avoid any sense of abandonment that could lead to negative reviews of your business.

Get reactive (if you have to): Parting ways
Take action if a customer acts abusively to you or your employees, takes advantage of your systems or business, or ignores your payment policies:

  • Document the customer’s negative impact on your business systems, profitability or morale, and define what changes could resolve the problem.
  • Present the unsustainable operational, staffing or bottom-line impact of the customer’s demands on your business. Don’t get defensive or try to prove that you’re right and the customer is wrong. This will only inspire bad word-of-mouth — in person and online. Instead, politely present facts accompanied, wherever possible, with solutions for how to improve the situation.
  • Listen carefully (out of earshot of others) if the customer wants to tell his or her side of the story. Don’t interrupt, argue or blame others. You may learn that the client isn’t aware of the impact of his demands, or that he’s willing to accept revised procedures or fees to overcome the problem.
  • If you can’t reach an accord, make parting ways feel like a mutual decision by using a term like “not a good fit.” Then get the customer redirected to another business. “Firing” the customer might be tempting, but not when the word hits the online grapevine. Likewise, taking blame for the bad relationship may feel gracious, but it’ll fuel the customer’s sense of being wronged.

After the fact, don’t say anything negative about the customer. Instead, define what about the customer was out of sync with your business so you can avoid entering a similar, costly relationship in the future.


January 4, 2011 / Tony Arena

The Finite World

Published: December 26, 2010


Oil is back above $90 a barrel. Copper and cotton have hit record highs. Wheat and corn prices are way up. Over all, world commodity prices have risen by a quarter in the past six months.

So what’s the meaning of this surge?

Is it speculation run amok? Is it the result of excessive money creation, a harbinger of runaway inflation just around the corner? No and no.

What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.

Some background: The last time the prices of oil and other commodities were this high, two and a half years ago, many commentators dismissed the price spike as an aberration driven by speculators. And they claimed vindication when commodity prices plunged in the second half of 2008.

But that price collapse coincided with a severe global recession, which led to a sharp fall in demand for raw materials. The big test would come when the world economy recovered. Would raw materials once again become expensive?

Well, it still feels like a recession in America. But thanks to growth in developing nations, world industrial production recently passed its previous peak — and, sure enough, commodity prices are surging again.

This doesn’t necessarily mean that speculation played no role in 2007-2008. Nor should we reject the notion that speculation is playing some role in current prices; for example, who is that mystery investor who has bought up much of the world’s copper supply? But the fact that world economic recovery has also brought a recovery in commodity prices strongly suggests that recent price fluctuations mainly reflect fundamental factors.

What about commodity prices as a harbinger of inflation? Many commentators on the right have been predicting for years that the Federal Reserve, by printing lots of money — it’s not actually doing that, but that’s the accusation — is setting us up for severe inflation. Stagflation is coming, declared Representative Paul Ryan in February 2009; Glenn Beck has been warning about imminent hyperinflation since 2008.

Yet inflation has remained low. What’s an inflation worrier to do?

One response has been a proliferation of conspiracy theories, of claims that the government is suppressing the truth about rising prices. But lately many on the right have seized on rising commodity prices as proof that they were right all along, as a sign of high overall inflation just around the corner.

You do have to wonder what these people were thinking two years ago, when raw material prices were plunging. If the commodity-price rise of the past six months heralds runaway inflation, why didn’t the 50 percent decline in the second half of 2008 herald runaway deflation?

Inconsistency aside, however, the big problem with those blaming the Fed for rising commodity prices is that they’re suffering from delusions of U.S. economic grandeur. For commodity prices are set globally, and what America does just isn’t that important a factor.

In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.

And those supplies aren’t keeping pace. Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental.

Also, over the past year, extreme weather — especially severe heat and drought in some important agricultural regions — played an important role in driving up food prices. And, yes, there’s every reason to believe that climate change is making such weather episodes more common.

So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.

But that’s for the future. Right now, rising commodity prices are basically the result of global recovery. They have no bearing, one way or another, on U.S. monetary policy. For this is a global story; at a fundamental level, it’s not about us.


Originally posted:


December 19, 2010 / Tony Arena

Imagine a Better World

[VIMEO 17854149]

December 17, 2010 / Tony Arena

Playing For Change

This one doesn’t need a message…. Enjoy!

December 15, 2010 / Tony Arena

A Doggy Christmas Surprise

In 2011 make team work one of the priorities in your business. Here’s how!

December 14, 2010 / Tony Arena

The Power of Helping Others

At BCI we believe in the power of giving, that’s why during this season we invite you to help others. Charity, family, friends or even yourself, who are you going to help this Christmas?

What about children with cancer? To donate to the CCIA you can click below:

December 13, 2010 / Tony Arena

Carols with Style

December 10, 2010 / Tony Arena

2010: Year in Review

Merry Christmas!

Zeitgeist 2010: Year in Review

December 2, 2010 / Tony Arena

Avoiding business broking pitfalls

Eight common mistakes made by business agents and how to avoid them. By Tony Arena

Business brokers come to the profession from different walks of life – real estate, accounting, small business or large business. Their background usually determines what sort of business broker they will be.

As with most professions, the more experienced you are, the more you realise you don’t know. Here are some common mistakes.

1. Not analysing the figures well enough. Most business brokers are salesmen, so there is a tendency to take the last year’s profit and loss, and base the profit on that. You should look at earlier years’ profit, not to do an averaging exercise but to fully understand where the business has been and where it might be going. You should also find out how the business is trading now and present the current picture to a buyer, especially in a market as dynamic as this one.

2. Focusing too much on the figures. Once you have analysed the figures enough to gain a picture of the business from a financial point of view, it is time to step back and concentrate on the non-financial aspects. See the business from an internal and external perspective: What impact does the current economy have? How is it placed within its own industry? What is the future of this business? How important is the current owner to the business and what systems are in operation? The key to the sale of a business is transferability. The valuable broker understands this and spends a good part of his or her time investigating transferability on behalf of potential buyers.

3. Not spending enough time to understand the buyer. Brokers act for the seller and hence we are preoccupied with the vendor and their problems. Spending time with a buyer, however, may unlock important information that will help you clinch this deal or find them something else to suit. Understanding buyer personality and motivation is crucial for the accomplished business broker.

4. Not staying in touch with the seller when inquiry drops off. It is easy to talk to a seller when you are getting plenty of inquiry. But when inquiry dies down, that is when it is tough to make the call. What most brokers don’t realise is that the vendor is often as embarrassed as the broker that the business hasn’t sold. During this ‘grind’ period, the broker must maintain regular contact and seek suggestions from the seller on how to best offer the opportunity.

5. Not selling yourself. A business broker has the skills, abilities, contacts and toughness to get a business sold. Combining the knowledge that a salesman, lawyer, accountant, finance broker, adviser, mentor and marketing expert must have, the broker (in an ideal scenario) achieves a result that makes a buyer and seller happy. We as brokers don’t spell this out enough to buyers.

6. Not appreciating the value of their database. The cheapest client to get is an old one. We spend so much time chasing new clients but fail to realise that there are so many people we have spoken to that could probably become a client if we make further contact. The database is gold!

7. Not having sales targets. It’s OK to have listing targets, but business brokers get paid on sales. A broker should have a sales and commission target set for each year, broken up into quarters. A listing shouldn’t be taken unless the broker actually believes there is a good to very good chance of sale.

8. Not spending enough time on the preparation. Get all the documents you need in advance of the business going on the market. Compile all the information, create a good selling document and ask the vendor to pay for this. A dollar spent before the sale will mean two or more dollars to the vendor on sale.

Tony Arena is an REINSW member and Managing Director of Business Connection International, a Business Broking company based in Sydney.


November 29, 2010 / Tony Arena

Is Your Status Quo Killing Your Business?

To rise above the competition, you’ll have to question the sacred cows.

The more things change, the more they stay the same — especially in business. And that’s the problem, according to global business consultant, Rebel Brown.

“As much as we all acknowledge how the world has changed over the last two decades, businesses and corporations tend to continue doing things the same way they’ve always done them,” said Brown, a consultant who has worked with companies as diverse as Silicon Graphics, NeXT and Verity, as well as startups in the U.S. and abroad.

“I can’t count the number of times executives have told me, ‘Well, that’s the way we’ve always done it.’ The truth is that most companies talk about change far more than they actually engage in it. That’s because they are afraid of making any change out of fear — of Big Bang disruption, of the wrong change or of leaving the safety and comfort of the known. We’re stuck in the way we’ve always done it — and that’s a big reason why our economy is stuck in neutral.”

Brown, author of Defy Gravity, believes that the key to evolving and prospering is to not only challenge some of our most basic business assumptions, but, in some cases, to reject them outright. Brown has proven through her past client engagements that businesses that let go of the status quo will begin to rise above their competition, defying gravity in a sense. In order to start that process, Brown wants executives to start questioning some of the most common sacred cows of business, including:

It’s Our Best and Biggest Seller — Sometimes clinging to the cash cow can lead to a complacency that prevents new companies from staying in sync with what the market needs. Instead, these companies become slavish to the needs of one client, and ignore the changes in the marketplace. What’s worse is that the big seller may represent strong revenue, but all the extra attention this client commands may actually mean that it’s big only in revenue, but not in profits. What’s worse is that your company may end up completely incapable of surviving if that big seller stops selling, because myopia has prevented them from evolving to meet the changing needs of their customers.

They’re Our Biggest Customer — Are they? Sometimes our best customer commands more attention than the rest, which cuts into the actual profitability of that customer. It may also take our attention away from other customers who could account for as much profit, if the time and effort were taken to help those relationships grow. Moreover, focusing on a very select set of big customers makes us myopic to the changes in our industries, often preventing us from capitalizing on other opportunities for growth and expansion.

It’s a Huge Opportunity — The big deal, the dream client, the huge order — all things that businesses strive for — may not wind up being that profitable in the long run. We’ll discount, deal, sacrifice strategy, dedicate extra resources and throw out the baby, the bathwater and the tub to get those deals. And once we have them, we celebrate and take our victory lap, but what have we really won? We rationalize that we’ll make up whatever we spent to get the deal over the lifetime of the contract. We justify the extra effort by thinking if we can get this big domino to fall, other big ones will follow. But the reality is that those plans aren’t always sure things. Remember, huge opportunities aren’t always inherently opportunities for success. They can be opportunities for failure, as well.

“Let’s face it, two years ago, we never expected the emergence of social media as a way to communicate with and market to our customers and prospects,” Brown added. “And five years ago, many didn’t expect the web would become the major revenue driver it’s become. So, if the world around us is changing so dramatically, so quickly, why do we cling to the oldest ideas in business? If we truly want to defy gravity, we must first untie the tethers that bind us to old assumptions. We can use our innate human abilities to learn to think differently about our businesses by listening to our markets and shifting our perspectives — from gravity to growth.”

Rebel Brown helps companies define their strategies, plan their courses, motivate their organizations and deliver profitable and sustainable growth. She has worked with more than 100 global clients — from larger companies and smaller, more entrepreneurial concerns — in startup, growth and turnaround situations. She is the author of Defy Gravity

Originally posted:

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