What is the purpose that drives all the business building activity?

Businesses that experience superb growth typically have an owner, or owners, who have clarity of purpose and that purpose sits at the heart of everything they do.

I have written before about the 6P’s of Peak Performance as being that systematic approach to doing the key elements of building a successful business and evening out the revenue or production performance (see The 6 P’s of Sustained peak Performance ), however during a recent workshop the question arose as to where these actions fitted with Purpose.

An excellent adviser and friend, Keith Kerr, was present and he hit the nail on the head when he said “Purpose sits in the middle of the process and the Purpose guides the decisions in each area”.

Having clarity of purpose is is being able to answer the question “why are we doing this at all?“

It is akin to “vision” or understanding what the end game is for your business…what you are trying to achieve. But Purpose brings in another dimension beyond having clear vision of what the business aims to achieve.  Having clarity of purpose brings in the personal dimension: what is actually important to you?  Does your business activity reflect, or sit comfortably, with your own values and personal goals?  Will it help you achieve your personal goals and lifestyle objectives?

Identifying that clear purpose for you personally will help shape the systematic approach to building a business that gives you what you are aiming for as it will help guide decisions and actions in such a way that they feel right as well as energise.

Once you can identify what the point of all this business building activity is,  then getting out and promoting, producing, pitching, processing, perfecting and planning becomes substantially easier – and worthwhile.

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Paul Tynan

The mere mention of the words ‘sales’, ‘selling’ or ‘salesperson’ in financial services and it immediately generates a vision of a negative stereotype from a bygone era where a pushy, commission focussed, fast talker enticed unsuspecting consumers into buying products or services said Financial Service Brokers (Connect) CEO Paul Tynan.

Like many things in life, the reality is far different from the perception and one only has look at the majority of long term financial advisers that are still in the industry today providing exemplary service for their clients.  At the same time, they are mentoring the next generation by passing on those invaluable interpersonal skills required to engage effectively with consumers in the FoFA era.

“Although the words ‘sales’ and ‘salespeople’ are no longer fashionable and referred to negatively in financial service circles, they still exist in reality as there is no function or activity in life that doesn’t require selling of some kind”, said Paul Tynan.

“For example, you sell yourself to clients, prospective clients, business partners, friends, etc.  Furthermore, you sell your knowledge, experience, qualifications, advice and communication skills – and the list goes on”.

According to Tynan, this does not however stop financial commentators warning the world to move away from sales and focus on advice which serves the clients best interest.  However, regardless of the diminished regard for the sales function, it is still a fundamental aspect of everyday life and a skill that requires years to master.

“Too many people are focused on the end solution – which in the majority of cases involves a ‘product’.  The sales and product nexus is a part of life – we would all be better off when the hang-ups of ‘selling’ are left in the theory books. Selling is a part of life”, affirmed Paul Tynan.

The true art of salesmanship is not in trying to sell a product or service, but seeks to solve an underlying issue or problem.  The modern sophisticated consumer doesn’t want someone rattling off features and benefits in a robotic monotone.

They need someone to ask questions, probe, challenge and then assist them to identify the problem and discover a solution they’re comfortable with.

Far from disappearing into the pages of history, salespeople are actually evolving and needed more than ever before.  Good and great salespeople throughout the years have tended to share a common trait…they sincerely care about their clients and the people with whom they do business.

As an example, recently Tynan was conducting a succession planning meeting with a four partner accounting firm and asked if the business firm had a buy/sell agreement and the answer was yes.  He then went on to ask what level of funding they had in place and they all sat there stony-faced.

He then asked if they had any insurance in place to fund the buy/sell agreement and their answer was ‘no we don’t deal in product’.  Insurance is not product ‘flogging’ – it is the solution after professional advice is given.

Paul Tynan concluded, “The biggest criticism I receive about new entrants to the industry (and the primary reason why so many fail and exit) is their lack of soft skills, inability to network and prospect and deficiency at finding clients and establishing referrals.

“Look at the world’s top entrepreneurs – they are the number one sales person for their business selling their vision; Jobs, Gates, Buffett, Branson, Ellison, Forest, Symond and Zuckerberg.  First and foremost they are all great salespeople – who said selling was dead”.

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• The services sector is going backwards. The Performance of Services index fell from 50.7 to 46.2 in November. Any reading below 50 suggests that the services sector is contracting. The services sector has contacted in nine of the past 11 months in 2010.
• New vehicles sales rose in November. There were 87,342 new motor vehicles sold in November, up 1.8 per cent on a year ago. Sales of four-wheel drive vehicles hit record highs over the past year.
• Car affordability is close to the best levels in 34 years. CommSec estimates that it takes the average worker just over 31 weeks of wages to buy a new Ford Falcon.
• CommSec has estimated that vehicle sales rose 1 per cent in seasonally adjusted terms in November after falling by 0.6 per cent in October.

What does it all mean?

• Had it not been for a modest lift in car sales, economic data over the past few days would have been uniformly dreadful. And while we estimate that car sales rose in seasonally adjusted terms in November, the gain was modest with an estimated lift in sales of around one per cent.
• Certainly the services sector is depressed, impacted by higher interest rates, a stronger currency and the conservative buying behaviour of consumers and businesses. The Reserve Bank has a habit of applying one too many rate hikes, and that appears the case with the decision to lift rates in November.
• Businesses are under substantial pressure at present with costs edging higher and consumers driving hard bargains. Input costs jumped sharply in November but the reading of selling prices actually fell. Business margins are constrained, thus depressing profitability.
• A period of interest rate stability would clearly help the situation. If the Reserve Bank stayed on the interest rate sidelines until mid 2011, consumers may be tempted to open their wallets again.
• The car market is in reasonable shape. While sales are rising, the gains remain quite modest as savvy consumers and businesses weigh up their options.
• Clearly Australia’s love affair with the four-wheel drive shows no signs of ending. One in every four vehicles sold is a 4WD vehicle and that ratio could lift to one in three over 2011. The usual deterrent of 4WD purchases is the rising cost of fuel but petrol prices have actually been reasonably flat over 2010. And Aussies just love the versatility of the four-wheel drive or sports utility vehicle.

What do the figures show?

Performance of Services index

The Performance of Services index fell from 50.7 to 46.2 in November. It was the ninth time in the past 11 months that the PSI has been below 50. Any reading below 50 indicates a contraction of activity.

The property and business sector was the only one of the nine sectors to record growth (reading above 50) in the latest month.

Sales, orders and employment all fell in the month with each now below 50, suggesting weakening activity. In fact only input prices and wages have index readings above 50.

Profitability is clearly under pressure with the index of selling prices falling 1.6 points to 49.0 and input prices up 4.3 points to 64.4.

New vehicle sales

The Federal Chamber of Automotive Industries reported that 87,342 new motor vehicles were sold in November, up 1.8 per cent on a year ago. Passenger car sales were up 5.0 per cent on a year ago, 4WDs were up 13.3 per cent, heavy commercial vehicles were up 6.2 per cent but light commercial vehicle sales were down 18.9 per cent. ·  Over the past twelve months, 1,037,695 new vehicles were sold – the highest annual total in 25 months – but still below the record high of 1,068,301 vehicle sales in the year to June 2008.

CommSec estimates that vehicle sales rose 1 per cent in November in seasonally adjusted terms – the third modest gain in four months.

Over the year to November a record 236,346 four-wheel drive vehicles were sold, accounting for a record 28.7 per cent of all combined passenger and 4WD vehicle sales.

CommSec estimates that car affordability is close to the best levels since the 1970s. It takes someone earning the average wage just over 31 weeks of wages to buy a new Ford Falcon. Five years ago, the average worker would have needed to work an extra month to afford the same car.

What is the importance of the economic data?

The Australian Industry Group and Commonwealth Bank release the Performance of Services index each month. The PSI is a key indicator of conditions in the services sector – includes retailing, finance, hotels and cafes.

The Federal Chamber of Automotive Industries release figures on new car sales at the start of each month. The data is useful in gauging consumer spending behaviour.

What are the implications for interest rates and investors?

Overly optimistic analysts have some soul searching to do. Retail spending is slumping, the services, manufacturing and construction sectors are going backwards and the non-farm economy actually contracted in the September quarter. The mining sector is not coming to the rescue of retailers or builders – for that we have to rely on a period of stable interest rates to allow some positive momentum to take hold.

The car market is in reasonable shape, but we can’t say the same for many other businesses that are reliant on consumer spending. Holding in the car market’s favour are lower prices, serving as an attractive inducement to car buyers.

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