Direct or Dealers ???

You've developed a terrific product with excellent margins.
Great!
What next? These are the questions you may be pondering:Who am I going to sell it to? Or through whom will I sell it? And how much must I give away.

Here are some thoughts:
1. Selling direct is tough but possible. A strong ad program to generate leads will be critical.  Reps cold calling wastes your time and theirs.  For a new company with a new product this may be the only alternative.  Dealers may worry about taking on a new product and new company. Selling direct also means providing direct parts sales, and providing direct after sales service. This last item is more important than parts sales if the parts are standard among other manufacturers.

2. Selling through dealers/distributors.  A dealer network already exists for your product. Yes, it truly does. The only question really is the discount from retail.  Dealers have substantial investment made in developing their client list, their physical location, their tech staff, parts departments. In addition they have a reputation in the trade area they service.  All these are available to the new product but for a price.

3. Some manufacturers become obsessed with how much the dealer makes for "essentially doing nothing." This is crazy and nuts and a sure sign of both ignorance and arrogance.  New companies frequently want to establish complex discount programs for parts, products, so that the dealer really has to work for the commission. Established dealers are suspicious of such programs, especially from new companies. New companies must earn the right to dictate terms because in the early stages of business the balance of negotiating power is with established dealers, not new companies.

4. The best way to gain a solid reputation with dealers is to be generous with the discount, relaxed on inventory requirements, yet still maintaining a disciplined 2% net 30 payment term.

5. Some new companies resort to rental.  Allowing dealers to sub-rent brings them on as well.

6. The key point with dealers is not to worry about how much money they are making on your product, but rather to help them find ways to build their business using your product.  [Also: don't include outrageous interest rates in figuring your rental rates. If the banks are lending at 10% don't expect your customers to accept it.


Finally obsession with patents products will usually absorb the needed energy for aggressive marketing.  The software industry learned this early.

Curiosity is Cing

Critical to conquering successful international business is an insatiable curiosity and the subsequent willingness to go deep in finding key contacts.  One must realize the obvious but frequently dismissed fact: everyone is somewhere, just find out where that somewhere is and you have found them.  Meaning: when you haven't found your key contact dig like a dog in search of a bone!  Disorganized....organized... doesn't really matter. What matters is a fierce determination to find that contact and then make contact. This requires dogged hard and intense work.  But the payoff will come sooner or later and sooner the more fiercely one works at it.  Remember they have the cash that belongs in your pocket.  They have your commission! Track them down and convince them that by handing over their money to you and then you handing them the product that their wants will be quenched like water surely quenches fire.

International work isn't for the lay-about.  A 13 hour plane ride is too tough for you?  It takes that long to drive from Salt Lake City to Phoenix. Would you make the drive if you knew your big commission was in Phoenix. Oh yeah!  Both are miserable trips but neither lasts forever.

Can't speak the language? The language of $$$ and a contact at the US embassy will connect a qualified interpreter with you in a matter of a day or two.

What's your next excuse?

Call to discuss further

"So Prove It" Part 2

Your prospect may be thinking it, or may be saying it, or may be pounding the table with his eyes popping out of his skull and the veins in his neck ready to burst.

At some point you must show proof. What is proof? Proof is defined as a demonstration which proves in the mind of the prospect the results you are claiming.

And that is the rub.  You may be in love with your demonstration, but your prospect may still remain unconvinced. Benjamin Franklin observed: A man convinced against his will, is of the same opinion still.

I've seen it happen to others and it has happened to me.

Why do proofs fail? Here are a few common reasons:

1. The prospect hasn't been prepared by you.  Which is to say the explanation leading up to the demonstration has failed to prepare the prospect for the punch line.
2. The proving demonstration failed to operate correctly.  Very costly mistake due to lack of your preparation. Every demo needs a few dry runs and a dress rehearsal.  Make sure the operator is rested, relaxed, and ready to respond to questions.
3. The demo doesn't fit the prospect's problem. Nothing worse than having the right answer to the wrong problem.  Manufactures who focus only on selling what is inventory frequently find they are demonstrating products for which a need existed three years ago, but the need was filled better by a newer product 6 months ago.
4. The demonstration lacked zip, organization, and precision. I recall having the Hitachi general sales manager in Australia look at a machine I wanted them to sell.  Hitachi is crazy for "fit and finish." The machine we were demonstrating didn't fit together well, there  were welding splatters all over it, the paint job had several noticeable sags precisely at eye level.  [Remember a static machine is a demo of the manufacturers ability.]  Later we showed the sales people and the dealers that the machine worked very well. That evening on a river cruise and steak fry the general sales manager complained, for the 15th time, about our fit and finish. I'd had it with his pestering. But he was right; I had to admit it. Finally I blurted out the truth: "Well, it does look like hell, but it sure works like the devil."

A demonstration is like a great movie. It must start off with a bang, have a climax, and then finish off with a great ending.  If you have trade shows coming up, remember these points.

p.s. Just had a demo go bad and I wasn't allowed to be on hand for the demo....owner didn't want to spend the money for me to be there.  It was a $3.5 million deal.   Before the owner got it going and tested to make sure the bugs were out, they invited the customer to see it. The customer had to fly/drive about 800 miles to see it. Machinery only worked about 50%. So the customer got the privilege of seeing a busted demonstration.

Part 2:
Well the customer bought the order anyway and I was happy to get the commission. However the commission should have been larger but the customer beat the heck out of us on the price, all due to the busted demo. I had the unfortunate privilege of making the above mentioned 800 mile round trip with just the both of us in the car.  He's a Frenchmen so wasn't interested in hearing Rush Limbaugh, or Golden Oldies during the drive. He was hopeful going to the demo, and rather peevish the 400 miles back to the airport.


There are 4 key tasks which must be achieved to sell construction equipment, dental equipment, or even clothing.  Watch for the Big Four on my next post.

Don't get lost, and getting lost is natural

What to do?In the kerfuffle of starting and running a business it is very easy to be caught up in the thick of the thin. When you are forced to play the money game it is easy to forget why you started that restaurant, bar, construction company, race track, or HVAC contracting business. The mental and family pressures can be quite intense and not easily relieved.

So what to do?

Drop back 10 yards and punt.

A strategic retreat is designed not to give up but rather give time to re-strategize so as to more ably deploy resources and recapture the initiative.  It's tough on the ego, but better to be a bit humiliated that forced to Chapter 11.

We can help. www.EricStoddardConsulting.com has more than 60 years of business leadership experience at your beck and call. That does not mean we are cheap.

Extra Effort Pays Off

If you ever played football, you know about "second effort."  If not, it is the struggling a runner or receiver makes after they seem to be down and stopped.  Often the extra effort is futile.  More often than not it gains inches or feet.  The cumulative "second efforts" over the course of 4 smashing football quarters can give a team only 10 more yards.  But in a tight game those 10 more yards can be the difference between victory or defeat.

Willing salespeople who make just one more call, one more follow up visit, one more try usually are the winners. They are inspirational. And they keep customers delighted and cash flowing.

Visit www.EricStoddardConsulting.com to see how we can help you.

Cheers!

Up dated web site

Just updated the web site: www.ericstoddardconsulting.com
Bolder, fresher.
Cheers!

So Prove It!

Your prospect may be thinking it, or may be saying it, or may be pounding the table with his eyes popping out of his skull and the veins in his neck ready to burst.

At some point you must show proof. What is proof? Proof is defined as a demonstration which proves in the mind of the prospect the results you are claiming. 

And that is the rub.  You may be in love with your demonstration, but your prospect may still remain unconvinced. Benjamin Franklin observed: A man convinced against his will, is of the same opinion still.

I've seen it happen to others and it has happened to me.

Why do proofs fail? Here are a few common reasons:

1. The prospect hasn't been prepared by you.  Which is to say the explanation leading up to the demonstration has failed to prepare the prospect for the punch line.
2. The proving demonstration failed to operate correctly.  Very costly mistake due to lack of your preparation. Every demo needs a few dry runs and a dress rehearsal.  Make sure the operator is rested, relaxed, and ready to respond to questions.
3. The demo doesn't fit the prospect's problem. Nothing worse than having the right answer to the wrong problem.  Manufactures who focus only on selling what is inventory frequently find they are demonstrating products for which a need existed three years ago, but the need was filled better by a newer product 6 months ago.
4. The demonstration lacked zip, organization, and precision. I recall having the Hitachi general sales manager in Australia look at a machine I wanted them to sell.  Hitachi is crazy for "fit and finish." The machine we were demonstrating didn't fit together well, there  were welding splatters all over it, the paint job had several noticeable sags precisely at eye level.  [Remember a static machine is a demo of the manufacturers ability.]  Later we showed the sales people and the dealers that the machine worked very well. That evening on a river cruise and steak fry the general sales manager complained, for the 15th time, about our fit and finish. I'd had it with his pestering. But he was right; I had to admit it. Finally I blurted out the truth: "Well, it does look like hell, but it sure works like the devil."

A demonstration is like a great movie. It must start off with a bang, have a climax, and then finish off with a great ending.  If you have trade shows coming up, remember these points.

p.s. Just had a demo go bad and I wasn't allowed to be on hand for the demo....owner didn't want to spend the money for me to be there.  It was a $3.5 million deal.   Before the owner got it going and tested to make sure the bugs were out, they invited the customer to see it. The customer had to fly/drive about 800 miles to see it. Machinery only worked about 50%. So the customer got the privilege of seeing a busted demonstration.

"It takes 5 years to train a power plant operator"

When I heard this from the operations manager of a large coal fired power plant in Thailand I was dumbstruck. He went on talking and my mind headed into outer space. I wondered to myself why training a power plant operator was related to the  earth orbiting the sun, and why it took 5 orbits to do so.  After coming back to planet earth I composed myself and asked the operations manager the obvious question.  He thought then said "well it takes 5 plant shut down/start ups before we consider an operator fully trained." I thought that makes sense. He went on to say, " We only shut down the plants annually."  He had conflated two facts and come up with a policy likely to generate a shortage of operators.

Better solution: Invest in simulator training for his operators.  Simulators are not so dependent on the number of times the earth orbits the sun.  Actually in a month an operator can have many, many more shut down/start up experiences.  In fact it is not duration of time that determines proficiency but rather repetitions that builds skill.

Myths and Drowning

The ancient Greeks and Romans developed myths to explain natural phenomena that otherwise defied explanation.  These myths were projections of people's own fears, and the natural human intellectual desire to fill the void. While it is easy to understand why myths were developed, it is vital to realize these explanatory myths were not fact based.

Business owners both in ancient times and today may likewise suffer from believing in myths and with the same results as the ancient Greeks and Romans.

A few myths:

1. "Make a better mousetrap and the world will beat a path to your door." Nearly every inventor, programmer, engineer, designer, Phd, seems to suffer from this powerful delusion. If you fall into one of these groups, there is a 99% chance that you truly believe this. Those suffering from this delusion should ask themselves the question: If a tree fell in the forest but no one was there to hear it would it make a sound?  It is profoundly amazing that in the presence of even the simplest lemonade stand business owner how widely spread and how deeply felt this myth continues to exist.
2. "I can't afford to advertise." Clearly a myth related to Myth Number One above.  Advertisement is the communication with prospective customers/clients about you what you can do for them.  If you don't effectively and frequently tell them, how are they to know?  Can customers/clients actually buy products and services of which they are unaware? If you don't invest in communication you will never have a business, and you will barely have a practice.  
3. "No one without my experience could do what I do as well as I do it." This is both myth and egotistical arrogance but is fed by the way technical people are educated and trained. The reality? Most people claiming 10 years or 20 years experience really have only a few months or years experience repeated over several years. 

Are these myths confined to one culture? I've done business in more than 40 countries and have found these myths thriving, especially among technically trained and heroically hard working professionals.  They suffer and wonder why their business does not thrive.  They blindly thirst while stumbling about in the oasis. They are doomed as they stumble back into the desert only to dehydrate and die all the while wondering why they could never find the sweet water of success.  Myths are unforgiving. 

How can I help someone suffering such terminal 4th stage drowning delusions?  It's not unlike helping non swimmer avoiding drowning. I must be careful lest I am pulled down with the victim and we both drowned.

Reducing Marketing Risk

When considering a marketing plan, it is wise to divide your customers into four groups:
1. Customers who know you and know your product or service.
2. Customers who know you but your product or service is new to them.
3. A product or service known to potential customers who as yet do not know you.
4. A product or service which is unknown and for whom there never has been a customer

These 4 factors are presented in order of lowest to highest level of risk. Risk here is related to both marketing budget and schedule plus expected cash flow from these investments.

To understand how to market to the first three groups of people, please give me a call and we can devise a plan which will work.

To understand how to market to the last group, call someone else. It's a mystery to me.

What is hot?

Renewable energy! Hybrids! Solar and wind!

All the best and brightest minds are working feverishly to make these new energy solutions work. The kind of brains that gave us the nuclear bomb and nuclear power plants, the internet, personal computers, the mouse, software, and hardware have been updated. Look to the men and women who have electrical engineering degrees to lead the technical vanguard.

The new version of those brains are working out how to make photovoltaic panels out of clear glass panels. They are closer than ever before.

Thousands of megawatts of solar plants are in design, under construction, and even more thousands are being sought be governments of oil starved third world countries.  Countries where there is little oil but where there is abundant sunshine are scorchers in the summertime. Those countries increasingly need to have "factories" where knowledge workers can be educated and trained. Without a/c it won't work.

Imagine if all the glass tower windows in Singapore could generate electricity....

Drive through the pass west of Palm Springs. It's suicide for low flying birds!  But awesome for a/c users in Palm Springs.

Renewable energy has the "big mo." That's big momentum.

And my recently graduated step daughter agrees. If you are looking to get with a hot growing trend get on this one and ride it for the next decade.

Where is today's gold mine for construction equipment?

I can tell you the obvious: not North America.

And I can tell you there are three areas you must develop to move construction equipment today.
They are Russia, Poland, and the Kingdom of Saudi Arabia. I've visited projects in all three countries in the past six months.
Here's why.

1. Russia. Major motorways underway between Moscow and Saint Petersburg.

2. Poland. Major motorways underway financed by the European Bank for Reconstruction and Development

3. Kingdom of Saudi Arabia.  Just in the past 5 months contracts have been let to move more than 300 million cubic meters of sand; that is the equivalent to three times the amount of material moved to build the Panama Canal. Plus there is a Women's University City underway a few miles from Riyadh. This city is complete with the university, dorms, shopping center, parks, recreation areas, and a monorail system winding through the city to transport the students....only women.  In a few months a Sports City will be announced.  These "city" projects are the hub to the King's develoment of the country.  The first city to be built was completed several years ago called Al-Jubail. The program manager was Bechtel.  And there are more cities in design.

Previous kings built airports. The current king is commited to roads and railroads and they are being built in record numbers of kilometers.

Here are some facts and elements you must consider about some of the newly announced Saudi projects [these are based upon my personal observations]:

1. Some projects are as much as 1,000 kilometers from the nearest supply point [of any kind of supply]

2. You will be working in blowing beach sand.

3. Heat to 130 degrees F.

4. 1,000 kilometer long logistic chain

5. A single two lane road

6. NO airport

7. Build your own man camp

8. Find workers from the region and supervisors to run them

9. Some used equipment, but mostly new

10.And much, much more. We can discuss when you call me.

What are contractors buying:

1. Fleets of on road dumpers

2. Fleets of ADT dumpers

3. Fleets of pull scrapers and tractors

4. Fleets of water wagons

5. Fleets of fuel tankers and lub trucks

6. Plus all support equipment to operate and maintain

And Stoddard Consulting can connect you with the top 10 Class A contractors in Saudi Arabia.

Call me at 530.383.9079 or email me at stoddardconsult@yahoo.com

Why do I use Yahoo Email? I can access it anywhere I can connect to the web. Can't do that with others.

What's New

Solar isn't new. It's been around for centuries. In fact, my grandfather created a solar hotwater heater from an old car windshield installed in the roof of his California home to focus the sun's rays on a coil of copper pipes wrapped in black tape. That invention provided extra hot water for my grandmother and their seven active children.

Last Wednesday the USTDA hosted a conference in San Francisco of renewable and clean energy governmental and private parties interested in participating in the development of new plants in Morroco, Egypt, and Lebanon. 

Amazing working going forward on in these middle east countries where the hydrocarbon is in short supply. Imagine: 97% of Morroco's energy relies on imported hydrocarbons.

Both Morroco and Egypt have governmental agencies with land, permitting, garunteed feed, and rates based and paid in US cents per kilowatt hour. 

American companies are not in the lead. The Germans, French, Spanish, and even Italiens are all active in the area, yet there is plenty of room for all.

Each of these countries has in excess of 230 days of sunshine, and millions of acres of desert just waiting for solar panels and wires to create clean energy and improve the lives of millions of people while providing power developers handsome rewards for their efforts.

Do you wish to participate?

Stoddard Consulting offers unusal expertise and levels of contacts in each of these three countries as well as the Kingdom of Saudi Arabia.

John Deere scrapers sitting idle

Last week I visited a John Deere dealership and a construction equipment rental company. The Yuma dealership had 9 1810E scrapers sitting idle, the Yuma rental company had 4 1810E scrapers sitting idle. The Cat dealer had aboiut 10 acres of idle equipment sitting in their yard in Phoenix. 13 scrapers sitting idle in the middle of construction season tells the real story behind Obama's stimulus program.

Europe is dead

European construction activity is as cold as the weather. No money=no projects. Major project to build new airport in Spain near Valencia was cancelled a year ago, and there is no hope of reviving it. Companies such as Caterpillar, Bell Equipment, K-Tec Earthmovers have scaled back their plans for business development.

Czech Republic, Slovakia, Hungary are stuck in neutral.

European Bank for Reconstruction and Development is going slow on everything, just like your local banker.

Manufactures are being forced to consider extended terms, rental, export development financing in order to obtain orders.

Outlook is grim, and that is being positive.

Big Projects in Saudi Arabia

American construction equipment market is stuck in neutral untill real projects start up again. Meantime working is going strong in Saudi Arabia. Dubai is slow but Abu Dhabi is strong. Nothing happening in Yemen...no money.

Saudis are building roads and railroads. Strong infrastrure growth.

Heading there on Sunday for two weeks.

Companies! Command employees R & I

What is R& I?

R&I is a favorite catch phrase invented by the Business Guru Dr. Steven Covey. It stands for "resourcefulness and initiative." He commands his staff to focus on their R&I when the situation begins to unravel, or when a problem appears larger than life.

What is FUD?

One of my favorite acronyms for business leaders who are floundering is: FUD. It stands for "fear, uncertainty, and doubt." FUD immobilizes leaders. How can it be diagnosed? If a leader calls for a "prevent defense" it is a sure sign, in the best case,the leader is trying to buy time while a strategy is being devised. In the worst case, the leader is in a panic, trying to prevent chaos while wringing the hands.

It really is ugly out there

Being in the international area provides one with additional perspective on the current economic crunch. Major construction equipment producers have seen increases in inventory, reduced cash positions, lower orders.



This situation will last at least untill the Fall of 09.



Why?



All these "shovel-ready projects" , many of which must be rebid, are not so ready. Prior to the owner rebidding the project, many of the owners will redesign and re-spec the project. Old bids will be invalid. New bidders will need to be found in many cases. That process will take 6-9 months depending on the project.



And if they projects are ready then to start in the Fall of 09, then the Fall rains and snows will begin to slow up projects beginning in the north and northeast.



Not until Spring of 2010 could we see a response to the stimulus.

So what are the targets of construction equipment makers? The Middle East; China; and Indonesia.

What products will succeed? Not small rental items. Large equipment which are very efficient will be in strong demand. Large equipment with technological innovations will lead out.

The lesson? Go big or go home.

Dream Big

Dream big; plan in detail.

Why?

Because it seems anything of consequence takes twice as long to accomplish, costs twice as much as originally thought, and delivers half the effect sought.

So dream big if only to ensure something of the dream is realized.

Cheers!

Eric

Helping Elephants Dance Part 2

Helping large organizations advance change requires a clear process strategy. In Part 1 I discussed the importance of understanding expectations for the change outcome.



One must realize expectations come in two forms: explicit and hidden. At the beginning of the change process many expectations are trumpeted loudly and broadly up and down the cubicle filled office spaces.



Trumpeted expectations must be taken into account. In some cases they must be edited to become: time oriented, desireable, and achieveable.



Equally important are the deeply held yet unmentioned expections of key players. If they aren't mentioned must they be taken into account? Yes, because these unmentioned expectations can prove to be the undoing by key players of any organization change project. Two examples:



1. Carl was a construction manager overseeing from Houston a major Bechtel/Proctor and Gamble project in Canada. Earl the Bechtel site manager reported directly to Carl, received his performance appraisal and bonus recommendation from Carl. During initial discussions of expectations I found time to discuss with Carl his expectations for the project and uncovered a gem: he expected this project, in order to be a success, to lead to additional work. At first this seemed reasonable. Upon further discussion with the project team this expectation held by Carl had to be rejected. He so agreed. Rejection was necessary because the team could not do anything about future Bechtel business opportunities.



Only expectations which are under the control of the team can be allowed to be recognized. Unearthing unreasonable expectations held by important senior players is critical to success.



2. Phillip was the vice president from Proctor and Gamble for the same project as in #1 above. During the change project phase were expectations were being uncovered he dropped a technical bombshell: he wanted no cracks in the concrete slab floor. His reason was to maintain a clean manufacturing environment. This expectation had never before been disclosed. Had it been so the engineering spec for the concrete would have been written differently. Since he was a major player in calling the project a success his heretofore undisclosed expectation required rewriting the concrete spec; which was done.



In conclusion it is vital to have all expectations disclosed. Some can be accommodated, and some must be declared out of bounds and be so agreed by the holder of the expectation.

Come to think of it, this is also important in making a marriage work! Zounds!!!!



Part 3 to follow.



For more information contact the author directly at stoddardconsult@yahoo.com



Happy New Year!!!!