If you're a lawyer, engineer, doctor, architect, technician, accountant, fashion designer or any other independent professional who sells a specialized skill, you probably find the business end of your trade a chore.
After all, you didn't spend years in college, university or apprenticeship to learn how to build a business, manage your customers or to market your knowledge for commercial success. You would rather pursue loftier goals -- like arguing cases in court or designing award-winning buildings or healing the sick etc.
This is because of your natural tendency to focus solely on the practice of your skill and neglect the business aspects of your practice. Professionals are so preoccupied with practice and most often think of money ignoring the long term sustainability of customers.
Business skills have never been more important for doctors, lawyers and other professionals, who face more competition today than ever before and with cost of operations continuously increasing. It isn't enough just to be a good professional anymore; you have to be a good businessman. To give your business skills a checkup, given below are simple business principles that professionals can use when managing a practice for right returns.
Need for a business model
It’s so fundamental for any professional to understand the concept of business model as the foundation to build a sustainable business. From an operational perspective, the business model is simply a working description that includes the general details about the operations of a business. The components that are contained within a business model will address all functions of a business, including such factors as the expenses, revenues, operating strategies, work culture, and sales and marketing principles, and procedures, etc.
Generally speaking, anything that has to do with the day to day functionality of the profession can be a part of the business model. From financial perspective, a business model is nothing but a representation of how an organization makes or intends to make money. The purpose of the business model is to -- communicate the value proposition of the service offered to the client define and identify the target audience who are my preferred clients; decide on the communication and distribution channels to reach clients; allocate the key resources needed to make the business model possible; determine revenue streams generated through the business model; identify the cost structure resulting from the business model; formulate the competitive strategy; and differentiation to create competitive advantages
Once the model is in place, professionals need to focus on day to day operational management. In this, there are a few fundamental requirements which need to be managed effectively to achieve the desired outcome.
Business agreement for every key transaction
Most professionals in Sri Lanka depend on trust binding the two parties as an alternate to a formal business agreement. We hear professionals saying “my clients and I understand each other; hence, we don't need a formal business agreement”.
Majority of professional partnerships in the country have no agreement at all. Premature ending of business relationships that do not have a formal contract can be costly for both the professional and client.
Advertising for awareness creation
Professionals used to think that “If I'm good in my specialty, clients will find me wherever I am.”
Maybe that was true in the 1980s but not anymore in this fiercely competitive environment. No individual professional has a constant flow of new customers who are willing to pay the right price. One way to bring in new profitable business, of course, is to advertise. But many clients still prefer to find their ace by referral, and many professionals are uncomfortable advertising their services. So, start by building relationships with other professionals in complementary specialties to whom you can refer customers and get referrals in return. Become active in your local professional society. And look for opportunities to publicize yourself by giving speeches, writing for professional journals or lending your expertise to local journalists who cover your field. Being quoted in a newspaper or featured on TV can really help your business grow.
Delivering customer satisfaction
Sadly most professionals in Sri Lanka think “everyone understands that I'm busy and expected to have to wait for me”. It is annoyances like being kept waiting that drive clients away in a market where there is a choice.
The No. 1 complaint among Sri Lankan patients is that the doctors are not on time and that they suffer from poor on-time performance. Unexpected developments are no excuse for poor time management - if the foreign doctors can, why can’t the local doctors. Whenever a delay is unavoidable, have your assistants communicate with the clients who are scheduled to see you later -- at work and at home -- to tell them you're running behind schedule. Even if they miss the call and wind up waiting anyway, they will appreciate your effort.
Communicate upfront your price
Talking to clients about fees and charges is tacky. Sure, but carrying aging receivables are tackier still. Write a letter to new clients, outlining the policy on fees, expenses, billing and payment. Having a frank discussion about fees right from the start, even at the risk of scaring away some business, will almost always save you trouble in the long run.
“Business is booming, so I need to add another professional to the practice”. Before you add a colleague, make sure the extra work that comes your way fits into your long-range business plan.
If you do want such extra business, consider whether you should hire an assistant rather than bring in a full-fledged professional.
To help make that decision, write down the tasks you want to delegate and analyze whether a fully trained professional is the only person for the job. If so, find one who is not just competent but also compatible with your personality and the culture of your firm. If a practice brings in wrong or unprofitable business and wrong people, it can head off in the wrong direction.
More importantly; People strategy
Show your staff that their work is critical then they will want to help you in every way they can. More likely the reverse is true: your staff feels overworked, underpaid and undervalued. Professional practices are particularly susceptible to this problem because, unlike in other small businesses, most entry-level employees are cut off forever by their lack of training from achieving the highest level of pay. Make a serious effort to talk to your staff and identify problems that you can work on together.
This will improve their loyalty to you, morale and efficiency. In terms of compensation and rewards, “We're all hard workers here. The fair thing is for each of us to take home what we bring in”.
But they soon realize that the take-what-you-make system failed to generate team spirit. ''It creates a feeling of 'your client, my client,' rather than 'the firm's client.
A growing number of professionals the world over are reviewing their compensation systems. Some of them are moving away from the old lockstep seniority-based payment plans and moving toward compensation schemes that instead emphasize merit or the real value contribution to the business.
Besides fostering solidarity, these systems can be tailored to further the objectives of your group.
A young, growing practice, for example, might give additional pay to those people who bring in new customers. An established firm, on the other hand, might reward those who agree to take on axdded administrative work. Depending on your practice, you might even experiment with a kind of democratized compensation scheme.
Remember, professional competence will always be the foundation of your reputation. But it's the way you run your business that will determine, in the end, your financial success.
''Your customers already think you're competent or they wouldn't call for an appointment in the first place, 'It's the little things you do that keep them coming back.''
*The writer is Managing Director/CEO, Chevron Lubricants Lanka PLC, and one of Sri Lanka's most dynamic private sector executives.