Creativity in Business – Do We really Need It?

Creativity in business - it' makes for good business

I was asked the other day whether there was room for creativity in the business world.

My answer was a resounding, “Yes!”  Creativity is in strong demand in the business world.  There’s a continuous need for it on so many levels:

Think of products and concepts: Steve Jobs (Apple) and Elon Musk (Tesla) are two top-of-mind examples.

Think about creativity in the ability to make a deal (making an acquisition, hiring a star employee, negotiating good terms with a vendor,….).   Creative business people  make the best deals.  

Think finance: accountants who can get creative can save their clients money. Not everything is black and white – the value and savings are often in the grey.

Businesses are inherently full of problems just begging for solutions.

The key is being able to develop practical solutions.

If you’re a creative marketer, sales professional, coach of any kind, lawyer, accountant, doctor, shoemaker, plumber, name any other industry – you can go far.

From an employer’s perspective – ask yourself, “Who is more valuable?”:

Employee #1: Is steady, consistent, and does a good job or,

Employee #2: Is steady, consistent, does a good job, & can solve a problem when one arises?

If you can be a solution provider rather than a problem reporter – you will go far.

Remember, you can handle any given business extremely well.  Likewise, the same issue can be handled very poorly (we’ve all seen countless examples of this).

A business person who is creative (and strategic) will always consider multiple options and then carefully choose the best way of playing the cards they have been dealt.

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Graham Acreman
President, Stellacon Business Coaching
graham.acreman@stellacon.com

Everything is Negotiable in Business

Negotiating Terms

Read the Fine Print  and Negotiate.

In business, there is never a shortage of things to negotiate. The key thing to remember is that  EVERYTING is negotiable. This includes:

  • Pricing;
  • Contract terms;
  • Liability clauses;
  • Start dates;
  • Delivery dates;
  • Termination clauses;
  • Etc.

When a vendor asks you to sign their agreement they are starting with the upper hand. The person who supplies the agreement has initial control of the negotiation after all,  the terms and conditions of the agreement have been written with their best interests in mind.

As a business executive, you need to carefully read through any such agreement with your best interests in mind. Frequently, there will be differences in expectations. It is your responsibility as the person planning to sign the agreement to ensure you are comfortable with and fully understand all of the terms and conditions. If not, you need to take steps to understand the agreement and then negotiate the terms and conditions.

Let me ask you a question: If you were going to buy a new car would you consider walking into a dealer, finding the car you liked, and offer to buy it for the MSRP or initial asking price? No way. Well this is exactly what you are doing if you just sign an agreement without  reading through it, understanding it, and pushing back where necessary.

Don’t be swayed by a  sales rep’s response of, “It’s standard industry practice.”  Sometimes standard industry practices are just plain crazy and if you don’t challenge them then by default, you are accepting them.

If you don’t take the time to read and negotiate you may find that:

  • You’ve locked yourself into a 5 year agreement that can’t be changed even if your business needs change;
  • You’ve agreed to unlimited price increases as the vendor sees fit;
  • You’ve agreed to never hire a staffing agency employee directly without paying a substantial fee;
  • You can’t sell certain products/services that compete with a nearby tenant.
  • Your profitability is affected.

The above are just a few select examples of potential ramifications.  There are countless more.

Now whether a vendor wants to negotiate with you or not is up to them but whether you want to accept the deal or not is up to you.  As the saying goes, it takes two to tango.  When it comes to negotiation though, the question is, “Do you want to lead?”

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Graham Acreman
President, Stellacon Solutions
graham.acreman@stellacon.com

Understanding the Fuss About Tim Hortons

Ontario’s minimum wage increased 21% January 1, 2018.  Prudent businesses have already developed plans for how to mitigate the impact of the increase. Some solutions have been more popular than others.

Already there have been public call-outs of owners who are thought by some to be offside in how they are dealing with the impact of the change.  Some are weathering the storm, others are quickly backtracking, and others are still trying to figure out their next move. Read How to Mitigate the Effects Of Ontario’s Minimum Wage Increase. 

 

 

The reality is, businesses exist to provide value and make money.    In the process, they provide jobs and opportunities for employees. If an employer is not earning a reasonable return on their investment for any reason they will not remain in business long.

Salary costs are often the single largest cost to a business.  The impact of the minimum wage increase will vary by industry.  To get a better understanding of the impact let’s take a look at a case study using a company that has a 60% labour cost and predominantly employs minimum wage workers. This means for every $1 sold, 60% of the revenue is labour related.

This is our case study showing a snapshot of their financials before the minimum wage increase:

In the above, the business has $1,000,000 in annual sales.  Their labour cost is $600,000 (60%), other costs are $300,000 and their remaining profit is $100,000.

Now we take a look at the numbers after the effects of the minimum wage increase:

 

 

 

 

The only change above is that the labour cost has increased 21% (now represents 73% of the total sales).  This single change has taken a business that was profitable and now brought it into a loss position.    Obviously this isn’t good so what is a business owner to do?

Options  can include:

  • increase prices
  • reduce hours
  • reduce number of employees
  • reduce benefits
  • reduce other costs
  • automate processes

Most employers will likely use a combination of these options.

Returning to our case study, if our business owner chose to increase prices in order return to the same level of profitability then our numbers would now look like this:

Keep in mind, our business is not selling any more volume they have simply increased their prices by the amount necessary (12.6%) to maintain the same level of profitability.

In the case of Tim Hortons, price increases of 12.6% would look like this:

 

 

 

Of course a business owner choosing this route would have to consider whether their customers would be accepting of a 12.6% increase.  And in the case of Tim Hortons, this is not a decision that that franchise owners have – their pricing is mandated from their head office.

Ultimately  they had to do something  as has been widely reported in the media.  I suspect in time we’ll see some pricing increases and increased automation.

In the meantime, as business owners consider their next move, they need to be mindful of the potential impact and ramifications of their decisions.   You must carefully strategize how you are going to educate your employees.   That is, how are you going to sell it to them?  An effective strategy can significantly improve your likelihood of success.

 

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We help business owners solve problems.

Graham Acreman, President | Stellacon Business Solutions

(613) 263-1010

Email: info@stellaconsolutions.com

Web: stellaconsolutions.com