Turning Adversity into Opportunity

Growing Your Business Summit SeriesSeoul, 13 April 2012

Daniel Evans, Chief Economist and Co-Founder

Presentation Objectives

Understanding current market risks

Discuss attracting new users and retaining current customers

Ideas for how to weather changes in market conditions (e.g., competition, reduced cash-flows, shortages, new market channels, etc.)?

Tactics to increase business profitability

Key Concepts

Customer retention

Maximising productivity

Freedom from deficiencies

► Reducing overheads► Minimising risks► Generating new sales

What actions we can take today?

Current Environmental Scan

Challenges we face today in growing business

Challenges to Growing Business

Weak global economy

Increased competition

More demanding customers

Government, business and consumer budget cuts

Retaining existing customers

Lead generation

Lack of funds for new lines of business

Risk aversion

Challenges to Growing Business

Lack of capital

Resources to support growth

Difficulty in finding new opportunities

Inflation and seasonally-adjusted GDP vs. trend, quarterly figures, first quarter 2000=100

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Advanced economies Emerging markets

Global: Two-speed Recovery

Global Market: Future Risks

World economy under stress: Two-speed recovery, rising commodity prices, ongoing tensions in the financial sector, eroding confidence in public finances, shift in market sentiment from inflation fear to recession panic

US economy: Structural weaknessesEurope: Slow recoverySovereign debt crisis in the euro area:

Ongoing instabilityAsia: Growing market potential but large

exposure to US & Europe risks

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Inflation-adjusted GDP, change on previous period in percent

Euro Area: Slow Recovery

Facing the Challenges

Getting better, stronger, healthier

Considerations

Satisfying Current Customers (80/20)

Attracting New Customers

Learning more about Potential & Current Customers

Determining effective outreach methods

Methods of Improvement

Acquisitions- GrowthNew Product/ServicePartnershipNew Market Expansion

Loyalty Programs- Increase Customer Base New Customer Incentives

Different Channels

Cost-Cutting Programs- Increase Profits Emphasis on High-Margin

ProductsSupply Chain Evaluation

Pricing- Defend Against Competition Promotion

New Products

Stocking Up Your Toolkit

Preparing for growth

Sell More To Existing Customers

They are the easiest to sell to because they already trust you.

Bundle products. Offer customers multiple services for a special/reduced price. Customers are happy to consolidate services with one vendor as long as they are satisfied with your service.

Look for up-sell opportunities. If the customer already purchased a service from you, offer the warranty or the first software upgrade at a discounted price.

Offer a discount. Discount the products you know your customer is interested in but can not afford normally or tell them when the product will be on sale.

Reward customer loyalty. Offer loyal customers a gift with purchase or free product with 10 purchases.

Offer free samples. Let your customer try it before they buy it. Create a desire within the customer to purchase the product.

Generating New Sales

Teaming with affiliatesCo-market with affiliates or vendors that offer complementary services,

AdvertisingDon’t forget to be visible so people know you’re around!

NetworkingAttend business and social events, e.g., tradeshows, civic organizations, chambers of commerce, industry associations, and open houses. Connect with friends and colleagues on Linkedin, Facebook, and Plaxo.

Creating product championsWork with customers to create case studies, testimonials, or product endorsements. Post on your website. Ask customers to share your success story with others.

Analyzing metricsAnalyze and track how you obtained your current customers and continue these efforts, such as advertising, interest in articles written by your company, marketing materials, websites, and relationships.

Reduce Overheads

Maximise Productivity

COST SAVINGS$$$$

Improving business profitability

VALUE

outputs

Reducing Cost

► Understanding your inefficiencies and areas of excess capacities

► Utilise all of your resources to either earn you more money or pay for your existing expenses.

► Conducting “want vs. need” analysis on your current expenses

► Don’t be short-sighted or cut corners … it may come back to haunt you.

Understanding Cost Offsetting

Fixed vs. Variable CostsDebt-service costsInfrastructure and Systems CostsHuman Capital Costs

SalariesBenefitsHealthcare costs

Advertising and Promotional CostsOverhead and Administrative CostsResearch and Development Costs

Understanding Cost Offsetting

Many types of costs can be offset against increased sales or under-utilised capacity

This includes costs to:Retain existing customers

Generate new sales

Offsetting

Taking advantage of every opportunity

Which Is Stronger?

OR

Generating Generating New New Sales Within a Sales Within a

Closed Business Closed Business Network Network

Sales Generated Sales Generated Come at a Come at a Lower CostLower Cost

BuildsBuildsRelationships Relationships

Building aNetwork With Mutual:

•Financial Benefits•Social Benefits•Structural Ties

•Profitability

Working With A Network

Why Is Barter Beneficial?

Reduces existing cash outlayBuying using your own goods or services as payment

is a lower-cost option than purchasing using cashHelps expand (or maintain) market shareIncrease salesSidesteps liquidity problemsCleans up bad debt situationsOffers interest-free creditCredit is based on unsold capacity versus cash credit

which is based on pre-sold capacity

A barter platform serves several functions: Provides a multi-lateral matching system of wants and needsHelps source new customersPromotes existing participants (nationally and globally)Acts as a third-party to mediate between delivery of goods and

services for the best priceFinds alternative (non-cash) suppliers for you to make purchases

fromRecords the values of transactionsIssues account statements to show the transactions

A barter platform provides each member with an account which:

Offers access to interest-free lines of creditRecords the value of every purchase or saleIssues account statements

A Barter Network

DIRECT BARTER

BARTER NETWORK

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When a member sells, their barter account is credited for the value of the sale – just as if it had been sold for cash

When a member buys their barter account account is debited

Case Studies

Real-world examples in action

Case Study #1

A CPA who served middle-class corporate personnel has noticed that his sales are going down. He has analyzed the market and learned the following:

His customers are retiring and moving South or have been hurt by the economy and lost their jobs.

The new people moving into the area represent a younger ethnic-oriented crowd, blue-collar, who prefer to be served by members of their own community.

The CPA has two options:

Change/expand his services to attract new customers.Look into different markets.

Case Study #2

A small restaurant owner has a place at the Galleria that attracts a shopping crowd. However, since the economy hurt mall attendance, he decided to open another location in a nearby city.

Unfortunately, he only found a place in the business area that closes down at 5pm and his new customers are coming for lunch only.

How can he bring customers for dinner and compete with more centrally–located larger restaurants with already established local reputations?

Case Study #3

A grocer is hurt by the Wal-Mart expansion into the area. He can not fight the Wal-Mart prices, especially in the dry goods area.

How can he defend himself?

He has two options:To identify products/services where he can be superior to

Wal-Mart.

To develop special loyalty programs for customers that would offset higher prices but still would be cost effective for him.

Looking Forward

Be consistent and stay involved

Action Points

Closely examine each category of your expenses and ask: What type of expense is it? Variable? Fixed? Do we really need to incur this cost? Would changing suppliers affect our business?

Evaluate your cost to make a new offset sale:What are the most profitable lines of products or services I could sell to offset those costs?

Benchmarking is key … know the profitability of your barter transactions and act accordingly!

Types of Costs Suitable for Barter

Fixed vs. Variable CostsDebt-service costsInfrastructure and Systems CostsHuman Capital Costs

SalariesBenefitsHealthcare costs

Advertising and Promotional CostsOverhead and Administrative CostsResearch and Development Costs

Best Practices

“Lean and Mean” does not need to translate into a compromise of your culture … rigor can be instilled without rigor mortis … and discipline can be instilled without fear

Profitability-improvement programs do not always need to be focused on reducing costs … there should also be an effort to develop higher-margin revenue streams

Act with integrity and honesty …. Cost reductions through offsetting can be successful provided that you do not sacrifice quality of your services or the services of others… Whatever you do in a network will come back to you…

Communication and creative thinking is critical…

Considerations

The 21st Century world of business never rests – the speed of flow of information has created global markets in which we all trade. Consumer needs vary widely across time and space creating constant need for alertness and change. If we as managers are not keeping up with the pace, others will – it’s very competitive out there!

About Ormita

A 2 minute overview

International Presence

> AUSTRALIA > HONG KONG > MEXICO > SWEDEN

> CANADA > INDIA > NEW ZEALAND > TURKEY

> CHINA > INDONESIA > PAKISTAN > UNITED KINGDOM

> EGYPT > IRAN > POLAND > UNITED STATES

> ESTONIA > ITALY > ROMANIA > ZAMBIA

> FINLAND > MACAU > SOUTH AFRICA

> GERMANY > MALTA > SOUTH KOREA

• Existing Office (retail)

• Government Trade)

• Launching 2012

• Under Negotiation

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GLOBAL TRADE VOLUME(millions of U.S. dollars)

NATIONAL OFFICES

Business Growth

Some of Our Customers

Media Recognition

Thank you for your attention!