Archive for the ‘business goals’ category

5 Ways to Become Profitable

August 23rd, 2013

5 Ways to Become Profitable

All businesses want to make money. And of course if they don’t, then even those with great products or services will fail. Making more money and becoming a profitable business is what it’s all about. Here are five strategies that can help.

1. Change the Way you Operate
Analyze your existing business models and try to establish ongoing revenue streams. If your customers are buying infrequently then you might, for example, sell an ongoing re-supply program or a maintenance plan instead of just a one-time or stand-alone sale. Establish a relationship with new customers and change the relationships with established customers to tie the profitability of their business to your products or services.

Look around, analyze and learn from what your competitors are doing. Think about what you can innovatively apply from those lessons to your business.

2. Become Visible and Connected
If you have a long established company with a great reputation, loyal customers and respected industry experience, then you are probably running a successful business. But along comes the new guy who puts his business on the Internet and posts his credentials all over the place. Everyone, including your customers, can find him. You can’t sit there and assume that just because people know who you are you will remain dominant.

You have to have a marketing plan that addresses the current methods used by potential customers to find the products or services that you offer. When they search the Internet, and you’re not there, or they can’t find you, then in 100% of those cases you will not get their business. A lot of older small businesses don’t have a web-presence. If that’s you, or you don’t have a strategic marketing plan in effect, then you need to take your reputation online through social media, a website and a blog to connect with customers, including the ones you already have, or you won’t have them much longer.

3. Raise the Bar on Marketing
A lot of small businesses think about sales but not marketing. You can’t just go out and try to make sales; you have to have a plan with a strategy coherent to your industry, your company and the prospects you want to target.

In order to track the leads your marketing program generates, you will need customer relationship management (CRM) software, although a well-designed Excel application may be OK as you get started.

Consider using search engine ads, email marketing and other such online advertising.

Give your business an immediate web presence through social media networks including LinkedIn, Facebook, Twitter and YouTube.

Offer tutorials, demos, or new certification sessions as webcasts or podcasts for immediate download.

All these types of promotional vehicles need to be on the table because that’s what your competitors are doing.

4. Make Every Person a Salesperson
Some employees don’t think they’re there to promote sales or the business and are just there to collect a paycheck. But those days are gone and those people are the first to be laid off. Everyone should be an income-producing part of the business no matter what their main function might be. Everyone needs to pitch in to help cut costs, sell, and network on the web. Motivate employees to spread the message and reward those who make the extra effort or are producing new business.

5. Streamline Your Costs
If a business is having profit problems, the options are pretty straight forward. You can increase sales, decrease expenses, or do both. Due to the sluggishness of the current economic recovery, sales may not be where you would like them to be, and increasing sales may be a slow road. Decreasing expenses may be a faster way to turn things around. Try fitting expenses into three categories: fixed costs, such as rent and other overhead, sales-related costs that are tied to producing revenue, and discretionary expenses, such as new equipment and bonuses. Examine every single line item looking for ways to save, even with the fixed costs. Telephone and insurance costs may be fixed, but they are also competitive, and therefore negotiable.

6 Myths About Starting a Business

July 17th, 2013

Lots of people decide to take the entrepreneurial path and start their own business. The idea of being your own boss, making it big, and having a company that you can point to as your life’s work is very appealing. But the realities of starting up a small business are sometimes overshadowed by myths which make it difficult to deal with the real challenges that arise in those first few years, resulting in unreasonable expectations, frustrated entrepreneurs and potentially a failed business.

Here are some small business startup myths that might keep you from realizing your vision:

1. You should spend a lot of time preparing a detailed business plan
A client of mine in Gardena believed, as many business owners believe, that they should spend a lot of time preparing a detailed business plan, and that the business plan needs to include lots of what-ifs and elaborate financial projections. A grain of truth obscures a much larger point here. Yes, it’s smart to have an overall strategy in mind before diving into a business of any kind.  However, it’s very possible that by the time you finish your do-all-end-all business plan, the market will have changed so much that it will be about time to start on a new one. Business plans are especially important in the initial phases, as it is essential your businesses road map includes your goals. It is also important that you refer back to your plan every few months, check these goals, and add or change them accordingly.

The problem is that detailed plans work best when you are pursuing a fixed goal, such as losing weight or sticking to a budget. In these cases, a planned sequence of steps will best accomplish the goal. In business however, the goal is meeting consumer demand, which is often a moving target. Look at all the businesses (like Google) that are now doing something radically different from their original plan. So create your business plan, and then get busy developing a product and trying to sell it. Then resolve to be open-minded and react to opportunities as you see them emerge.

2. You have to develop the coolest, most innovative product
Many entrepreneurs think they have to develop the coolest, most innovative product. Entrepreneurs are often creative-types, dreamers and inventors, and they get so caught up in the coolness of their product that they forget that they need see if anyone will actually pay money for it.

What you do need to do is get your product to market as soon as possible, to start generating revenue and gain customer feedback. All companies, large or small, need to be more customer-oriented than engineer-oriented. You have to take into account customer demand, and develop products based on that feedback. Too many entrepreneurs so endlessly improve their products before starting to sell them that by the time they finally do, they’ve run out of capital and have to shut down.

Get a workable product out the door and fix the bugs as you go along. That way you also get valuable feedback about its strengths and weaknesses, for the market doesn’t necessarily agree with you about what’s perfect.

3. You’ll have more time to do what you want
Yes, you do own your time. By, ironically, you will find yourself using more and more of this time to run your business. Whether this hoped-for scenario actually pans out, is largely a function the business you are in and how much time you devote to it up front. Early on, you will almost definitely not have more time on your hands.

As a client of mine in Manhattan Beach found, there are many benefits (personal and financial) to having your own business, but plenty of free time is not one of them. You will probably have a little more flexibility, as many small business owners choose to work late at night so that they can spend time during the day with their families; but there are still some major sacrifices, such as sleep. Starting up a small business requires that you work until the work is done, without exception. Those fantasies of taking long vacations while your business grows itself are just that, fantasies.

None of this is to say that you will not ultimately have more freedom as a result of running your business. However, to expect a lot of it in the early days would be an exercise in self-delusion. So prepare yourself for immense demands on your time.

4. You’ll be able to write everything off
Absolutely not, unless of course, you have a desire to get audited. I can’t tell you how many clients have come to me over the years for help getting their books in order only to have to be told that even with a complete set of transactions and reconciliations, their books won’t be clean until we remove all the personal expenses they’ve burdened their profit picture with. Personal expenses should not be expensed to your company, and the business expenses you do incur should be clearly connected to the business you’re running. While it’s true that business owners can write off more than employees can, there is great risk in taking this too far.

Typical real expenses can include your computer and business operating and account management software, rent, employee salaries, money paid to independent contractors, advertising costs, and your business phone bills. You probably will not get away with deducting 100% of your car payments, nor gas and repairs. You can write off the portion of auto expenses that you can document as being essential to your operations. The key word here is “document”. Keeping good records is critical. Basically, if you cannot document it and cite a clear connection between the write-off and the operation of your business, your attempt at a write-off could trigger audits, fines or worse.

5. If you build it, they will come
Despite the Field of Dreams reference, setting up shop and getting your startup ready for business, doesn’t mean that the world will beat a path to your door. A former client in Torrance found out the hard way that today’s consumers have an endless array of choices, meaning simply “building it” will not cause customers to walk through your doors and snap up your products. No matter what type of small business you choose to start, it will rarely, if ever, be sufficient to open up shop and idly wait for business to start pouring in.

You still need to market and advertise your business strategically. That means having a plan and a budget.  It also means researching the most effective methods for marketing and advertising. There is no shortage of ways to waste money in advertising, as a client in Lawndale discovered, and it can end up being a huge financial drain on a fledgling company. No matter how good you are, there is lots of competition and your small business has to establish a presence and reputation to go along with your talent.

Consider your number one priority after opening your doors to be spreading the word about your product to your target market as much as possible.

6. Starting a Small Business is Rewarding
One other common myth about starting a small business is that it can be an incredibly rewarding experience. But unlike the myths presented above, this one has great potential to become true.

The independence and the satisfaction of turning a business idea into a successful enterprise are probably what most small business owners find the most rewarding. And there are all kinds of other satisfactions, including creating a successful new product or service as a result of solving unforeseen problems, or from customer feedback. So don’t let the myths of starting a small business put you off; the reality is so much better.

Small business is one of the most exciting arenas for earning a living.  There is plenty of creative potential, and a chance to really make something tangible for yourself and your family. But doing so requires more than just the vision and determination of a bold risk-taker. You need to be intelligent about how your business is framed in the marketplace, and what obstacles there are to overcome. You also need to be aware of the tools and support that you have at your disposal. Staying focused on these realities, and avoiding the myths that many fall prey to will only increase the chances of success and longevity in your small business.

 

6 Tips for Cost Improvement

June 12th, 2013

6 Tips for Cost ImprovementMost small business owners can agree that saving more money is a continually reoccurring topic. Cutting costs, boosting cash flow and paying less in taxes, will allow you to keep more of what you make, and is a good entrepreneurial frame of mind to be in.

To take this from prudent thinking to actual practice, and put more money in your own pocket, utilize these six tips to put your business on the path to fiscal improvement.

1. Talk to your employees
Employees who are on the front lines of your business, dealing with customers, processes and systems, often have ideas for ways you can cut costs. Have you listened to them? Sit down with your employees and brainstorm ways that costs could be cut without sacrificing quality. Make it more interesting for them by offering a bonus to the people who come up with ideas that have a positive impact on the bottom line.

2. Pay attention to detail
Often, substantial sums of money slip between the cracks a few dollars at a time. One good crack to seal up could be done by reevaluating your businesses recurring expenses. This could be a subscription you signed up for a year ago, insurance that you no longer really need, or a monthly membership fee to an organization you’re no longer involved with. Auto billing is a great way to reduce the cost of paying reoccurring expenses. But it is common that these fees can get rolled into your monthly credit card bill to the point that you no longer notice them. And little sums do add up. Go over all invoices and bills in detail and cut out anything you don’t really need. And don’t stop after looking at auto payments, review everything that isn’t providing a return on investment (ROI).

3. Negotiate with vendors
What you’ve been paying your vendors does not have to be the final word on what you continue paying. Ultimately, vendors want to stay in business too, and they’re dealing with a tough economy just as you are. Many are often willing to negotiate lower prices rather than lose a regular customer. The potential to save money, without even having to change vendors, can result in better prices on everything from office supplies to the phone bill. You certainly won’t lose anything by trying, and you may find yourself able to shave several hundred dollars off your monthly operating costs.

4. Stay on top of your invoices
One of the biggest cash flow problems for small businesses are the slow-paying customers. To speed up the process, make sure your invoicing system is working smoothly. Your invoices should be clear, easy to read, and simply state what is due and when. Make sure you’re meeting any special requirements of each customer, such as including purchase order numbers, and that your invoices are going to the right person at the right address. This may sound basic, but simple errors like putting the wrong suite number on an invoice can cause delays.

5. Enable customers to pay invoices faster
Once your invoicing system is cleaned up, look for other ways to encourage customers to pay you even faster. Depending on your industry and financial situation, this could mean offering a discount for cash payments or early payments. Encourage your customers to use e-payments. This will not only enable faster payment, but also saves processing time on your end.

6. Partner with your accountant
Sure, you have an accountant, but do you only get together at tax time? A good accountant can help shape up your business’s finances all year long. Enlist your accountant to give your company a checkup. What could be improved? Where could you cut costs, free up cash, or make more by putting profits back into the business? Check in with your accountant once a month to follow up on results, fine-tune systems, and make sure your company is on track. There is a wealth of information in your books for improved business decisions. Have your accountant help you access it and be rewarded with higher profits, better cash flow, lower expenses, reduced taxes, and more money going into your pocket.

10 Ways to Grow Your Business

February 12th, 2013

Is your business already as big and profitable as you want? Then read no further. For those who realize that growing your business is a never-ending necessity for its survival, as well as for your own economic well-being, this list is intended to help you focus on that task. What can you do to get your business beyond the sustenance level? All of the ways of growing a business outlined below have been successfully used by others and, with some planning and investment, they’ll work for you too.

1. Sell more to your existing market The first thing that comes to mind when thinking of growing your business is getting new customers. But the customers you already have are your best bet for increasing your sales; it’s easier and more cost-effective to get people who are already buying from you to buy more than it is to find new customers and persuade them to buy from you.

2. Know how to ask for referrals Getting new customers is the obvious approach to growing your business. One of the easiest ways to do this is to ask your current customers for referrals. But notice the verb. Doing a great job and just assuming that your customers are passing the word about your business isn’t going to do much to increase your customer base; you have to actively seek referrals. During, or after, every job or sale, ask your satisfied customer who they know who has a use for your products or services. Notice I didn’t say, “who they know who would be interesting in buying your products or services”. Don’t make your customer have to decide who wants to do business with you, just who could use what you’re selling.

3. Reduce your costs Keep in mind that the point to growing your business, is to grow your bottom line. And the difference between pre-tax and post-tax money can make this a very effective growth strategy. There are two main approaches to cost cutting; liquidating your “loser” products, and improving your inventory turnover.

4. Innovate your product or service Discovering and promoting new uses for your products or services is a great way to both get existing customers to buy more and attract new customers. Think duct tape, and how little would actually be sold if people thought it was only for ducts.

5. Extend your market reach There are several ways of growing your business by making your product or service available to a new pool of customers. The most obvious is to open stores in new locations, such as opening a store or kiosk in a new town. A new location can also be a website with an online store. Another approach is to extend your reach through advertising. Once you’ve identified a new market, you might advertise in select media that targets that market.

6. Capture a niche market Remember the analogy of the big fish in the small pond? That’s essentially how this strategy for growing your business works. The niche market is the pond; a narrowly defined group of customers. Think of them as a subset whose needs are not being met and concentrate on meeting those unmet needs. A nursery, for instance, might specialize in roses.

7. Diversify your products or services The key to successfully growing your business through diversification is similarity. You want to focus on the related needs of your already established market or on market segments with similar needs and characteristics. An artist might also sell frames and framing services, for instance. Or a mountain bike rental business might switch to renting skidoos in the winter season.

8. Participate in trade shows Trade shows can be a great way of growing your business. Because trade shows draw people who are already interested in the type of product or service you offer, they can powerfully improve your bottom line. The trick is to select the trade shows you participate in carefully, seeking the right match for your product or service.

9. Franchising The stories of entrepreneurs who have become both well-known and well-heeled due to franchising their small businesses are countless. If you have a successful business and can develop a system that ensures that others can duplicate your success, franchising may be the fast track for growing your business.

10. Exporting Expanding into international markets can also be a powerful boost to your business’s bottom line. Like franchising, this is a way of growing your business that requires quite a commitment of time and resources, but can be extremely rewarding.

Don’t let this list overwhelm you; pick one or two of these ideas that are suitable to your business and your circumstances and get your plan for growing your business underway. While you probably won’t experience growth right away, whichever way of growing your business you choose, you will see progress if you keep at it, and will successfully transform your business into all you want it to be.

A Successful Business is a Well-Oiled Machine

January 21st, 2013

 

Since you want more clients or customers, more income, and more time off, you’ll need to make your business run like a well-oiled machine. If you are like most entrepreneurs you’re handling almost everything yourself, and so your business is probably running YOU, instead of you running your business. That means a lot of things are being left undone, opportunities are being lost, and consequently fewer clients and are coming in.

Consistency is crucial and chaos is costly, both financially and time-wise. When things run like a well-oiled machine, when everything’s organized, chaos is reduced. Ideally, you want things run on their own, or by the efforts of someone else, so you can focus on growing your business, while having more time off to enjoy yourself. For this to happen, you’ll need to systemize the processes involved in operating your business.

If you haven’t identified the one best way to perform each repeatable task or process (such as answering the phone in a consistent manner, managing your sales process, etc.) then you’re in big trouble. You need to create some systems and procedures.

Even if you don’t have help from staff, you can still make your business run smoothly.

Begin by documenting everything you do:
Start by tracking your time. Take a note pad and document the time it takes you to do the tasks you do every day. In a week you will have a good picture of where you are spending your time. It also allows you to see what can be removed from your day, and what can be delegated to your team. By keeping an awareness of your time and where you spend it, you will be much more productive. You’ll see a pattern of where you are spending too much or too little time, and which things you are doing that aren’t essential to your business. By keeping track of this, it will help you realize how you can use your time better.

Next, you want to document the process associated with each task:
Write clear instructions on how to complete each task. This will eliminate, or at least improve, chaotic situations. Increased levels of organization will enable a better work ethic and will help keep you on task generating better production throughout the day. It can be eye opening to see what you need to put into place. Once you realize what needs to be done, and fix it, your business will run more smoothly. You may also detect areas of your business that are under, or over staffed. By recognizing this you are attacking an issue before it becomes a bigger problem. You are now also able to better delegate what you need to, so that you can focus on what is the most important use of your own time. Make certain that all task instructions include the locations of all support material so that if you are unavailable your staff can easily find what they need to keep things going smoothly.

The end result should be an instruction manual for your business:
An instruction manual, or operations manual, for your business is a huge asset. It will help you and your staff to keep on track and know where to go to find the information need. It will clearly define the rules and regulations, work ethics and processes clearly. This will help you keep your employees in line, and help employees know their proper role, and what they need to do to fulfill that role. Everyone’s job is easier when the processes and procedures are clearly stated. There won’t be any gray areas when everything is right there in black and white. As you add to your team over time, having your systems documented will allow new people to integrate better, faster and more efficiently with your current team.

Ideally you will want to define your systems and document your processes and procedures before your company grows to full capacity. Then, as you approach full capacity status, you will avoid the breakdowns that cause so many businesses to fail. At the same time, you’ll make more time for marketing and for the ability to service the resulting larger client list.

A prime reason that franchises are so successful is that the operations manual eliminates all the guesswork on how to do things. It tells you “one best way”, and documents everything in a step-by-step manner.

But remember, just because the process is documented, it does not necessarily mean it’s always going to be the “one best way” to perform that task. You should challenge your employees to improve on how things are done to increase productivity and the quality of the results. That said, your operations manual should be a living document.

There are many things in any business that can be systematized. For example, each of your different marketing methods that you use to attract new clients should be well defined and documented, as should your client management, your schedule, your calendar, your email, etc. While you’re at it, your personal life could also benefit from establishing specific procedures. You can systematize your food shopping, your doctor appointments, your personal email, your dry-cleaning, your errands, your banking. You name it, and it can probably be systematized to your benefit.

You’ll be amazed to see how much of a problem-free zone your business becomes. You will have a lot more time to focus on building the business, a lot more room for new clients, and more time to simply enjoy yourself. You’ll have more time for vacations, for self-care, and for spending quality time with friends and family. And that’s what being self-employed is really about.