out of the box innovation

Business Innovation & Growth: How to Keep It Alive

When money flows into your business effortlessly from banks and customers, it’s easy to ignore mistakes, take the path of least resistance, and live with the problems. But when times get tough, it becomes more difficult to ignore. It forces business owners to create REAL changes or go out of business.

Choose a Different Path

Instead of blaming others or the economy when things get tough, do what entrepreneurs do.  Put on your creative hat and make the decision to rethink, restructure, refocus and rebuild. In doing so, you’ll come out ahead in the long run.

So if you are looking to turn things around, recognize that it’s time to stop putting band-aids on your business and commit to real change. Often the problems you have, like eroding sales and profits, long hours with little pay, or poor cash flow, are symptoms of bigger issues in your business. Get to the root cause and fix the real problems.

Where to Start Rebuilding

Get Rid of the Dead Wood. Employees are an asset, but only if they produce results. You need to be willing to let go of the people in your company who don’t. You know who they are. They show up late, collect a paycheck and add little or no value for your customers, team or business. They zap your energy and kill morale. So why do we settle and hang onto under-performers?

Sometimes it’s fear of the unknown.  Johnny may be lazy, but at least he shows up. Sometimes it’s a sense of obligation.  How can I fire my cousin or brother and still face my family? Sometimes we feel we can’t. because we never communicated our expectations or dissatisfaction. And sometimes we just feel too overwhelmed and don’t have the time to hire and train someone new. Whatever your reasons, you have a choice. You can fix the problem – help Johnny become an asset to the team — or make him go away.

Fire Deadbeat Customers. Again, you know who they are. They only buy with discounts or purchase low-margin products, pay late or after numerous collection requests, complain often and treat your team poorly. What you earn from your ideal customers subsidizes your less than perfect ones. Why let them hang around to zap your profits and team morale? Fire them and replace them with customers who value what you do or sell.

Apply Innovation in All Areas of Your Business. Many owners associate innovation with new products or inventions. Innovation, by definition, is the introduction of new things or methods and it’s important if you want to achieve sustainable growth and profit.

The key is to apply it to all areas of your business.  From marketing and sales to customer support, delivery and team building. It’s simply a matter of continuously looking for better ways to do what you do.

RELATED ARTICLEIs Creativity Required for Success?

Make Productivity Matter. Busy is not the same as productive. Productivity is about producing effective results or outcomes, in the most efficient way, with the least amount of time and effort. Now who wouldn’t want that?

So do you measure and look for ways to eliminate waste, increase outputs or reduce hours associated with daily tasks or service delivery within your company? Do you have systems for the critical activities and consistently look for ways to streamline or improve them?

If you want to increase your margins, without raising your prices, take a hard look at your productivity levels and the waste in your business. It’s a goldmine for many small businesses.

Plan, Measure and Systematize Your Marketing. A lot of small business owners view marketing as a necessary evil. They know they need it, but often struggle to get it right. So when money gets tight or owners get busy, marketing takes the hit. Unfortunately, it comes at a big cost — sustainable growth and profit. So why is that?

First, some lack a strong marketing foundation with clear targets, the right products and services for them, and compelling messages to get them to act. As a result, it makes marketing harder to do. An integrated and consistent marketing effort produces a better ROI, but it does require a little planning.

Second, some fail to measure results so they don’t actually know if their investment (time and money) is delivering a return. It’s easy to cut marketing expenses when you can’t tie the cost to specific results such as new customers or increased revenue.  Unfortunately, it’s not always the right decision.

Third, most marketing for small businesses is not systematized. There is no efficiency and most important, no consistency. Therefore, it costs more and is far less effective – an obvious frustration.

Focus More On Profit Than Sales. It may make you feel good to hit that target sales plateau or be able to tell others you do $1 million or more in sales. But if those sales are not providing you with the profit to sustain growth, increase your personal income and deliver the lifestyle you want – why bother?

As a business owner, you take all the risks. Your business must make a profit to stay in business. Your family, customers, employees and vendors are depending on it. Remember, sales growth is important, but profit and cash flow is king!

Kill the Paradigms. What beliefs do you hold to be true that really aren’t? We all have some. Those little self-sabotaging thoughts that act as constraints in our business and life. Here are a few examples: It’s impossible to earn a profit in this economy, I can’t get good help, customers are never satisfied, customers only care about price, marketing doesn’t work, I can’t get my people to do anything unless I’m there watching over them.

Any sound familiar? The problem with paradigms is they give you an excuse to settle for less, accept mediocrity or give up completely. Don’t let the attitudes held by others, but not supported with fact, hold you back.

Ready to Create Your Own Success Story? 

If you are ready to move your business in a better direction, I invite you to experience the power of business coaching with a complimentary session.  Click here to learn more or call (856) 533-2344 to schedule your session today.

frustrated - biz mistakes

9 Small Business Mistakes that Hinder Growth and Profit

While experience can be a great teacher, learning from someone else’s experience can save you time, money and a lot of frustration – especially when it comes to growing your small business. So here are some common business mistakes you want to avoid or fix.

Mistake #1: I Can Do It On My Own

Most of us became entrepreneurs because we are experts or skilled at something and believed we could do it better than competitors or maybe our current boss. But building a successful business requires more than technical know-how. None of us are experts at everything – so surround yourself with other experts to fill the gaps. Whether you hire employees, sub-contract work, create joint ventures, work with coaches/consultants or develop strategic alliances – the support you need is available. Avoid this costly business mistake. Don’t try to do it all yourself.

Mistake #2: Keeping Your Business a Secret

Today, a website is a must-have for a small business. It is a great equalizer and can build credibility for you, your company and products. But it only pays off if people who want your products and services can find you. As a small business owner, search engine optimization with relevant keywords and content must be a priority. Use social media and other marketing tactics drive people to your site too!

Mistake #3: Creating Confusion With Potential Buyers

When starting a business, the goal typically looks like this:  generate sales for your core products or services as quickly as possible by whatever means necessary. But if sales for core products are slower than expected, many begin dabbling with additional products or services to generate more revenue. Too many dissimilar products or different messages can leave people wondering what you do and why they should choose to buy from you. Focus on your core strengths and build from there.

Mistake #4: Great Products The Market Doesn’t Want

The best products or services will go unsold if you are talking to the wrong people – those who will likely never buy! Investing your time and money promoting your products or services to people who don’t have the resources, authority or need, today or in the near future, is both frustrating and costly. Who are the ideal customers for YOUR products and services? Be clear on this, find out where they are, how to reach them and then apply your resources to pull them in.

Mistake #5: Talk More Than You Listen

If you want to earn a customer’s business, you need to solve their problem or fill a need. So before you jump into your sales pitch, take the time to ask questions, listen carefully and determine what the customer needs. Your features and benefits are only relevant when they solve a customer’s problem or fill a need. Successful people tend to be good listeners – so you’ll achieve greater success when you spend less time talking and more time listening! Remember, technology and markets change, so keep your pulse on what customers need and adjust accordingly.

Mistake #6: No Follow-Up

Investing resources to generate leads for your company without a proven method to convert them into paying customers is costly. Whether potential customers come to you by phone, email, online or in person, a system for consistent and timely follow-up is a key to sales growth. Take the time to develop a procedure for moving prospects to customers. Take advantage of technology to ensure your process is both efficient and effective. Be consistent and watch your sales soar.

Mistake #7: Disjointed or No Procedures

Documented procedures for all the critical tasks and operations is a key to efficiency, consistency, continuous improvement and profitability. Yet despite the benefits, it’s ignored by many small businesses. This mistake becomes obvious when you hire and train new people, attempt to outsource or start losing customers due to poor service or missed deadlines. Take it one at a time, but make written procedures a priority in your business. The results will surprise you. My Ultimate Systems Guide makes it easy to start building systems and procedures in your small business.

Mistake #8: Hiring on the Fly

“Quick to hire and slow to fire” describes many small businesses. A strong team of people to support your business is certainly important – but only if they are the right people. There are proven hiring systems and tools, including a job description and clear goals, to help small businesses attract and retain quality people. Always hire with a purpose, invest in training, commit to developing your team and be willing to let go of those who don’t fit. Need an easy way to get the word out when you are hiring? Indeed.com is a great solution for small business owners.

Mistake #9: Roller Coaster Marketing

For many small businesses, marketing activities and spending look like a roller coaster, up and down based on how busy you are or how sales are doing. If your marketing is sporadic, your results will likely be the same. The key to attracting and retaining customers is consistency. It is better to do 5-6 lead generation strategies well and consistently than doing 10-20 of them periodically. And remember, marketing to existing customers is just as important as new business marketing — so incorporate both into your marketing efforts.

Which of these mistakes is impacting your growth and profit? Make it a priority to fix them – one at a time, if necessary. The sooner you do, the sooner your sales and profit will grow. And isn’t that why you are in business in the first place?

New Monthly Article & Business Tools

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profit builder

Want to Be a Profit Builder?

When you hear the words business growth, what pops into your mind? Is it revenue, sales or maybe new customers? What about profit? What are you doing to build profit in your small business? Is it a priority or an after-thought?

There are a lot of ways to build profit in your business. Cutting costs is the obvious one. While keeping costs down is important, put adequate resources (time and money) into other areas – and keep your focus on the bottom line. Be a profit builder.

5 Ways to Build Profit

#1 – Grow sales of higher margin products. Products and services, like customers, are not created equal. The growth of low-margin products can actually reduce your overall profit. Do you know which products or services deliver the highest profit margins?  You should. Then put your marketing and sales efforts into selling more of those.

#2 – Gain efficiency with systems. This is especially important in businesses that rely on labor to deliver their products or services. In a service business, you are only as good as the people doing the work – so their efficiency and effectiveness are critical to your profitability.

Take advantage of technology to save time. Utilize checklists so employees have the materials they need when they arrive at customers locations. Have a system for add-on sales opportunities. Schedule work to minimize drive times. Eliminate duplicate work.  These are just a few – I’m sure you can find others in your small business. When you do, enjoy the extra profit that comes from doing more with less.

#3 – Eliminate re-works that come from poor quality. Re-works or callbacks are profit busters. It costs you money to re-do the work – and you also lose the opportunity to serve someone else with that person or crew. Make quality a priority.  Get it right the first time.

#4 – Profit from your pricing. When you use a standard markup and cost to set prices, you ignore the most important ingredient – value. This comes from being better or different. Your pricing should reflect your quality, uniqueness, and convenience. Don’t be afraid to charge more when you can.  As a small business, discounts and low prices will always work against you. Avoid them unless you have a strategic reason for doing so. More sales at any cost is not a recipe for optimizing your profit margins.

#5 – Improve your marketing ROI. Marketing is an investment. It’s not about how much you spend, but how effectively you apply your resources – time and money. In fact, many of my clients are spending less and getting more revenue.  You can too with a few changes:  better targeting, emphasis on retention, compelling messages, diverse tactics, and a system that converts more leads. Marketing is not about getting leads – it’s about getting quality sales through current and new customers.

As you can see from these examples, profit-building requires a whole-business approach to growth – not just sales. Your people, systems, marketing and daily operations all play an important role – so leverage them. With small improvements in all these areas, you’ll grow both sales and profit. And that’s a recipe for a better business.

New Monthly Article & Business Tools

For new business improvement articles, exclusive tools and insights on entrepreneurship, click here to subscribe to my monthly eNewsletter. When you do, I’ll also send you my free eBook, How to Build Profit Through Leverage.

Five stars service

13 Ways to Make Your Service Business a Profit Sensation

Service companies make up 80% of the businesses today.  From plumbers, doctors and hair stylists to accountants and printers, a service business helps or does the work for someone.  Many are local. Most require a more personal interaction with their customers.  All sell something intangible.  But some stand out while others struggle.

13 Ways to Help Your Service Business Shine

Get Your House In Order.  The core of a service business is the service itself.  If you fail to deliver what you promise, customers won’t stick around and will share their bad experiences with others. Identify what you want the ‘buying experience’ to look like and have procedures in place to help your people deliver it consistently.  Here are some great words advice from Harry Beckwith, “Getting the word out and attracting people to a flawed service is a strategy for killing a service company.”

Hire for Heart, Teach Skills.  Your business is only as good as the people you employ to deliver what you promise. Skills can be learned through education or training from you or others in your company.  But you can’t teach heart.  People either care or they don’t.  They are passionate about helping others or they are not.  Keep this in mind when hiring people to represent your company and serve your customers.

Know Your Competition.  In a services business, your prospects have more options than you think. Sure they can choose you or another company in your industry.  But they can also choose to do nothing or perform the service themselves.  Look for ways to create additional demand in your market by converting those who do nothing or do it themselves.  Think emotions – what they can gain or avoid!

Mistakes Mean Opportunities. Outstanding service doesn’t mean zero mistakes.  Service businesses are people dependent so mistakes will happen.  How you handle them is the key to how you are perceived long-term.  Don’t pass the buck or try to justify it.  Fix it without a hassle and you may earn a lifetime customer and a lot of referrals.

Be Competent and Likeable.  If you sell a service, you are really selling a relationship, so chemistry counts. Prospects need to like you and feel comfortable working with you.  Sure you must be capable and professional, but most of all you must be personable!  And it must come across in everything you do before, during and after the sale.

Price With a Purpose.  Your pricing says something about you.  Don’t assume it is always logical.  People make assumptions about quality based on price. High price assumes high quality, low price assumes acceptable.    What you perceive to be a value, may actually make you look second-rate.

In his book, Selling the Invisible, Harry Beckwith shared a few pricing tips worth repeating:

  • A little resistance is a good thing.  If nobody complains, your price is too low!
  • Pricing somewhere between the high and low in the market forces you to compete with everyone — so, avoid the deadly middle.
  • Low cost is not sustainable and requires no imagination so don’t go there!
  • Charge for your experience, talent, skills, and knowledge – not your time.

Stand for One Thing.  Have a singular, distinctive message for your service business and reinforce it every chance you get.   You will achieve more if you narrow your focus, choose one thing and put the power of association to work.  By nature, we associate one positive (or negative) thing with other good (or bad) things. Yes, it works both ways.  So if prospects perceive you to be the most convenient provider, by association they will view you favorably for other attributes like quality and expertise.

Don’t Say It, Prove It.   “We offer great service” won’t inspire people to try you since most businesses make these claims.  If you really do a great job, create evidence to support this.  Build your case.  Customer satisfaction surveys are a great and often under-utilized way to document and demonstrate your service quality. The overall satisfaction scores along with customer comments and testimonials can be used in your marketing and make your service claims stand out.  Afraid to know what customers think or maybe your scores aren’t worth bragging about?  Then fix it and make service the priority it should be.

Manage customer expectations.  We’ve all heard the phrase, ‘under-promise, over-deliver’ and it emphasizes the importance of expectations versus satisfaction.  A customer’s satisfaction is the gap between what they expect and what they actually get.  Avoid hype. If you make a client think you will do better or more than you can do, they will end up disappointed and unsatisfied!

Sweat the Small Stuff.  Buying decisions are not always rational.  To justify decisions, people look for differences between service providers. When significant differences are hard to find, prospects look to seemingly minor things.  Are your business cards professional and free of smudges? Is your staff in uniforms or dressed professionally? Are your vehicles clean?

Be Grateful, Show It!  The best way to nurture and keep customers is simple.  Say thank you and say it often.  Stay connected in a variety of ways. Make them feel wanted and appreciated!

Always Look for New Clients.  If you have customers and are really busy serving them, it’s easy to become complacent.  This is especially true for service companies with recurring revenue or those who work on larger jobs a few at a time such as contractors.  Don’t do it.  Keep your pipeline full.  Unless it’s an emergency, people will wait to work with a company they really like or prefer!

Track What’s Important.  While customer satisfaction is one metrics you can use to evaluate what’s important, it’s not the only one.  For example, quality scores that reflect re-works or customer retention rates are effective ways to monitor your results. They can be shared in your marketing.  Labor as a % of sales is also an important efficiency metrics in a service business.  Pick a few that are relevant to your business.  Track them and use them to make improvements. Where applicable, promote them in your marketing and sales efforts.

Service businesses are people businesses.  The more you understand them, the more success you will have.  So get to know your customers personally, understand what is important to them,  and deliver what you promise consistently! It’s a recipe for success in all businesses, but critical when you sell intangibles!

Find this helpful?  Then share it.

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6 Ways to Put More Profit on the Bottom Line

In the quest to get more customers and grow sales, many small businesses lose focus on something that is vitally important – Profit! Profit is your reward for excellence in entrepreneurship. So whether you are just getting started or well established, here are some ways to help you put more profit on the bottom line and in your wallet.

Be Different & Compelling

Too often small businesses do what everyone else is doing. They tell customers what they do and just compete on price. If you want to avoid this trap (and you should), start talking benefits not features.

Customers today have many choices, so give them a reason to choose you over others. What makes you and your business compelling and different? Now different doesn’t need to be unique to you and you alone. It simply needs to be something you do very well that you can promote or guarantee – at every opportunity in all your marketing! It’s easier than you think; but if you are not sure, start by asking your customers. When you stop competing on price, you’ll earn more and create profitable growth in your business.

Avoid Trying to Serve Everyone

Who are your ideal customers – those who value what you provide, at the level you provide it and at the price you charge? These are the customers who are happy to work with you, rave about you and often refer others. It shouldn’t be everyone.

Don’t spend a lot of time and energy trying to satisfy everyone or you end up serving few people well. It hurts your reputation and definitely impacts your profit. So nail down your ideal customers, learn more about their needs and build your business around them. What products or services do they need? What are some of the challenges they face? What level of service, payment options, and availability do they expect?

Once you are clear on this, attracting more of them is much easier – and profitable. So be willing to think smaller to grow bigger! You’ll not only make more money, but you will enjoy your customers a whole lot more.

Plan Your Growth

Build your reputation on your core products and services before you start jumping into new areas and new products. More is not always better. Stick with what you do well, build your reputation on it and only expand when you have the resources and ability to deliver what you promise and do it profitably. Don’t let unprofitable growth erode the profits in your small business.

Get the Right People To Grow

At some point, you may need to add people or replace someone who is leaving. Many small businesses are quick to hire and slow to fire. And it comes at a cost – profit and productivity. Before you rush out and hire or replace someone, stop and build a case for your decision. Here are a few things to consider.

  • Do you need someone onsite or virtual?
  • Can you use a sub-contractor or do you need an employee?
  • Do you need someone full or part-time?
  • Can you promote or expand the responsibilities for an existing employee to fill the need — instead of hiring?
  • Can you restructure the company and job responsibilities (and eliminate redundancy) to avoid bringing in additional help?

Explore all your options, look at the costs and benefits associated with them, and then make the decision. Remember, people are an investment in your business. Whether you hire, use a sub-contractor or work with someone virtual, use a system – don’t just wing it.

Know the Numbers

You can’t manage what you don’t measure and what you measure you can improve. Successful owners of all sizes track and monitor what is important to them and their business. What numbers should you track to measure your progress and success? While they vary by business, some common measures include sales, gross profit margins, break even, number of leads, sales conversion rates, average sales dollar per customer and net profit.

Knowing where you are today can help you make better decisions and prioritize what needs to be improved. Do you know how much profit you make from each of your products or services? Or which customers are profitable? If you knew this information, would it change what you market and who you target? The answer is likely YES!

Learn to Love Systems

Finally, learn to love systems. Many small businesses have no documented procedures of how they do what they do. As a result, there is little consistency – a key to productivity, efficiency, customer satisfaction, and profitability. Many assume only big businesses need systems; and say things like, “We’re small, we talk to each other, and we all know what needs to be done”.

Maybe this is true when you first get started and it’s just you. But what happens when you grow and suddenly you are serving more people, or bringing in new staff? What happens when people leave and take the knowledge with them? If you want a business that provides consistent service with less effort and more profits, then make systems a priority in your business. For additional help with systems and procedures, check out my Ultimate Systems and Procedures Guide for Small Businesses.

So whether your business is well established or relatively new, you can make it a success if you focus on creating uniqueness and niche your business, plan your growth, know your numbers and always look for ways to systematize your business. The payoff will be there on the bottom line!

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For new business improvement articles, exclusive tools and insights on entrepreneurship, click here to subscribe to my monthly eNewsletter. When you do, I’ll also send you my free eBook, How to Build Profit Through Leverage.

Is It Time To Improve

Is It Time To Improve Your Business?

A mentor once told me, “A business is like a tree, it’s either growing or dying”. Building a business is hard work. But continuous growth and sustained profitability take more than just effort. It requires innovation, commitment, and the right focus. If you are ready to improve your business, here are a few ways to get started.

5 Ways To Improve Your Business

# 1 – Have an Open Mind

Business improvement ideas come from a variety of sources. Sometimes these opportunities are obvious. But often they come from fleeting remarks or suggestions by friends, colleagues or total strangers. But you must be open to new ideas and willing to try new things. When you do, improvements will follow.

#2 – Invest Your Time Wisely

Most owners know their time is valuable, but do you treat it that way? Or do you waste it putting out fires, working on trivial tasks or micromanaging your staff? Plan your day, schedule your time and focus on the right stuff – the things that only you can and should do.

Interruptions will happen, so plan for some.  And, when you do schedule the time to work on important tasks, treat it like a customer appointment. Shut the door, tell others you don’t want to be disturbed, turn off the cell phone and email reminders. Make these blocks of time productive so they move you toward your goals and improve your business.

#3 – Be a Profit Builder

Keep your focus on the bottom line.  There are a lot of ways to improve profit in your business – cutting costs is the obvious one. While keeping costs down is important, put adequate resources (time and money) into other areas. Here are a few you may wish to consider.

  • Grow sales of higher margin products or services. Products, like customers, are not created equal. The growth of low-margin products can actually reduce your overall profit.
  • Gain efficiency with systems especially if your business relies on labor to deliver the services.
  • Eliminate re-works that come from poor quality.  Get it right the first time.
  • Evaluate your pricing to reflect value, not just cost. This can help you optimize the gross profit margins – a key profit driver.
  • Improve your marketing ROI with better targeting, compelling messages, diverse tactics and a follow-up system that converts more leads.
#4 – Balance Operations and Business Development

As a business grows, the day-to-day running and serving customers can become overwhelming. When this occurs, marketing and sales activities often go on the back burner. Building a pipeline of new business opportunities while increasing sales to existing customers take time.  It is not a stop-start activity.  Plan and make business development activities something you do daily, weekly and monthly. Then do it consistently.  It will pay off on the bottom line. 

#5 – Think Lifetime Value

As a business owner, you must establish a long-term view of customer value before you can appreciate how important it is to develop a relationship with customers and ensure everything is done to keep them as long as possible.  What are your customers worth over their lifetime?

Here’s an example to demonstrate this point.  You own a lawn-care company.  The customer pays you $35 each time you mow their lawn.  While the first transaction is only $35, they spend that each week from May – September, so annually they spend about $700. If they stay with you for four years, they will spend about $2,800.  So is this a $35 customer or a $2,800 customer?  The way you view them will dictate how you invest in current and future customers.

The 30-Day Business Improvement Challenge

Are there improvements you can make in your business? Certainly. But nothing will change until you take action.  So identify one thing to work on over the next 30 days and get started.

RELATED ARTICLE: How to Build Profit the Hybrid Way

Get Started. Stay On Track

Are you ready to take a leap forward? To get started and stay on track? My accountability programs offer an affordable way to get the help you need.  More than accountability, this program provides business owners with structure, another set of eyes and practical advice too! Click here to learn more.

business mistakes

7 Business Mistakes That Cripple Success

Starting a business may be challenging. But sustaining success and building a business that really works for you is likely more difficult. Why? Because what helped you succeed early is often different years later. You need to make adjustments. Owners who do, stay in business. Those that don’t become another sad statistic.

7 Common Small Busines Mistakes To Avoid

1: I Can Do It All
You probably started your business because you had a skill and the confidence to do a better job than other competitors or maybe your current employer. But it takes more than technical know-how to win in business. Assess your personal strengths. Then surround yourself with others to fill the skill or knowledge gaps. Whether you hire employees, sub-contract work, develop power partners or hire a coach or consultant, the support you need is available. Don’t try to do it all yourself.

2: Confusing Customers
Without customers, you don’t have a business. It’s true and explains the focus new business owners put on sales, any sale to anybody. But this ‘never turn away an opportunity’ attitude often creates too many disjointed products, services, messages, and targets. It leads to one thing, customer confusion. And confused people rarely buy or refer others! Focus on your core strengths – what are you really good at and why should they choose you? Build your reputation on this and grow from there.

3: New Customers Are Priceless
That’s why we gladly go out and buy them! Whether we use discounts, free stuff or anything in between. It works. But the strategy only pays off if you keep them and serve them profitably. Be clear on who you want and invest your money to get them. When you do, solve their problems, wow them with service and never take them for granted. Sounds easy – but here’s the challenge. Be willing to say no or turn away customers who simply don’t fit. You’ll never make them happy and they’ll rarely make you rich!

4: We Are Small, We Talk
It’s the most common excuse when it comes to written systems and procedures. Big companies certainly have them, but small businesses need them just as much, if not more. Surprised? It’s not uncommon for employees in small businesses to wear a lot of different hats, requiring a variety of skills and knowledge. Some cross-train employees, most do not. But if procedures aren’t written down, it’s difficult for another team member to simply step in when others are away or leave. That alone is a good reason to write down procedures.

Here’s another. When you take the time to write down how things get done in YOUR business, you help others replicate what you want and then do so consistently and efficiently. When you review your systems with an emphasis on how we can do it better, you will uncover opportunities for improvement and increased profit. Everyone wins. You make more money, customers get what they expect and employees feel empowered through their contributions.

5: Quick to Hire, Slow to Fire
It’s not unusual for small businesses to view the team as family. It’s a strength, but can also be a weakness. Getting the right people to support your business is important. A good hiring system that includes a full job description with clear expectations and goals is a good start. It should be used for all hires – even the ones that are family or family friends! Once on board, invest the time to train them. Written procedures really help here! Make their personal growth and development a priority. Be the leader they need you to be.

With that said, a good system and your commitment and best effort will work most of the time. But we’re human. We have all made bad hiring decisions at one time or another. Perhaps the newly hired employee lacked some skill you thought they had. Or maybe he/she was not dependable or simply didn’t fit with your culture. Whatever the reason, doing nothing is not a good option. Be willing to let them go.

6: I Can Get All The Leads I Want When I Want
Like most things in business, you can if you throw enough resources at it. But is that what you really want — a lot of high-cost leads? Successful marketing has less to do with what you spend and more to do with the consistency of your actions. Turning your marketing off and on when things slow down or sales drop is expensive – but also less effective. It is better to do 5-6 marketing activities well and often versus 10-12 periodically. Develop a marketing plan, with a variety of tasks you do every week and month, and you will keep the flow of quality leads coming – at a cost that will make you smile.

7: My Accountant Handles That
If you own the business, you own the numbers. As a trusted advisor, your accountant provides the financial reporting and tax guidance you need for compliance and success. And a bookkeeper can certainly eliminate the burden of day-to-day record keeping. Delegate, but never abdicate. Whether good or bad, the numbers tell you how you are doing and what you can improve. They help you make good decisions that impact all areas of the business. A good accountant will gladly explain and teach you if you want to learn. Time to embrace the numbers. Successful business owners do!

RELATED ARTICLE: 5 Skills To Take You From Technician to Entrepreneur

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How to Turn 1% Into Double Digit Profit Growth

When it comes to profit growth or improving the bottom line, business owners often look for the silver bullet. The one big innovation or idea that will turn a business around and make people notice.

Innovation is important in all areas of your business, but often small improvements over time can make a big difference on the bottom line. In fact, a mere 1% improvement in revenue, cost of goods sold and expenses can produce double-digit profit growth!

The Power of 1%

Here’s a simple example to demonstrate the Power of 1-1-1

Revenue:  With a 1% increase, revenue goes from $500,000 to $505,000

COGS:  With a 1% reduction, cost of goods sold goes from $300,000 to $297,000

Expenses:  With a 1% reduction, expenses go from $160,000 to $158,400

The result, Net Profit goes from $ 40,000 to $49,600.  An increase of $9,600 or 24%!

Check it out with YOUR numbers to see for yourself.

So now ask yourself “Do I have what it takes to achieve a 1% improvement in these areas”? Absolutely! Can you do more? Probably. The key is to start – so set a goal. By focusing your efforts in these areas, you too can make progress 1% at a time.

Of course, a goal without actions won’t do much to get you there. So here are some things to consider as you plan your attack:

Revenue / Sales: There are hundreds of ways to grow sales. While generating more leads is an obvious one, here are a few that are often overlooked. You can improve revenue by improving your sales conversion rates, get customers to spend more or buy more often or expand your products or services. Need some ideas, check out 155+ Profit Building Ideas

Cost of Sales or Goods Sold: Based on experience with hundreds of small business owners, this area offers a lot of opportunity for profit improvement. The costs included in the cost of sales or goods sold will vary based on your type of business. These are variable – and link directly to sales levels. Examples of costs include inventory, incoming freight, direct labor (associated with service delivery or production), raw materials, service related suppliers and sub-contractors.

So how can you improve this area? Consider some of the following: improve labor efficiency by eliminating waste, renegotiate prices with key suppliers and vendors, outsource or utilize sub-contractors, improve scheduling, plan purchases to get volume pricing, and eliminate rejects or reworks.

Expenses / Overhead: These are relatively fixed and include everything from wages and benefits to marketing and rent. In today’s economy, many have focused on trimming the fat – but the key is to do so without impacting your ability to grow and deliver on your promise to customers.

Here’s a few things to consider: re-evaluate staffing levels to align with sales and service requirements, re-evaluate benefits, develop compensation model that includes pay-for-performance elements (not just guaranteed wages), evaluate outsource options or leasing, re-quote service contracts and insurance, renegotiate rent or relocate where appropriate, track marketing to improve ROI, and establish a budget – and live with it.

Small improvements in all areas have a compounding effect on your bottom line. They build on each other. All it takes is a clear focus, some simple proven strategies and a commitment to do it.

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Do You Understand Markup vs. Margin?

Your gross profit margin is one of the most critical key performance indicators for overall net profit – yet it’s misunderstood by many small business owners.

Your gross profit represents what you have left over from sales (income) after you take out the variable costs – those that increase or decrease based on sales volumes.  These are often referred to as cost of goods sold (COGS) or cost of services —  and it applies to all businesses.

If you sell products, like retailers or distributors, your costs include inventory.

When you make products, like manufacturers, your costs include raw materials and labor associated with production.

If you sell services, your costs include the labor associated with service delivery and may also include supplies required to do this.

Do you know your gross profit margin and how it compares to your industry? If not, take a few minutes to calculate it – divide your gross profit dollars by the sales/income for the same period. Please note that some small businesses include the above costs with expenses (versus cost of goods sold). Talk to your accountant to make sure your costs are set up appropriately.

Are you surprised? Many small business owners are. And here’s the most common reason why … they use markup to calculate the selling price and assume the markup percentage is their gross profit margin. Ouch… they are not the same.

In fact, if you mark up your products or services 30% — your gross profit margin on this product or service is actually 23.1%. Below is an example to demonstrate this.

Calculating Gross Profit Margin

Your cost for your product or service is $100

You mark it up 30% — So your markup (or gross profit $) is $30

Your selling price (cost + markup) is then $130

Your gross profit is $30 – note the markup and gross profit dollars are the same

But, your gross profit margin (gross profit $ / selling price) is 23.1%

For a markup and margin calculation tool, click here to access download

As a business owner, you need to understand both — and use them properly to generate the profit you want and need.

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10 Ways To Create a Successful Business

When it comes to business, there are plenty of stats on business failures and why this happens. Knowing the potential obstacles certainly provides you with information that can help you avoid the pitfalls.  But since our brain works better with positive reinforcement, we’ll focus on what you can and should do to create a successful business.

When we consider business success there are two fundamentals that are obvious, so I have not included them in the list.  First, the business must have working capital so it doesn’t run out of cash and, second, it must have products or services that others want to buy at a price that produces a profit for the business.

With that said, there are certain things that stand out among successful businesses.  Based on my experience with hundreds of small business owners, here is my list of things to consider – to help you create a successful small business.

Have an Actionable Plan.  Writing down WHAT you want to achieve (goals) and HOW you will get there (actions or tactics) is a must.  As a small business owner, you wear a lot of hats and have a lot to do.  Without a roadmap, everything looks like a priority and the important stuff ends up on the back burner.  It doesn’t need to be long and fancy.  It simply needs to be clear and actionable.   Successful businesses have written goals with associated actions to get there.  My Ultimate Guide to Planning may help.

Think Long-Term Value.  It’s natural to look for ways to save money.  While it should be a priority in both good and bad times, you need to look at the big picture.  Are you creating short-term profit at the expense of long-term value?

Here’s an example to demonstrate this point.  When business got tough, a business owner laid off staff.  As the business recovered, he made a decision to fill some of his staffing needs with temporary help to save money.  Over the next year, service levels began to decline, customers left and his reputation took a hit.  He saved money short-term but it had long-term implications.  Think long-term value when making critical decisions for your business.

Focus on Results.  As a business, you invest a lot of resources in activities – from marketing and sales to service and team building.  But do you track or monitor the results to see what works and make adjustments based on what you learn?  Activities that don’t produce the desired outcome, like more sales, efficiency or profit, cost you time and money.  So whether you are trying a new marketing tactic, hiring a new employee or changing up your service delivery procedures, be clear on your desired outcome and monitor the actual results.  Your findings will determine if you keep doing it, make some tweaks or stop doing it.

Be a Lifetime Learner.  Entrepreneurs by nature tend to be self-confident.  Would you start a business if you didn’t believe in yourself and your abilities?  But none of us are experts at everything and sometimes we just don’t know what we don’t know.  Successful owners understand this.  They recognize their strengths and are willing to teach others what they know.  But they are equally willing to learn from others – employees, customers, business associates and mentors.  They are open to new ideas, willing to try new things and gladly give credit to others along the way.

Speak the Language of Business.  You don’t need to be an accountant or a math guru — but you do need to understand the numbers that drive your business.  Whether you do it yourself or hire a bookkeeper, Quick Books makes it easy for any small business to KNOW what is going on with your sales, profit, and cash flow at any time.  Have an accountant to help with tax preparation and strategic planning, but take ownership of learning and understanding your financials.  In doing so, you will uncover opportunities and make better business decisions.

Leverage Your Business.  You didn’t start a business to become a slave to it – yet many small business owners end up working lots of hours with little reward.  It’s important to simplify and get more done with a lot less effort.  The key here, of course, is systems! Documenting procedures and systematizing routine and critical tasks makes it easy to do or delegate what you do consistently, effectively and efficiently – so you get more done and make more money.  Systems also make life easier for you, the business owner, your team and your customers! They may not be glitzy, but they sure contribute a lot to the bottom line! My Ultimate Systems Guide may help.

Niche: Think Small to Grow Big.  Intuitively, most owners know that trying to reach and serve everyone is a costly mistake.   Today customers are more cautious about spending and often have more choices. To be effective, your marketing must be compelling to potential buyers.  How do your products or services address their goals, desires, and problems?  This is difficult to answer when you are trying to ‘talk’ to everyone.  But when you employ a niche marketing strategy – think small to grow big – it’s easier, more effective and ultimately more profitable!

Here’s where to start: (a) pick a product or service – most businesses have more than one (b) identify the niche or ideal customer for your product or service; (c) identify the problems experienced by those customers and (d) communicate the solutions your products or services offer for the problems they experience.  If you are not sure what the problems are, ask.

Create Profitable Growth.  New business is a priority for most companies.  But revenue growth will not guarantee you put more money in your wallet or bank account. Products and customers are not created equal.  If new sales are coming from low margin or unprofitable customers or products, profit can erode despite the top line growth.  If you can’t make a customer or product profitable, be willing to let them go!

Give Your Products a Facelift.  When was the last time you actually took a look at your products and services – beyond price?  The needs of customers change over time, technology and market conditions change too.   Are your products or services keeping pace?  Do you have opportunities to expand your offerings or reach new segments with minor adjustments?  Are value-adds still valuable to the customers you serve or are you simply adding cost without a return?  Which products or services are most profitable; which are unprofitable?   Successful businesses routinely make adjustments – they add, delete or modify to reach new customers and keep current ones coming back.

Create Raving Fans.  Getting new customers is important, but repeat business is the key to sustainable growth and profit.  Go beyond satisfying customers.  Make it your mission to create raving fans, who buy and spend more and tell others how wonderful you are.

It starts with their initial contact, so make the experience one they remember.  Follow up and do what you promise.  This alone will make you stand out.  Make continuous improvement a priority.  Always look for ways to better serve and wow your customers.  Stay connected, keep them informed and make them feel special.  Do you have a plan or formal method to do so or do you simply take action when you have time or sales fall off?  It’s a lot cheaper to keep customers than it is to ‘buy’ new ones and raving fans are the best advertisement for your business.

There it is.  Not rocket science huh?  In fact, I believe most small businesses have the potential to be better and stronger than they are today. Define what success looks like for your business then apply some of these strategies into what you do.  The results may surprise you.

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