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.

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.

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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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goals.resolutions

The Myth About Sales

The Myth About SalesAs sales go, so goes the business. It’s a common myth about sales. As a result, revenue growth tends to top the list of priorities for small business owners. It’s the milestone that gets the most attention. It’s the most important number – or is it?

As a business owner, sales growth is simply one metrics on the scorecard. If sales alone guaranteed success, then large organizations like WorldCom and Radio Shack would still be in business. Sales are important, but profit and cash flow is king.

So look beyond sales. Seek opportunities to improve profit and cash flow. Here are four things to consider:

  • How can I improve my gross profit margins? Whether you raise prices, reduce costs, increase labor efficiency or eliminate products (or customers) that are profit busters – do something! If your products and services are not generating good margins, selling more won’t help the bottom line.
  • How can I reduce debt and/or monthly payments? While some level of debt is normal in business, it needs to be manageable based on your profit. Excessive debt can kill cash flow. And yes, ultimately kill your business.
  • How can I improve efficiency and effectiveness? Often overlooked, this area has a lot of hidden profit. Whether you improve your scheduling, delivery, and collection or eliminate mistakes and costly re-doing of work, systems build profit – and make life a lot easier!
  • How can I get more from my current customers? Don’t limit revenue growth to new business – products, markets or customers. Build plans and tactics to keep current customers coming back and buying more. Then be consistent with your efforts!

Never ignore sales, but give profit and cash flow the same priority. Together, they form the nucleus of a financially successful 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.

profitgraph2

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.

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.

goals.resolutions

3 Secrets to Get You on the Path to Profit

How to Get on The Path to ProfitWhile 80% of small businesses fail, many entrepreneurs who stay in business fail to achieve their dream – more money, time, control and freedom.  Too many small business owners today end up with a J-O-B and operate Just Over Broke.

But you can create a business that really works for you. One that is profitable. One that provides you with flexibility and control. So if you want to put yourself on the path to profit, control, and freedom, here are three things you should do consistently.

Your Path to Profit

First, turn ideas into results.  Over 90% of small businesses run with no plan of attack.  Now I don’t mean a formal business plan that collects dust on the shelf.  But a simple, actionable plan gives focus and clarity to help you go from where you are today to where you want to be.  Start the year with specific goals and prioritize what you need to DO to accomplish them.  You will be amazed at a what a little clarity can do.  For help with goals and action plans, check out my Ultimate Guide to Action Planning.

Second, learn to love systems.  They aren’t glitzy, but they are guaranteed to make your business more efficient, more productive and more consistent.  So if you want to make more money with a lot less effort, put the power of systems to work for your small business. Not sure where to start, my Ultimate Guide to Systems and Procedures can provide step-by-step instructions.

Third, take a Hybrid approach.  Putting efforts into sales is important, but it’s not enough.  Taking small steps to improve ALL areas of your business – from products and promotions to people and procedures – will put more money on your bottom line and in your wallet.

How Do You Measure Up?

Curious how you measure up in six key areas that impact your business? My free business success checklist can help you figure it out.  Click here to access this free download.

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How to Build Profit the Hybrid Way

What do you need to do to create a business that out-markets, out produces and out-profits your competition?  One that really works for you?  Will you focus your time and resources on sales or revenue growth? While it’s important, it’s often not enough.

Why not take a hybrid approach instead. Take steps to improve ALL areas that contribute to success, not just sales. This is a proven recipe for sustainable growth and profit with a lot more control.

7 Business Improvement Areas

Planning..  You don’t need a 50-page business plan. But you do need some clear goals with specific actions you need to take to achieve them. Written goals and a simple action plan provide you with focus and clarity. So take the time to write down what you WANT (results or outcomes) and what you need to DO (actions) to make it happen.

Remember, think beyond just sales or revenue. Here are some additional things to consider: product or service mix,  customer retention, productivity, efficiency, hiring or outsourcing, system development, power partners and building your online presence.

Products/Services.  When was the last time you actually thought about the products or services you offer? It’s more than just ‘what price should I charge’. Which ones are most profitable, which produce the most sales? Do your products and services still meet the needs of your target customers or do they need a facelift? Technology, competition, and your customers’ needs can change over time.  Make sure your products and services keep up!

Promotion.  Sales don’t just happen.  Revenue mastery is important. So what are you doing to attract new customers and keep existing ones coming back and referring others? Most owners associate promotion with marketing for new customers and invest few (if any) resources on current customers. Big mistake. Make sure your plans also include activities to turn your current customers into raving fans who spend more, buy more often and refer other quality people to your business.

Processes.  Streamlining and standardizing procedures make daily operations easier, efficient and more effective, whether you are there or not. They are also a key to increased profitability. So make systematizing your business more of a priority. Start with just a few. Focus on those that save you time, increase sales, or fix problems that consistently erode profit.

People.  No business operates successfully in a vacuum.  We all need help from others. While we often associate people with employees, building a strong network of contractors, vendors and alliance partners for your business is equally important. Your needs will vary based on your business, but most small businesses have an opportunity to improve in this area. Have a method for hiring or developing new relationships with people who are committed to your customers and the success of your business.

Personal Development.  As you grow and improve, so will your business. We are all familiar with the phrase, knowledge is power, but it also translates to earnings or income. And it doesn’t require a lot of time or money – just a commitment to learning and building skills and knowledge. Did you know that if you read (or listen to audio books) for 15 minutes a day, you will read about 12 books each year? What a learning opportunity!

Profit. Sales are important, but profit is your reward for excellence in entrepreneurship! You don’t need to be an accountant or financial guru, but you do need to track and understand the numbers that drive your business – beyond just sales. Here’s a few others to consider: average sale per customer or transaction, the number of leads, revenue per employee, average accounts receivable, gross profit margins, customer retention rates and net profit.

Monitor them and focus on activities that help to improve them – especially gross profit margins and net profit. If you keep them at the center of what you do, your small business will continue to serve your needs and the needs of your people and customers.

Remember, little improvements in ALL these areas will put more profit on the bottom line and in your wallet. So build your goals and plans with them in mind.

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.

goals.resolutions

5 Ways to Increase Your Gross Profit Margin

How to Increase Gross Profit MarginWhen it comes to improving the bottom line profit, 9 out of 10 small business owners tell me they need to increase the number of customers or reduce their expenses. Funny how they rarely mention the need to improve their gross profit margin.

Whether you sell products or services, your gross profit margin is a key profit lever in your business. So here are five ways to increase yours:

  • Promote the heck out of premium or higher margin products. A lot of small businesses promote lower-margin products and services, then try to up-sell the customer into something better. Why not do the opposite. Use your marketing budget to support sales of the good stuff — and let lower margin options become the alternate for those who can’t afford the best.
  • Look for ways to reduce product or service delivery costs so more profit falls to the bottom line. Renegotiate with vendors, eliminate slow-moving products or streamline your delivery procedures to reduce labor costs.
  • Find alternate, cost-effective ways to get your products or services to customers – joint ventures or the web are just a few.
  • Identify effective ways to add value that customers will pay for – so you can raise prices more than the cost of the value added. Not sure what you can add? Talk to your customers.
  • Differentiate yourself so you stop competing on price. Give them other reasons. What do you do well? What makes you better than your competitors? Price is certainly one consideration – don’t make it the only one.

Here’s one more to consider.  When it comes to pricing, know the difference between markup and margin.  They are not the same and a mistake here will cost you a lot of money on the bottom line. To learn more about this topic, check out my article on markup versus margin.

 

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