Small Business Profit Explosion

Tax Tip of the Week- New Credit for Hiring Veterans

Congress has passed new legislation providing an expanded tax credit to employers that hire unemployed veterans. The maximum credit is $5,600 for hiring veterans who have been out of work at least six months; $9,600 for hiring unemployed vets with disabilities.

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

Marketing Tip of the Week – In an Ideal World

In an ideal world all you would have to do to generate profits is open a business and have an overflow of eager customer banging on your door. In an even more ideal world you would have someone on staff that could handle all of your marketing and had an in-depth understanding of consumer behavior. In the real world business owners have to work on luring customers to their business and most small businesses can’t afford marketing magicians to be on staff.

So what are you left to do? Educate yourself! Ideally, if you were able to take one day a week to just focus on marketing, learning new concepts, implementing marketing strategies, and anything else related to marketing your business, you would undoubtedly increase your profits! If you can’t devote a whole day, a few hours a week will still do wonders.  That is still more time than what you are currently spending.

If you are really interested in Jump Starting your marketing, I am launching a new webinar in 2012 focusing on Jump Starting your marketing. It is a 2 hour long webinar that goes over 15 steps that you can use to GURANTEE an increase in profits! It is only $97, a small price to pay for knowledge that will generate thousands in increased monthly profits. So start the year off with a spike in sales! Call us at 915-857-8158 to save your spot!

 

Marketing Tip of the Week- The Power of Customer Testimonials

Dan Kennedy’s #7 No B.S. Truth about selling says it best, “What others say about you and your product, service or business is at least 1,000 times more convincing than what you say, even if you are 2,000 times more eloquent.” (From his book No B.S. Sales Success in the New Economy.)

90% of sales professionals and business users fail to use testimonials even though there is nothing more valuable in “proving their case” to their prospects and closing the sale.

By failing to utilize emotional connection with testimonials, you’re left of trying to link your company, product and service to your customer’s feelings, while sitting on the sidelines, silent, are your current customers who are able to tell the prospect exactly how they feel thanks to using your product.

Aren’t their stories certain to connect better than your promises?

 

Life Time Value of a Customer – Part II -Up-selling and cross-selling

On Monday’s blog we showed how a $250 tax return client really has a life time value of $5,250. Now let’s look at how up-selling and cross-selling can massively increase this customer’s value. (Up-selling is adding related products or services to the original purchase. Cross-selling is getting this customer to buy a product or service totally unrelated to the original purchase.)

Your current customers are the easiest sale for you to make. They already know you, like you and trust you. So why do most businesses spend all their money and efforts trying to sell to new customers who don’t know them, like them and trust them? It’s because they do not understand how much up-selling and cross-selling can quickly increase their profits.

By training yourself and your staff to offer other services and products to customers, you can easily increase profits. By addressing your customer’s needs when they buy one product, you may know of other products that will further help them. This will instantly increase sales, profits and improve your relationship with your customers.

Let’s look at what happens to the life time value of my tax return client if I use up-selling and cross-selling:

1. Tax return preparation ($250 x 7yrs)                                     $1,750
2. Up-sell year-end tax planning ($750/yr x 7yrs)                    $5,250
3. One time QuickBooks training for their business              $1,250
4. Annual QuickBooks support  ($600/yr x 7)                           $4.200

                    For a total of                                                                         $12,450

     5.Two referrals with same services                                               $24,900

        For a total life-time value of                                                           $37,350

Up-selling and cross-selling increases the potential life time value of that one customer from $5,250 ($1,750 x 3 customers) to an amazing $37,350!

Thank you for your continued support and let's make this year our most profitable year ever!

Tax Tip of the Week- Employee Discounts

Discounts on your business’s goods or services may be given to employees and their families tax-free. You can provide anything your business makes or sells at a reduced price, but never below cost.

Services may be provided at a discount of up to 20%.

Discounts must be given across the board to employees and families (or even retired employees), not just to higher paid employees.

There are a few items specifically prohibited from being discounted without being taxed to employees – primarily, real estate and investment property.

  Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

Life Time Value of a Customer – Part I

The life time value of a customer is one of the most important numbers every business owner must know and understand.  You calculate it by taking the average price that your customers pay for your main products or services and multiplying that average by the number of years they will remain a customer. Then add the value of the average number of referrals they will send you during their time as a customer.

Calculating this number often changes how much you would consider spending on each customer and how you and your staff treat them. In my case, the average personal tax return customer is charged $250. If I only look at this amount how much should I spend on advertising and how much time should I spend with each return?

But, let’s calculate the life time value of that new tax return customer. Assume that this new customer will stay an average of seven years and refer two other tax return clients during that time. The life time value of that customer is $5,250, calculated as follows:

 

• $250 times 7 =                                   $1,750
• Two referrals @ $1,750 =                    $3,500
• For a total of                                      $5,250

Now that I know that this new customer is worth an average of $5,250, not $250, how much should I spend in time and money to get this client and to keep them happy?

Thank you for your continued support and let's make this year our most profitable year ever!

 

Marketing Tip of the Week- Are You Losing Your Sales Message?

If you ask any good salesperson, there are certain points they hit when giving their sales pitch. These points make the customer want to buy the product they are selling because it fulfills a need, want or solves a problem. Remember, people buy things for that very reason, to solve a problem or meet their needs or desires.

Unfortunately, these points are often lost when creating advertisements.  It’s a big trend to focus on price when creating your ad copy and layout, but that is not always what motivates your customers to buy. I want you to look online, newspaper and any other place where there is a huge amount of advertising and critique the ads. Did it sell you? Did it address an issue you may have? Did it make you want to learn more about the product? Did you want to buy the product? You want to ask yourself these same questions when you create your ads!

Buying can be an emotional process. Salespeople have the advantage of dealing directly with a customer and adjusting their pitch to fit the customer. Good advertising can have the same advantage if done right. The next time you’re creating an ad, consult one of your sales staff and ask what points sell your product and incorporate that into your sales information and ads. I’m positive you will see more results with your new advertising message! 

 

Make a New Year’s resolution to learn a new language in 2012

I moved to El Paso in 1973 from Massachusetts, and I am embarrassed to admit I have never learned Spanish.  In these 38 years I have used the following “reasons” as excuses:

1. I’m too busy
2. My wife can translate for me
3. Well, to be honest, laziness

As I was sitting in a Spanish mass this Sunday with my wife and her mom, I thought about how much this has cost me in business (especially, since I live in El Paso). I have missed out on numerous opportunities because I can’t communicate with current clients and prospects.

This leads me to my point- for most business owners, accounting is a foreign language. Also, they either don’t make learning it a priority, decide that it is too much work or just leave it to their CPA or bookkeeper.

Yes you can, and should, outsource your bookkeeping and tax preparation; but, every business owner must know how to read and analyze their financial statement. Failing to do so can very easily result in lost opportunity or even bankruptcy due to unsolved cash flow problems.

I intend to make a New Year’s resolution to learn at least basic Spanish in 2012.

I challenge you to make your New Year’s resolution to acquire at least a basic understanding of how to read and analyze your own business financial statements.  This could have a huge impact on your bottom line!