Small Business Profit Maximizer!

Most of Your Profits Happen After the Sale!

The myth most business owners believe: My work is done when the sale is complete and paid for. Most business owners plan what happens with the customer before and during the sale, but never follow up after the sale.

Why this myth causes a problem: If you just concentrate on the sale, you are leaving most of your profits on the table! Most business owners never follow up with the customer to see if there are other products or services that the customer may also be able to use in addition to the product that they originally came in for.

The truth successful business owners learn the hard way! Most of the advertising and marketing costs are from getting the customer to buy from you the first time. Successful business owners understand that the real profits happen after the sale. They look for opportunities to sell additional products and services. These include:

• Send them monthly specials.
• Create a customer frequent buyers' club.
• Create a product-of-the-month club, something similar to the “coffee-of-the-month club”.
• Look for opportunities to cross-sell them into unrelated products/services. For example, business owners who come to us for tax preparation may be excellent prospects for our QuickBooks training.
• Put in a referral program that entices them to refer their friends.
• Design new products/services that their current customers will buy. This is an excellent way to test a new product. If your current customers won’t buy the new product, it is unlikely that prospects who do not know you will buy the new product. 

Lesson learned: The real profits happen when you plan what you will sell the customer after they buy the first time.

The Six Areas That Every Business Owner Must Master in Order to Earn Massive Profits

James Malinchak is a motivational speaker and a star from the ABC show The Secret Millionaire. After the show he had a course that listed the four Ms that a business owner must master in order to be successful.

His four Ms are:

Master your mindset
Master your marketing
Master making connections
Master making a positive difference in others' lives

To this list I would add the following: 

Master your people management skills
Master your money management skills

My experience working with business owners for the last 35+ years is that very few of them have become proficient in these six areas – never mind master them. Imagine how much your profits would increase if you did work hard to master these six areas?

3 things a boss doesn’t want to hear

Healthy collaboration depends on information sharing. However, when you are sharing information with the boss, you should keep these statements to yourself: 

• “There is only one solution.” Like a carpenter with only one tool, you may tend to see most problems from the same angle. However, just as you can’t expect a hammer to meet every carpentry need, you cannot expect an identical approach to succeed for every workplace problem. If you do, your boss will see you as a roadblock. Better: Share your first impressions of the situation, and ask the boss to do the same before you brainstorm together. 

• “No way.” Sometimes you may not be able to meet the exact goal, but you should never say that the goal is impossible. Tell your boss some of the challenges you see, and then start a conversation about ways to beat the biggest obstacles. 

• “Surprise!” No boss likes to hear that, particularly when the news is unpleasant. Discuss looming threats with your boss before they materialize, so the two of you can plan to overcome or compensate for them.

Recognizing burnout before it flares

Do you feel constantly tired and irritated by work? 

Burnout’s symptoms are as varied as those who suffer it. Some people get angry, some become quiet and introverted, while others overeat or abuse drugs and alcohol. 

If your job is stressful, it’s important to find out if you’re headed for job burnout. Some common pressures include job demands, changes in the workplace or unbalanced work-family time. 

Here are some of the best defenses against burnout: 

• Eat a healthy, balanced diet and get enough rest and exercise. 

• Make balance a priority. Have a rich life outside of work, as well as activities and people who bring you satisfaction outside of the office. 

• Reach out for help. Build a strong support system, and make sure you’re not with people who spend time complaining. 

• Come up with solutions. If you talk about a problem, make sure you add what you want to do about it and how you see yourself contributing to a remedy. 

Eight common feelings associated with burnout: 

1. Inability to be effective at work. 

2. The workplace demands more than you are able to give. 

3. Nothing you do is good enough. 

4. You are anxious and dread going to work. 

5. You are always tired, even when you get enough sleep. 

6. You’re bored most or all of the time. 

7. You feel guilty. 

8. You feel hopeless, powerless and futile.

Starting a home business? Be sure to keep it all business

With the economy and the dynamics of the work world in flux—and the increasing need by many people to get closer to their families, many are opting to start home businesses that will enable them to make a good living while connecting more closely with day-to-day family life. 

But since a home business is a business after all, it’s best to follow some guidelines to make sure your home office time doesn’t turn into all play and no work. 

1. Get up, get dressed and go to the office. Don’t live in your sweats, or, worse yet, your underwear. Put on a nice shirt, pants or skirt. Set up a separate office space in your home, preferably with a door, where you can quietly work apart from household hubbub. 

2. Outfit your office. Invest in a good quality copier, fax, computer and other office conveniences. 

3. Act like you’re in business—and you will be. Don’t do housework, watch television, exercise or gab with friends during your home work hours. If you wouldn’t do it in your office at a Fortune 500 company, don’t do it during your at-home workday. 

 

Hitting the Jackpot!

I went to Las Vegas years ago and I must admit, that place is a marketer’s dream! Everywhere you go, they’re trying to sell you something. People are willing to buy anything, whether it’s a condo, $20 cocktails, or extremely overpriced souvenirs.

If you think this is an accident, you are wrong! There is a lot of marketing research that goes into everything that is being sold. The hotels and casinos are masters of tourism marketing and have everything planned out to a T.

Everything we have mentioned in this marketing blog, they do:

• Constant marketing:  quarterly room sales and emails
• Frequent buyer club:  players’ club
• Free samples:  free cocktail
• Wow factor:  elaborate shows and rooms
• Excellent customer services:  concierge services

They do this because in the long run, it makes them money, and if you have been to the strip, you know the hotels and casinos know how to make money!

Vegas is ideal because the consumer is willing to spend the money at that time, but as you can see, the marketing never stops! You need to court your customer at all times. Las Vegas knows the importance of marketing, and that is why it’s the vacation capital of the WORLD!

Hit your jackpot with a strategic long-term marketing plan. It can be a gamble, but you can’t win big without taking chances.

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 because it fulfills a need/want or it solves a problem. Remember, people only buy things for those very reasons.

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, in newspapers, and any other places 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 that 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!

The Top 25 Causes of Small Business Failure

One of the big advantages a CPA has working with small business owners is that we get to learn what makes them profitable and what makes them fail – without losing any of our own funds. On top of that, we too are business owners who face many of the same kinds of opportunities and challenges that all small business owners face.

So what have I learned? Well for starters, launching a small business is risky and the chances of building a successful business are small. According to the Small Business Administration (SBA), over 50% of small businesses fail in the first year and 95% are out of business in the first five years. Of the ones that survive past five years, less than 1% reach a level that allows the business to survive the retirement or death of the founder.

The following are the top 25 reasons I have seen for small business failure:

1. Choosing a business in an industry that just isn’t very profitable.
2. Not having actual hands-on experience in the industry before opening the new business.
3. Unwillingness by the owner to take responsibility for everything that is not working in their business.
4. Poor management skills by the owner.
5. Lack of necessary effort by the owner. They often don’t understand that they are not in a 9-5 job anymore.
6. Unwillingness of the owner to be a continuous, lifetime learner.
7. Failure to have a business and marketing plan.
8. Inadequate cash reserves.
9. Failure to truly understand their customers' wants and needs. This also includes not understanding what triggers a customer to buy.
10. Lack of marketing and sales skills.
11. Failing to price your product or service correctly.
12. Failure to anticipate or react to changes in the marketplace, competition, or technology.
13. An overdependence on a single (or a few) customers.
14. Uncontrolled growth.
15. The owner believing they can do everything themselves.
16. Poor customer service.
17. Unqualified or untrained employees.
18. Failure to seek outside professional help.
19. Employee fraud.
20. Poor location.
21. Poor inventory management.
22. Poor credit arrangements.
23. Absence of performance monitoring.
24. Over borrowing.
25. Failing to innovate and introduce new products or services.

A review of the list shows that the key reason for business failure is the inexperience and lack of business knowledge by the owner.

Improve Your Quality of Life With Flexible Working

With so many different demands on our time and energy nowadays, many of us feel as though our lives are spinning out of control.  As we struggle to meet our responsibilities in the workplace, at home and to ourselves, we begin to feel increasingly that we are not doing well enough in any area of our lives. 

The world that we live in is a challenging one.  New technology means that more and more companies are dealing in global markets and across different time zones, and even local retail customers are no longer prepared to settle for 9-to-5 service.  For today’s workers, these things mean greater opportunities for flexible working patterns than ever before. 

Flexible working provides advantages not just for working moms.  Flexible working also benefits men and women who want the chance to better fulfill their roles as parents, partners or caregivers; to recover some sense of a social life; or simply to fit their work schedules to their natural body clocks and make the best use of those times of the day or night when they feel at their sharpest or most productive.  Greater flexibility can also allow employers to become more competitive, creating a win-win situation for all.  

If you think that a revision to your working patterns could tip your work/life balance in the right direction, then speak to your employer.  You could be doing yourself and your employer an enormous favor!

The Perils of Perfectionism

Finding work/life balance in today’s busy and highly competitive world could never be described as easy.  For most perfectionists, however, it is downright impossible. 

Although many people tend to think of being a perfectionist as a positive thing, true perfectionism is, in many ways, extremely counterproductive.  Not only does the need to attend to every last little detail waste unnecessary time and lead to tasks and projects taking much longer than they need to, but it typically means that perfectionists end up allowing work to eat into their own personal leisure time.  Perhaps worse still, even once the job is finally handed over, the perfectionist still never feels that he or she has completed it well enough and so is left with intense feelings of frustration and low self-esteem. 

Striving for excellence is something that can only benefit ourselves and our employers, but there is a world of difference between this and trying to achieve the impossible.  As human beings, we are not built to be perfect; trying to achieve perfection is a certain road to unhappiness.  By all means give everything your best shot, but know when to stop because your best really is good enough!

Keep employees motivated when work is boring

Some jobs are boring. That makes managing the people who do them a challenge, especially when those employees grew up with constant entertainment from TV and the Internet. How do you keep them engaged and motivated when they’re counting the hours until they get to go home and do something fun? 

• Be honest. Acknowledge up front that the work isn’t very exciting, but explain why it’s important. Don’t just focus on the company’s profits. Emphasize how their work helps other people—co-workers, customers, and so forth. 

• Give them goals. Sometimes a target can make work more interesting. Challenge employees in different ways: To greet the most customers, assemble the most widgets, count the inventory more accurately, etc. Offer a small reward to make the game more enticing. 

• Look to the future. Employees are more likely to stick with a job, even a boring one, if they see the possibility of moving into something better. Describe potential career paths, and tell your people what they need to do in order to move up. 

• Ask for feedback. Encourage employees to suggest ideas for making their work more interesting or productive. Implementing their ideas will show that you value their opinions and take them seriously. They’ll also be more invested in making their own suggestions succeed.

Improving Management of Your Business

All companies have business processes that can be improved. Most companies can benefit from automation or further automation of solutions. 

Improving Management of Your Business. 

Improving business processes is all about a work flow plan, often graphic, and implementation of automating and organizing work processes. It is also a way of defining software architectures and applications. Business process solutions help an enterprise monitor human and automated processes. It can also serve as an enterprise application integration (EAI) tool. Business process management solutions help you identify areas of your business that can be automated and used to apply business rules and guidelines. In practical terms, it acts like a virtual machine that executes process models rather than software code. 

Business process solutions take business data and determine how the information is used to perform a task. By creating an overview, a business manager can plan and improve an existing business process. Some solutions also send data through a test set of tasks to ensure that a business process is being followed. These solutions permit a business manager to visually describe, control and trail the flow of a work process. Process solutions generally involve computer systems and software to automate a process. 

Technologies used to implement process management solutions include work flow charts, BP-XML languages, ERP (Enterprise Resource Management), software development and EAI (Enterprise Application Integration). ERP is a set of applications that can cover financials, manufacturing, human resources and back-office business administration utilities of an enterprise. It is a business management system that integrates all components of the business as well as planning. On the other hand, EAI software operates as a center that interprets data and messages between different applications. 

Improving and automating business processes is the path to gaining huge productivity. These management solutions monitor business presentation by defining a series of tasks that must be performed to attain a defined strategic goal. There are three obligatory requirements - flexibility, reliability and security. 

A good solution must help in continuous process enhancement, but managing the huge amount of these processes becomes more and more difficult as organizations become highly complex. Process management solutions give you the capability to satisfy and retain your customers and also maximize your joint venture returns with other businesses. 

Remember that business processes define your business, and they can also present your organization with a competitive benefit. If you can make your processes efficient, you will reap better customer relations and profits.

 

5 Reasons Why Recordkeeping Is So Important

When you decided to start your business, was your first priority concerned with setting up your filing system for recording your expenses? I seriously doubt it. This simple task (yes it is simple) is usually the item that is the last thing on the new business owner’s mind. The more “important” issues of what product to sell, how am I going to advertise, how much money is it going to cost me, and how much money can I make are the first questions we consider when going into business. 

The task of recordkeeping is usually procrastinated until the very last minute, when it is required. It is time to file your tax return, or time to go to the bank to get a loan for the business and the banker wants to see some financial records for the business. This can be a very daunting and cumbersome task if you have to dig through receipts and expenses for the whole year! No wonder we hate keeping records. That’s no fun! 

Well, guess what? If you aren’t keeping good, timely, and up-to-date records monthly, you don’t need to be in business. That’s right. I said it. Here are the top five reasons why I truly believe this statement. 

1. Lost tax deductions = Lost Money If you are throwing your receipts in a shoebox each month and not keeping an organized record of your income and expenses, I can bet you money that you are losing out on some major tax deductions. A smart businessperson keeps track of her income (cash in) and expenses (cash out) monthly, sometimes even weekly. You do not need a fancy accounting software package to do this. You don’t even need a computer! Simply keep a journal monthly and log in all of your receipts and invoices, and there you have it. 

2. High CPA/Tax Preparer Fees = Lost Money I can speak from personal experience, that if you bring in that shoebox of receipts for the year and expect your tax preparer to record and properly deduct your business expenses on your tax return, you are sadly mistaken. Tax season is the busiest time of year for these professionals. If you expect them to do your bookkeeping and recordkeeping as well, expect to pay for it. They don’t have the time, or the desire to make sure that every receipt is accounted for. As a businessperson, it is your responsibility to make sure they are given the right totals and you can trace it right back to your tax return. 

3. Too much time spent looking for receipts The time you spend looking for a past receipt for a particular purchase for whatever reason, you can be utilizing this time in advertising your business or producing your product. These are important money generating activities that you are sacrificing due to your lack of recordkeeping. 

4. No financial statements Every business owner should review at least the profit and loss statement (income statement) for their business MONTHLY. This important piece of paper tells you if you are making money or losing money. How can you possibly run your business and make a profit if you are not analyzing your sales and expenses continuously? A good recordkeeping system will allow you to have this information at your fingertips. 

5. No need for expensive accounting software If you are just starting your business, or are a small business owner, you more than likely do not need software to prepare your books. A simple journal that is kept monthly of your income and expenses is all you need. At a glance, you will know how your business performed for that particular month. 

As a business owner, you need to realize the importance of a good recordkeeping system. This should also be a task that the business owner performs for at least three to six months before delegating the job to someone else. You will be able to run your business more effectively, determine possible cycles in the business year, and know where your money is going. Your business will be much more successful if you keep a simple recordkeeping system.

Concentrate on the Customer – Not the Product!

Most startup business owners start their business by thinking about the product or service they are offering. They fail to answer the most important question that every business owner must answer:

Why should I, the customer, choose your product or use your service over all of the other options available?

To answer this question, you really must have a vision of your ideal customer in your head. Better yet – write it down. Think about your ten best customers and answer the following questions about them (if you don’t have customers, then you better do some research so you can answer these questions):

• What niche are they in?
• What industry are they in?
• What is their age?
• What is their gender?
• Where do they live?
• What is their education level?
• What do they read?
• What groups do they belong to?
• How did they first hear about you?
• Why do they continue to buy from you?
• What are their problems? Better yet, what are the problems that they wish they could solve?
• Why do they buy?
• How are my competitors solving my customers' (or potential customers') problems?
• Who else influences the customer’s buying decision?

Now think about your product or service and answer these questions:

• What can I do better or faster than my competitors to meet my customers’ needs?
• How does my product or service solve a problem the customer is having?
• How is my solution different from the solution my competitor is offering?
• What guarantee or promise can I give that my competitor isn’t offering?
• How can I communicate this advantage to the customer in one sentence or less?

Answering these questions almost guarantees that you will make it clear to your customer that your product/service is such a “smart” decision that the customer really has no option but to buy from you.

The Sale Isn’t Complete Until the Customer Pays!

A recent study found that half of all small businesses are having trouble collecting receivables. During good times, this is an annoyance. During bad times, it is often the path to an appointment with a bankruptcy attorney.

Collecting receivables requires a plan and a system that addresses collections before the sale, at the point of the sale and after the sale.

Before the sale is complete you should:

1. Review the customer’s ability to pay. Big companies use credit reports. But for most small companies the easiest method is to require a down payment from any customer who you do not have a track record with. How they pay the down payment is a good indication of their payment ability. Plus, a down payment lessens your exposure, recovers your costs, and speeds up your cash flow.
2. Make sure that your product has value to the customer that is equal to or (preferably) higher than the price that the customer will pay. This is one of the top reasons for slow pay or non-payment. We have all fallen victim to the slick salesperson who gets us to buy something that later we regret. The customer usually “gets even” by slow paying or refusing to pay.
3. Offer incentives to prepay. This can be with a discount but I would rather offer a bonus of some sort that actually increases the value to the customer if they pay early.
4. If possible, don’t deliver without receiving payment. At a bare minimum, review your payment terms with the customer. The goal is to eliminate the excuse that they didn’t know about when the payment was due. At this point, also keep an eye out for clues that something in the customer's financial ability has changed between the order date and the delivery date.
5. Invoice quicker. Don’t wait till month's end. Invoice as the work is completed.  

After the sale is complete you should:

1. At every step in the collection process remember to keep stressing the value that the customer received. Don’t stop selling!
2. Call shortly after the sale to make sure they are happy with the purchase. You are still stressing the value of the product or service they received. If you can’t call all customers, you should at least call the largest sales. (This is often a great time to up-sell to the next level or to sell an add-on product!)
3. Have a system that includes some combination of calls and letters that automatically go out to any account that is past due. The squeaky wheel does get paid first. So squeak loudly! Of course remain polite and keep stressing the value of what they received.
4. At a certain point (60-90 days after the sale) the owner should call.
   
   1. Make sure the customer really felt they received value. If not, the owner should try to fix the problem. This may be your last chance to save a customer.
   2. Ask them for payment.
   3. If they can’t pay, the owner should say, “You are a valued customer and I would like to help you by offering a payment schedule.”
   4. As a last resort, offer a reduced payment if the invoice is paid by a certain date.
5. If all else fails, write off the balance and forget about the customer. Don’t waste any additional time and money suing them.  Your time would be much better used learning what went wrong in your sales and collection process and getting better customers who value what you are providing and are willing and able to pay.

Managing older workers? Eliminate the stereotypes

You may have lots of younger workers, but that doesn’t mean you can afford to neglect your older workforce. Baby Boomers may have skills and attitudes that younger workers haven’t mastered yet. Here are some tips on effectively managing older workers: 

1. Address your attitude first. Eliminate stereotypes from your thinking, positive or negative. You may believe older employees are harder workers, or that they’re just waiting for retirement. Treat every employee as an individual without jumping to conclusions based on age. Stereotypes often keep us from tapping talent. 

2. Give them feedback. Many younger managers are a little hesitant to give older workers feedback. But remember that older workers need to know their value to a team or the importance of their work. And they need to know where and how they need to improve. 

3. Consider making them mentors. Older workers have a mountain of experience. Make use of it. They can help steer younger workers though minefields that are never written in the company policy manual, and they can provide insights based on their own successes and failures.

Management lesson No. 1: Don’t fake it

Everyone knows how annoying it is when a leader pretends to know all the answers and fakes his or her way through tough situations. When a leader behaves like this, it can cause workers to roll their eyes and jump ship when it seems that no one is truly wrangling with problems. 

So how do leaders admit that they’re confused and don’t have the answers, without coming off as weak and incompetent? The first thing good leaders must do is admit their biggest fears to themselves. They have to face the nastiest voices in their own heads that are screaming phrases like “I’m foolish,” “How did I let this happen” or “I’m unfit to lead.” Once leaders face these fears they can move on to the following steps to deal with problems effectively: 

• Step One. Stop pretending to have all the answers and embrace your confusion. Show others that you have the courage to work with them to find answers. 

• Step Two. Admit to your co-workers that you are confused and that you need to understand the situation. Don’t apologize when you tell others you don’t have the answer to the problem. Set the tone so that your co-workers, colleagues and employees are willing to sit down and participate in a real learning session. 

• Step Three. Give your inquiry the structure everyone needs. Assert yourself as a leader, while at the same time inviting others to join you in your quest for answers. Take charge of and introduce a process that will clarify and resolve the problem. 

• Step Four. Pay attention and learn from your experience. Keep an open mind and really listen to what the others who are working with you have to say. 

• Step Five. Think out loud. Let colleagues hear you working through the information that is brought to you. Don’t sit there silently, decide what needs to be done, and then announce your decision. No one appreciates that kind of old-school leadership anymore.

Cross-selling and Up-selling

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 sales 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 learn about other products that will further help them. This will instantly increase sales and profits, and improve your relationship with your customers.

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

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

The Power of Customer Testimonials

Dan Kennedy’s No B.S. Truth #7 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 percent of sales professionals and business owners 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 connections with testimonials, you’re left trying to link your company, product, and service to your customer’s feelings, while sitting silently on the sidelines 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?

Lessons Learned – Profits Are All That Matter!

The myth most business owners believe: The most important thing is to get the sale!

Why this myth causes a problem: It focuses on the wrong thing! The only thing that counts in a business is to make a profit. You didn’t start a business to make a sale and turn around and send all the cash out to vendors and employees. Most business owners started their business in order to at least be reasonably prosperous (some even wanted to be unreasonably prosperous).

Most business owners who have rapid increases in sales for the first time almost always run into cash flow problems. They have spent so much time focusing on increasing sales that they failed to get the financing and systems in place to support the increased costs in inventory and employees to deliver the product to the customer. The result is usually serious financial trouble and sometimes even bankruptcy.

The truth successful business owners learn the hard way! Successful business owners have learned that, in business, the only thing that matters is profits! A profitable business provides the means to support the business owner and their employees while also paying all vendors, bank loans, tax liabilities, and investors.

Profits allow the company to have the strength to survive the tough times and to take advantage of good business opportunities when they appear.

The successful business owner starts every year by creating a profit plan. A sales and marketing plan that focuses on profitable sales is obviously a large part of that profit plan.

Lesson learned: Start each year by making a profit plan that maps out exactly how the business will hit the profit goal that the business owner has set. By focusing on what is really important in running a business, you will greatly increases your odds of truly becoming successful.