As Dan Kennedy, author of the No B.S. marketing books says, “Every business is a marketing business.” Only after business owners understand this key point are they ready to grow their business. Take this test to see how good your marketing is.
Grade yourself on each of the following key points with a traditional letter grade from A (for excellent) to F (for failure, or when there is nothing done in an area): 1. Do you have a short answer for this question: Why, with all the other choices out there (including the choice of doing nothing), should I buy from you? Grade____ 2. Do you know the lifetime value of a new customer? Grade___ 3. Do you make it easy to buy from you? Grade____ 4. Do you understand that every contact with a customer is a marketing opportunity? Grade___ 5. Is there a script for all of your staff to use for every contact point with a customer? Grade___ 6. Do you have a clear strategic marketing plan? Grade___ 7. Do you have a written marketing implementation plan for the next 30-60 days? Grade___ 8. Do you use this marketing plan to guide your daily, weekly, monthly, and annual sales and marketing activity? Grade___ 9. Do you act on your marketing plan? Grade___ 10. Do you contact all your customers by mail, email, or phone every month so that they don’t forget you? Grade___ 11. Do you personally call your top customers monthly looking for new ways to better serve them? Grade___ 12. Does your company have a plan to upsell or cross-sell to every customer? Grade___ 13. Do you have a clearly defined customer benefit statement for each of your products or services? Grade___ 14. Do you have a way to capture contact information for all prospects? Grade___ 15. Do you have a systemized plan to turn prospects into customers? Grade___ 16. Do you have good sales material? Grade____ 17. Are you only using advertising and marketing tools that allow you to track effectiveness? Grade___ 18. Do you concentrate on selling to a particular niche rather than trying to be all things to all people? Grade___ 19. Do you have sales training meetings? Grade____ 20. Do you have a marketing-based website? (A website that leads to sales or an appointment, rather than an electronic business card.) Grade___ 21. Do you use email marketing? Grade___ 22. Do you use social media to educate your customers and build loyal fans? Grade___ 23. Do you look for ways to WOW your customers on every sale? Grade___ 24. After you have wowed them, do you ask for testimonials? Grade___ 25. Do you look for ways to create marketing partnerships that are beneficial to both parties? Grade___ 26. Do you remember to thank your customers at least yearly? Grade___ Review the grades you gave yourself and work on improving any grades lower than a C.
Every year I hear this question from people who just missed the tax deadline. What should you do If you forget to file your tax return on time?
Every year I hear this question from people who just missed the tax deadline. I joke that these are the people who believe that deadlines are only recommendations that really don’t apply to them. Unfortunately, that is not how the IRS looks at it!
Here are the key points to remember when filing late:
If you are getting a refund, then there really is no problem, since penalties and interest only apply to any balance you might owe. Of course, you should file promptly in order to get your money back. The IRS will not refund you any money owed if you wait three years from the time the return was due. That means that you can still file for 2010, 2011 and 2012 and receive a refund.
If you owe tax, you may be charged a failure to file penalty of 5 percent of the balance due per month (or part of a month), up to a maximum of 25 percent. So try to get your tax return filed as soon as possible to avoid this penalty.
If you don’t pay your taxes on time, you will also be penalized a failure to pay penalty of 0.5 percent per month (or part of a month) up to a maximum of 25 percent.
Filing an extension will not eliminate the failure to pay penalty, only the failure to file penalty. You will still be charged interest and the failure to pay penalty up to the date you finally pay the tax.
If you can show reasonable cause for not filing or paying on time, the IRS may abate the penalties. You should explore this possibility with your tax preparer.
Don’t ignore the problem and hope it will go away. The IRS, like any large bureaucracy, can often take months or years to send you notices about unfiled and unpaid income taxes. But they will always catch up to you. Ignoring the problem only makes the balance owed larger and can lead to the IRS seizing your bank account, paycheck, and assets.
Your spouse is probably already helping you in your business. Actually, officially putting them on the company’s payroll has many advantages.
If you’re a business owner, you know how much you rely on your family’s support. Your spouse is probably already helping you in your business. Actually, officially putting them on the company’s payroll has many advantages.
You can deduct the full amount of contributions to a qualified retirement plan made for your spouse. Of course, you still need to follow the laws and guidelines, but this is a great way to lower your taxes and save for retirement at the same time.
If a business owner is operating a C corporation, payments to the spouse can reduce taxes if the company is in a higher tax bracket than the owner’s tax bracket. This also allows you to take more funds out of the corporation before the company is hit with the excess earnings tax or has to pay dividends, which results in the much-feared double taxation of income.
If your spouse is considering going back to school for a business degree or something else that can benefit your business, the business can pay for it and deduct the tuition. You cannot take any education credits for yourself, but you will not be taxed on the money you spend on tuition. This can be tricky, so please check with your tax preparer.
Health insurance is another area where hiring your spouse can cut costs. As we all know, health coverage is expensive, and if you hire your spouse, you can get the same coverage and price that your other employees receive. The difference is that it is 100% deductible.
If you and your spouse travel a lot for business, you can deduct the mileage and expenses for both of you. If your spouse is an actual employee and will be performing work-related duties during the trip, expenses can be deducted as normal business expenses.
Again, if you offer your employees life insurance at group rates, you can include your spouse in that plan.
These are just some benefits that you can receive if you are considering employing your spouse. You may want to consult a tax advisor and your insurance representative to make sure the savings are worth the payroll tax expenses.
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer comprehensive tax info in this video or article, no matter how well researched or written. And remember, I love my readers, but watching this video or reading this article does not make you a client. Before relying on any tax information given in this magazine, contact a tax professional to discuss your particular situation.
Do you know where you are taking your company and how you will get there? In this video I discuss why you must have a company strategy and how it is vital to growing your business.
Simply put, a company strategy is how you are going to reach your long-term goals from here. If I need to get to San Diego from El Paso in the next couple of months, my options are almost endless. If I wanted to, I could copy one of those Bike Across America guys and ride 20 miles every day until I got there. But if my goal is to get to San Diego tomorrow, then my strategy better include finding a flight or jumping into the car now for a 12-hour road trip.
At its most complicated, a company strategy is the unique formula for success that forms the foundation of a business plan and governs day-to-day operations. This strategy is not a business definition and summary of pertinent markets; it is an account of the one or two key factors that distinguish the firm from its competition and are most expected to contribute to the firm’s longterm success.
To be effective, a company’s strategy should be no longer than one page. For many businesses a single sentence is ideal. The strategy should be easily and frequently communicated to employees so that a cohesive business focus is always maintained.
Why develop a strategy? Your strategy helps you understand and properly communicate to your investors, employees, and your customers who you are, what you do, and why you are the best. It helps you understand who your best target audience is and discover the best way to reach them.
By serving as a jumping-off point for annual business planning, your strategy will become the nucleus around which an annual business plan is developed. It will also form a framework for considering mid-term deviations from the plan. It will help set a consistent direction for key functional areas.
A good strategy should endure year after year and tie one year’s business plan to the next. This enables the company to easily build upon the accomplishments of the previous year. This does not mean it doesn’t change or that once done, it should be stuffed in drawer to be forgotten. It should be considered a “living” document that changes as your business grows and new opportunities present themselves.
Without a clearly defined strategy, companies of all sizes tend to lose direction when they run into temporary difficulties, or when management gets bored operating “the same old business.” It is amazing to see so many very small businesses, after having had a few moderately successful years, start adding completely unrelated product lines or services that only muddy their identities. This tactic signals to customers that management has no clue as to what the nature of the business really is.
If I haven’t sold you on the importance of a strategic plan, consider this: 79 percent of the largest, most successful companies said that strategic planning was their most important and favorite growth tool. One quick way to success is to see what the best of the best do and copy them.
Can you quickly state your company’s strategy? If not, now is the time to start creating one. I would recommend buying two books: The Plan-As-You Go Business Plan by Tim Berry and Strategic Planning Kit for Dummies by Erica Olsen. What Is Your Company Strategy?
Action Tips: 1. Re-read the article. 2. I would recommend buying two books: The Plan-As-You Go Business Plan by Tim Berry and Strategic Planning Kit for Dummies by Erica Olsen. 3. Write down your long-term goals. 4. Decide how you will reach these goals. Your plan is your new strategy.
Not knowing your true costs & opportunity costs can seriously lower your business profits. Learn why you must know your costs & how to calculate them
Make Sure All Your Products Are Cash Cows
All business owners know that not all products are created equally. There are some products they make a ton of money on and others where they barely break even. But it is amazing how many business owners don’t really know what products they make the most money on. They focus on those products that they make very little profit on and ignore those that are real cash cows. Even worse, I have seen business owners who have unintentionally put a product on sale below their costs, and then spend advertising dollars to sell even more items at a loss!
Why? The business owner is either just trusting their gut and their back-of-the-cocktail-napkin calculation from years ago, or they are not calculating their product costs.
The Starting Point: Calculating Gross Profit by Product
First, calculate the gross profit for each product using a spreadsheet as follows:
Sales price for each product.
Less: Purchase price of product.
Less: Cost of direct labor for each product. This is best calculated using a standard rate times the standard number of hours to produce the product or service.
Less: Cost of outsourced work.
Less: Cost of other direct costs related to preparing the product for delivery or sale (freight, packaging, supplies, etc.)
If you have already calculated your gross profit per product, congratulations! This puts you in the top 10 percent of business owners who manage their profits to this detail. Now the bad news: You have just started. I have seen business owners make costly mistakes because they did not know the total cost incurred throughout the sale, from taking the order to delivering the product and collecting the invoice.
I had the owner of a commercial glass installation company who called me in because his sales had increased by 50 percent but his profits had dropped by 25 percent. When I did activity-based costing on his major products, I found that he had put a new type of glass on sale that was taking his staff almost three times as long to install. When we added this installation time to the product cost, we found out he was losing about 10 percent on each sale with his current pricing. But it got worse! He was having a 10 percent off sale on that item for the month. This meant that he was now losing 20 percent on an item that, because of the sale, was selling out quickly.
To calculate your total activity-based cost you take:
Gross profit for each product
Less: Sales costs. This is the amount of time you and your sales staff spend to sell the product.
Less: Advertising costs. This is the cost of any advertising you run on this particular product.
Less: Delivery and freight costs.
Less: Collection costs. This is particularly important if you are in the medical field and bill Medicare, Medicaid, or private insurance.
Equals: True Product Profit
Knowing your true product profit is the key to making good profit management decisions. You will now be able to focus on your most profitable products while eliminating or reducing those that add little or nothing to your bottom line. Let your competitors focus on the losers. You will now be focusing on your cash cow products!
In every business, cash is king. You’re going to go out of business without it, even if you’re profitable. With it, you can hide a lot of sins. But the truth is that very few business owners actively manage their cash.
Mastering Your Cash Conversion Cycle
The Key to Getting More Cash in Your Bank Account
In every business, cash is king. You’re going to go out of business without it, even if you’re profitable. With it, you can hide a lot of sins. But the truth is that very few business owners actively manage their cash.
Business owners usually enjoy producing and selling their products, but they often feel that managing cash is the bookkeeper’s job. The big problem with this is that if you run out of cash, you’re pretty much out of business. Your employees expect to get paid every Friday. Your landlord expects to collect his rent at the beginning of the month. Payroll taxes are due every month. The list goes on and on.
So when business owners start to run low on cash, they quickly have to figure out how to get more. This usually means collecting receivables, investing some personal money, running up credit cards, and asking for loans.
Once the cash balance is back to normal, everything is business as usual—at least until the next cash shortage. The best way to solve cash flow problems once and for all is to speed up the complete sales-to-cash process.
Understanding the Sales-to-Cash Cycle
This is how the sales-to-cash cycle goes:
You advertise your product or service.
The customer places an order.
Your staff turns out your product.
The product is delivered.
The invoice is sent.
You collect the invoice.
The staff is paid.
Your vendors are paid.
Any cash that remains is called cash flow. That’s the small amount of your collections that actually finds its way into your bank account.
This is how it works in a perfect world. You collect the invoice before you have to pay your staff and vendors. But as most business owners know, we don’t live in a perfect world, and the truth is that we often have to pay our staff, our vendors, and our overhead before we have a chance to collect anything.
And it gets worse!
Every business owner has certain fixed expenses (rent, loan interest, taxes, insurance, utilities) that have to be paid monthly, no matter when the cash is collected. Accountants and bankers refer to these expenses as overhead expenses. I joke that they are called overhead expenses because they are constantly hanging over your head demanding that you participate in a never-ending hunt for cash.
Why Improving the Sales-to-Cash Cycle Is Critical to Success
The reason so few businesses improve their business cycle is because it is really hard work. You have to look at each step individually and find ways to improve them. But the payoff can be big.
Amazon is a great example of a company that has almost perfected this. Think about their business model. Everybody pays with a credit card upfront, which Amazon will even keep on file for you. This allows customers to place an order in one step. They have several regional warehouses, making it easy to ship the product as soon as the next day. This fine-tuning of their system has allowed Amazon to dominate the online retail world and easily compete with many brick-and-mortar stores.
So how will speeding up the sales process improve your cash flow? Compare the following two companies.
If I buy from Company A, I place my order today and it’s delivered in a week. I get an invoice at the end of the month and I pay 45-60 days later.
If I buy from Company B, I place the order today, pay for it today (or at least leave some down payment), and it ships tomorrow. The invoice accompanies the order, and I pay the remaining balance (if any) in the same 45-60-days.
Company A receives the cash from my sale 90-100 days after the sale is made. They have to maintain a large cash reserve to finance this amount of work-in-process and receivables.
Company B has purposely designed their sales-to-cash cycle so they receive at least half of their sales price before the product is delivered. This one change dramatically increases their cash balance and allows them to make more sales without worrying about running out of cash.
But That Won’t Work in My Industry!
Until recently, I was one of those business owners who believed this. I assumed I had to follow the traditional business design of most CPA firms, which are run like Company A above. They bill when the work is completed and then wait to collect their receivables. This leads to a constant struggle to collect enough cash to cover payroll and overhead.
A couple of years back, I decided to see if I could change this and made these sales-to-cash cycle improvements:
We started requiring that our clients consent to monthly billing via credit card or bank draft. I only want to hold receivables when absolutely necessary.
I used to have a huge problem with collecting on tax return work. If I let my client take the tax return without payment, I often did not get paid later—there’s simply no pain later. I’ll get paid whenever they feel like paying me. Now we simply tell the client, “You can’t have the tax return until you pay me.” The IRS deadline helps make the payment of my return a priority. We explain our new policy to every client at the beginning of the process so there are no misunderstandings.
Then I wanted to take it a step further. Why can’t I get paid in advance? Yes, this is almost unheard of in the tax business, which in many ways is just a commodity business. I first told myself I couldn’t because no one else was. Then I found a CPA in Oregon who was getting prepaid for a lot of his work.
So I put together a system that gives my clients an upfront discount for paying me monthly. I then offset this discount by upselling an audit protection program. The result: My net income is basically the same, but I get the cash in advance.
All new clients are now required to leave at least a 50 percent down payment. They don’t have a relationship with us, and we don’t know how promptly they will pay. This helps weed out the deadbeats. If they don’t want to pay us now, they probably won’t want to pay us later.
For our business clients, we created a variety of packages combining tax preparation, year-end financial statements, tax planning, QuickBooks support, and sales and profit consulting. We designed them to provide what the clients really wanted—more sales, more profits, more cash in the bank, and less taxes paid—while getting what we really wanted, which was greater monthly income. This allowed us to increase our average sales per client above the industry average.
Key Cash-Building Tip:Don’t assume that just because all your competitors do it one way, you have to do it the same way. Don’t be afraid to look at how you’re treating your customers and how you’re getting paid, and then look for ways to get paid at the time of the sale or even before the sale. One of the key components of speeding up the sales-to-cash cycle is to just eliminate receivables as much as you can.
Thousands of businesses fail every year. This year much more than any time in history. Here I discuss what marketing and sales you must focus on to succeed.
Every year thousands of businesses shut their doors, ending the dreams of so many hopeful entrepreneurs.
One thing that is overlooked in this statistic is the high physical, emotional, and financial cost of each failure. I have watched as clients of mine who were forced to close their businesses suffer through divorce, depression, embarrassment, loss of their life savings, loss of friendships, and arguments with family members who have often invested in those businesses.
In my experience, the number one cause of business failure is that the business owner didn’t have a systematic and proven sales process for increasing leads that are then converted into paying customers. They also had no idea what their gateway products were, what their unique selling position was, what their closing rate was for their sales staff, who their most profitable customers were, or what their most profitable products were. Worse yet, they often don’t know what these things are or why they are important.
Too many failed businesses concentrated more on selecting their business cards, stationery, and office furniture than they did on the following four things that would have almost certainly guaranteed their success:
Marketing and lead generation. Successful business owners have a direct response marketing plan that consistently entices prospects to call, email, or visit their business.
Sales and conversion. Successful business owners have a scripted plan and consistent sales staff training designed to convert prospects into customers. They leave nothing to chance, and they don’t do anything that doesn’t produce measurable results.
Up-selling and cross-selling. Successful business owners have a plan to upsell and cros-ssell to customers at every step of the sales process.
Client retention and follow-up. Successful business owners actively work on client retention with frequent follow-up after a sale. Many of them use monthly newsletters as a no-fuss way to accomplish this.
Referral generation. Successful business owners have an active plan to get their best customers to refer them to their friends. They do not leave this chance or just wait for it to happen naturally.
Sadly, I have many business clients who seem to have given up and accepted that their
businesses have stagnated and are in trouble. They just don’t seem interested in doing the hard work needed to get their marketing in shape and become leaders in their niches. Trust me, it is a lot more fun to run a profitable business than one that is barely hanging on.
So, when are you going to start concentrating on improving your marketing?
In this video I cover the three traits every successful business owner and high level sales person must have.
I was recently listening to an interview with master salesman Steve Clarke (you should check out his website www.newschoolselling for some great sales tips). In it, he mentioned three traits held by every successful salesperson he's ever met. After listening to him, I realized that these same three traits are essential if you want to succeed in business.
First: The business owner must not make excuses! To put it simply, this means the business owner must take responsibility for everything in their business, whether it goes well or fails. If you don't like something in your business, don't complain about it! You created the business you now have.
It is almost impossible for me to help a business owner who is always blaming someone or something else for his problems. Until you take responsibility for everything that happens in your business, there is no way for you to change your management style. But of course, it is much easier to blame the new competitor down the block, the Internet, lazy employees, or banks who aren't lending. The list of excuses I hear goes on and on.
So if you really want to improve your business, stop looking for excuses as to why it isn't working, and start looking for things that you can do to improve it.
Second: The business owner must be a self-starter! When you own your own business, no one is there to make sure you show up to work every day. No one is there to make sure that you do the work that is necessary. And no one is there to make sure you focus on the hard work of growing your business.
Being a self-starter can't be taught. Either you are or you're not! But I have often found that it is much easier to get started on a project when you really enjoy what you're doing. So a key question here is: Do you enjoy the work your business does?
Third: You must be resilient! Every business owner is a salesperson, and every business owner will fail to make the sale at some point. They will also fail to close a business deal, fail to hire the right person, fail to make a profit, and sometimes just have their business fail in total. There isn’t a single business owner I know that hasn’t had some failure!
But a successful business owner learns from their failures, figures out how to do it better next time, and never gives up!
So do you have what it takes to be a very successful business owner?
Creating product tiers is one of the easiest ways to increase sales from your current customers. See why they work and how you can use them for your business.
Creating product tiers is one of the easiest ways to increase sales from your current customers. All it requires is that you design more elite versions of your current products.
You and your customers are already used to this. We see examples everywhere:
American Express pioneered this by having their regular Green card, with their better customers moving up to a Gold card, then Platinum, and finally the elite Black card.
Airlines use tiers with their coach, business class, and first class seating.
Video games do it with their “Ultimate Collector’s Edition”.
Books have paperback, hardback, collector’s edition and signed first edition copies.
You get the idea.
To get started, all you do is create a higher tier of your basic product, then a better one, and then the best one. Each level up will have a higher price point, of course.
Price tiers work because of people’s buying psychology. Customers are hardwired to always want to stand out and be the best. You want to position your product upgrades such that people feel having your top product will give them that satisfaction.
Most people will use your regular product, but others will upgrade, and they will gladly pay the price to get the best in order to feel like the best.
So give those people what they want and watch your profits soar!
This week I had many calls from businesses that have been forced to close again due to COVID19! They want to know what should they do? Here's how I answered?
