Small Business Profit Maximizer!

Using the 80/20 rule to massively increase profits

Watch this video to learn why using the 80/20 rule to focus on your most profitable customers, products and employees is one of the main tools I use in my SMART Profit Maximizing System which I created. 

 

C’mon over to the Small Business Profit Maximizer Facebook page at https://www.facebook.com/BusinessProfitMaximizer/ where I am sharing business profit maximizing moments that you can use to quickly increase you can double, triple or even 10X your bottom line while creating a more hassle free business.  Be sure to like the page and follow it so you will be notified when I am live and can ask questions live..

Be sure to check out my blog, “Small Business Profit Maximizer!” Where I share these videos and other ideas you can use to make this your most profitable year ever!  Click https://wjb-cpa.typepad.com/ to go to the blog page. .

As a gift to you for watching and following my videos, go to https://profitmasters.mykajabi.com to access the following free courses that will help you increase profits and your bank account balance:

• Double Your Business Profits in 30 Days!
• Turn to Your Customers When You need Cash Now!

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Finally, if you have a question or wish to talk to me you can email me at Wayne@wjb-cpa.com or call my office at 915-857-8158.  .

Thanks so much and let’s make this our most profitable ever!

Secrets to Massively Increasing Profits

Secrets to Massively Increasing Profits

Every business owner’s goal is to increase profits.  So why isn’t every business massively profitable? 

My opinion is that most business owners don’t experience massive profits because of three things. First, they concentrate on increasing sales and not on increasing profits.  Second, they are comfortable with slow steady growth that is in their comfort zone. And finally they don’t have a plan to increase profits.

Massively successful business owners do things very differently.  These are the steps I have watched highly profitable business owners take:

1. Decide to not accept the status quo! They always look for ways to improve their profits by thinking out of the box.  They don’t just run their business the way all their competitors run their business. 

        The standard CPA firm has a bookkeeping section.  After reviewing and                     calculating costs I determined that this wasn’t a good use of our resources.  I now send the client to bookkeeping firms rather than us doing it for                 them. This allowed us to cut our payroll in half and increase profits dramatically even with a reduction in sales.

2. If you really want to shake up your business and increasing your profits ask yourself the following question—How can you two times the sales and profits with half the effort? This question forces you to think outside of the box.

        One of my clients owns a medical supply company.  In this industry almost all of them sell to individuals who are paying with private insurance,                 Medicare or Medicaid.  Currently the industry is being squeezed by increased costs and lower reimbursement rates.  My client opened one of the first         medical supply retail store.  This sales model is mainly cash and eliminates all of the insurance problems and thus reduced payroll.  While many of             their competitors are currently struggling they are doing well.

        Want another example?  Consider what Netflix did that eliminated Blockbusters.  How about what Amazon has done to Sears and Toys-R-Us?

3. Set small goals and you will achieve small results. Highly successful business owners set extreme goals that force them to step out of their comfort zone.  If my goal is to add 5 clients this month I can easily reach that by doing a few extra calls.  If I set a goal to add 50 new clients this month doing a little more of what I am already doing just won’t work.  I will have to think seriously outside of the box to get the new clients and perform the services promised to the customer in a profitable manner.

4. They hire coaches, consultants and mentors who have been there before them to assist them in implementing their profit plan.

        The biggest mistake I have made in my business career was to try to grow my business alone.  I now pay about $2,500 per month to coaches and                 mastermind groups that help me reach my goals.  (Be sure to see my article on why coaches help business owners achieve massive growth.) 

        Yes I know a ton about running successful businesses and I have helped many business owners to become highly profitable.  But it is very hard to do so         for your own company.  I am too close to it and having a couple of other successful business owner’s help me become highly profitable. 

5. The number one thing that highly successful business owners do is they implement their plan. They don’t just plan—they have a system for implementing their profit plan.  They have a system for monthly progress toward their goals and a system that creates accountability that forces them to reach their goals.

As you can see—achieving massive profits requires work and is not for the faint of heart.  But if you are serious about growing a highly profitable business there is no easy button and there are no shortcuts.  But you’re working hard now—so why not work hard and be massively profitable.

Planning for Massive Profits in 2019!

Planning For Massive Profits in 2019

Using the Profit Maximizing SMART System

2018 is over and as many of you know, I just finished meeting many of my most successful business owners in order to create a tax plan designed to help them pay the lowest possible taxes legally allowed.  This year we will have saved our clients over $1 million in taxes after we do their 2018 tax returns.

During our discussions I noticed that while they all can tell me what worked and what didn’t work for them in 2018, none of them had a systematic plan to grow their business profits in 2019.

And this is not that uncommon for business owners who are running reasonably successful business owners.  It often appears that the smartest thing is to continue to do what worked for you in the past.

But this can also be a trap!  We now live in a fast-changing world where what worked in the past seldom works in the future.

“Don’t look back. Something might be gaining on you.” --Satchel Paige

In business I can guarantee you that someone is always gaining on you.  You only have two choices in your business—you can either lead or chase!  You can either be the leader in your niche or you can be chasing the leader.

The bad news is that in this fast-paced business world, the leader in any field is getting the best customers and making the highest profits in their niche.  All the rest are chasing them to get the most profitable customers and highest market share.

“If you don’t know where you are going, you’ll end up someplace else.” –Yogi Berra

The most highly profitable businesses didn’t get there by accident—they had a plan and they executed it.  If you want to be highly profitable in 2019, now is the time to create your profit plan!

Why most business owners don’t prepare an annual profit plan

One problem I hear from business owners is that they don’t know how to make a profit plan.  A quick Google search illustrates how little business owners focus on developing a profit plan.  Compare these Google results:

• Google "Sales Plan" and you receive 2.55 billion results.
• Google "Marketing Plan" and you receive 2.29 billion results.
• Google "Employee Development Plan" and you receive 1.21 billion results.

Now Google "Profit Plan" and you only get 774 million results.  That’s right; you will receive over 3 times more results for creating a sales plan then for developing a profit plan.

The vast majority of business owners only concentrate on increasing sales.  Don’t believe me?  Just ask the next 10 business owners you run into how business was in 2018.  I bet nine of them will tell you how much their sales numbers increased or decreased.  You might get one who knows how much their profits increased or decreased.  Trust me, these are the exceptions.  This focus on increasing sales is why most business owners don’t have a profit maximizing plan.

The leading business owners understand that, while sales are important, the only thing that matters in business is your bottom line profits!

I have worked with many business owners who increased sales and still lost money.  One of my early clients had revenues of $500k in year one.  In year two they had sales of over $3 million and lost $250K.  What happened?  I argue they failed because they had a sales plan but not a plan to massively increase profits.  (They went out of business a year or two later.)

Use the SMART Profit Maximizing System!

One of the biggest reasons business owners don’t create a profit plan is that they don’t know how.  Increasing sales is something the average business owner understands.  Thus they work to increase sales and hope that at least some small amount will end up increasing their bottom line.

I created the SMART Profit Maximizing System after studying the thousands of business owners I have worked with in the last 40+ years and seeing what the most profitable business owners do to massively increase profits.  The SMART Profit Maximizing System incorporates the strategies that I discovered consistently increased business profits the quickest.

Here are two examples of using the SMART Profit Maximizing System in 2018 that are pretty typical of what  can occur when you focus on maximizing profits rather than simply on increasing sales:

• A company selling medical supplies only increased their sales by only $13,165 but increased their bottom line from a loss of ($187,590) to a profit of $175,076 for a profit increase of $362,666.
• A CPA firm (yes, mine) had a 8.4% decrease in sales but had 77.2% increase in profit. This translated to an $89,534 increase in profits even though sales dropped by just under $40k.

So what is the SMART Profit Maximizing System?

Here is a basic outline of what is included in the SMART Profit Maximizing System:

• S is for increasing sales to current customers with a particular focus on your most profitable customers and products.
• M is for managing your money in a way that increases your gross profits while controlling your payroll costs and reducing your overhead. It also includes having strong accounting records that provide the business owner with key systems and reports needed to focus on maximizing their profits.
• A is for accelerating your profit growth with massive action. Slow growth is tiring and allows the competition to catch and pass you (if they haven’t already).  In this section we cover the mindset, strategies, and techniques that the most profitable companies have adapted in order to achieve massive profits.
• R is for recurring revenue. Almost every highly profitable business I have worked with or studied had a plan to get their customers to return often and pay them more.  Part of this plan was making sure that the recurring revenues were highly profitable.
• T is for tax planning. There are not many guarantees in business.  But tax planning is guaranteed to lower your tax bill by thousands—legally!  In the last three years I have helped my most profitable business owners lower their taxes by over $4.3 million dollars.  This is $4.3 million dollars that went to their bottom line rather than to the government.

In future articles we will get into each of these areas in more detail.

So when and how do I start?

Right now, in January, is the best time to create your 2019 SMART Profit Maximizing plan!  Doing so now will allow you to implement your customized profit strategies in order to have your most profitable year ever.

This will put you miles ahead of your competition.  Less than 1% of your competitors will even have a profit plan, and even if they do, they seldom have real world tested strategies and tactics.  Getting started now will give you a huge head start!

Call me if you need help creating your profit plan.  Keep your eyes open for future emails where I will be launching my SMART Profit Maximizing System coaching program that will help business owners create and implement their own profit maximizing plan.

Marketing to Current Customers is the Fastest Way to Grow Your Business

Every business owner must have a plan for selling to your customers who, hopefully, already know, like and trust you. This is the fastest and most economical way to increase sales and profits.

 

 

Common Accounting Mistakes Small Businesses Make

If you go by the SBA (Small Business Association) definition of a small business being under 500 employees there are 28 million businesses in this category. However, if you look at businesses that just employ one person, a sole owner/employee combination, then you have a total of 22 million, leaving just 6 million businesses having more than one and less than five hundred employees. 

With all these self-employed businesses it isn’t surprising that accounting mistakes are a big problem. The following are the most common errors that small businesses make with their accounting that can result in serious risk of not earning the profits you need to stay open past that critical first year. 

• Poor expense records – most small businesses fail to take advantage of all the opportunities they have to write off small business expenses. Having a single credit card and using that for all business transactions can help, but you also make it a point to keep and itemize actual receipts to ensure you are not missing out. 
• Failing to talk to an accountant – by talking to your accountant on a regular basis you can make sure that you are maximizing your tax deductions and taking advantages of tax incentives and programs that you may be eligible for. 
• Doing your own taxes – many self-employed business owners assume that they can do their own business taxes just like they do their own personal taxes. The reality is if you are doing either you are probably not taking full advantage of tax deductions or failing to understand how to reduce your taxes for the upcoming year. 
• Not collecting outstanding invoices – many small businesses are very lax at following up with customers and ensuring that they are paid on time and in full. If you don’t keep track of this on a weekly basis you will have much more difficulty in getting all your numbers together for tax season. 
• Not investing in yourself – all small business owners should be using retirement savings accounts and tax breaks on these funds to not only help reduce their taxes but also to provide them with the funds they need for later in life. 

To avoid any of these issues start working with an accountant. You can meet with him or her a few times and year and ensure you are on track for meeting your financial business goals and taking full advantage of tax incentives.

How to Delegate Effectively

If you want to expand, you will need to multiply yourself. This will require you to have employees and then delegate work to them. This is one area that very few business owners do effectively. They try, but they soon give up because their employees make mistakes and take much longer then they do to finish the work.

I often hear from business owners that they would like to expand, but they just can’t find good employees. My answer is always the same: “That’s funny – your competitors have found a way to get good employees!”

The truth is that their competitors have learned how to hire effectively, train effectively, and delegate effectively. Since you have employees now, learning how to delegate effectively is one of the quicker ways to free up your time so that you can work on improving your business and increasing profits.

Effective delegation requires you to:

• Properly define the task and the required result.
• Put a deadline on every task.
• Have a method for progress reports and follow-up. I used to use a delegation book. But I now use an online program that allows me to track employee progress easily. (Check out www.smartsheet.com).
• Don’t just delegate the job. Delegate the authority to complete the task.
• Hold weekly progress meetings.
• Don’t accept the “monkey” back! If, or should I say, when they come back to you with questions, insist that they come prepared with possible solutions.
• Understand and accept that mistakes happen when you delegate authority. Deal with them. Do more training. But don’t stop delegating!

So How Do I Know If My Employees Are Making a Good First Impression?

Awhile back I wrote a blog article about the importance of making a good first impression on your prospects (http://bit.ly/sblW7W). But how do you know if your employees are losing possible customers by making a bad first impression? One of the best ways is to “mystery shop” your own business or practice.

You should do this with your employees’ full knowledge. Being open with them about it will:

1. Let them know it will happen. They will not know how or exactly when, so they will automatically treat prospects better.
2. Let them know that the results will be part of their reward, bonuses, pay raises, etc.

You can hire someone yourself or can check out www.mysteryshop.org and www.shopreports.com to hire from businesses that specialize in mystery shopping (Disclaimer: I have not researched the quality or level of service they offer. You should still do your normal due diligence.)

Making sure your customers are receiving the best service possible is always your responsibility. Testing your staff isn’t dishonest; it’s good business practice.

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

The Correct Way to Ask For Referral

Referrals are an important way to grow your business.  Yet many business owners either don’t ask for referrals, or ask in a way that makes them look desperate.

If you ask me for names of people who might use your services or goods, I’m probably not going to make a referral.  You are putting all the responsibility on me, and I may not want to take the time to think about it.  So don’t ask, “Do you know someone that can use my services?”

I personally like using a method that comes from a position of strength while making it easy for customer to refer.  This means doing my homework and phrasing the request in a confident way.

One way is to set up a referral prospects file and keep notes on your top customers’ contacts.  You can do this by doing Google searches or social media to determine who their friends are, who they do business with, and what community groups they belong to.  Then go up to them and say, “I didn’t know you knew this person, I’d love to meet them.”

Make sure that your customers don’t feel that you need their help growing your business.  You must have confidence in the value of your product or service.

Frame the discussion as if there is very limited room for new customers, and the only people you are accepting are friends and colleagues of your current customers.

The portrait studio owner that I discussed in the article “Increase Sales With a Customer Call-Back Department” didn’t just ask for referrals when he called his customers after the sale.  He instead asked a series of questions that helped his customers think of people who could use his services.  “Do you know anyone who I can call that is getting married?  Do you know anyone who is graduating from high school or college?  Do you know anyone who having a special wedding anniversary?”  He would ask about 10 of these questions to help the customer think about special occasions where people might want portraits.

 

Finally, don’t forget to thank your customer for every referral.  Even better—reward them with a small gift or a discount on their next purchase.

5 Ways to Increase Year-End Profits

 

Are your sales and profits for this year lower than you expected?  There is still time for you to close strong.

Here are five ways to finish this year on a high note.

1. Have a contest.  The ability to win a prize creates excitement among your customers and your staff.  The key is that the prizes should be large enough to create the excitement you want.  Be creative and be sure to publicize it
2.      Hold an employee event.  Often your problem is that your employees are losing their motivation during the long summer months.  Kick off the fourth quarter with a fun internal event or contest.  Consider both a non-business event and a business-related event.
3.      Launch a new campaign.  Business is always out there.  It isn’t a matter of if there are customers, but rather how you will get them.  Launching a new campaign gives your staff new direction and can excite your customer base.
4.     Introduce a new product or service.  A failure to reach your profit and sales goals often indicates a gap in what the market wants and what you are offering.  Brainstorm with your staff and look for ideas with a high return on investment that can be implemented easily.
5.      Jump start your marketing.  Sometimes the problem is that you have become complacent.  Now might be the time to jump start your sales and marketing.  Check out our Sales and Marketing Boot Camp at www.freeisbstrategies.com for a very affordable course designed to rapidly increase your sales.

Customer Service Problems Happen – Just Deal With Them as They Happen.

The myth most business owners believe: Being a manager and small business owner means solving problems as they happen.

The truth successful business owners learn the hard way! Most problems occur repeatedly due to a deficiency in your operating system or in the training of your employees. And, most problems result in a customer service problem that often leads to a lost customer. So developing a system of tracking problems and solving problems is a key component of improving customer service.

When you are small this is a simple as keeping a log of all mistakes. Weekly or monthly it is important to review this log and look for repeat errors. Now, analyze the root causes of these errors and solve the root problem.

We prepare over 600 returns and at least 99% are completed correctly the first time. But, tax law is a complicated area with frequent changes and keeping errors from happening is a continuous battle. A few years back I noticed that when a client failed to give us a 1099 for retirement income we failed to notice this three times. I put in a procedure so that the reviewer looks specifically for this and worked with all preparers so that they understood the importance of looking at last year’s returns in order to look for items that the client fails to give us. The result: These errors, and many like it, have disappeared during the last two tax seasons.

As a company grows and adds more employees it is no longer possible for the owner to keep track of all the problems and customer service errors that occur in a business. But, solving these problems becomes more vital to keeping customers happy and returning. At this point it is important for the business owner to develop a “customer service ticket” to track these errors.

You should review these employee prepared “customer service tickets” weekly to determine 1) that all customer service problems are resolved promptly and 2) to look for problems that are re-occurring.

Lesson learned:  Problems have root causes and will happen repeatedly if you fail to address these root causes. You need a system to identify customer service problems in order highlight the problems that the manager needs to solve.

Marketing Tip of the Week – Liven Up the Place!!

El Pasoans are always complaining there is never anything to do, so take that as an opportunity to get people through your doors.  Depending on your business, you can invite speakers, live bands, motivational speakers, dances, art exhibits and any other event that can draw a crowd.

An event like this can create positive brand equity and promote awareness for your business. Think about it, people are going to your business to enjoy themselves and hopefully learn more about your business. Plus, if they are already at your door, they are more likely to buy from you.

Of course promoting this even may cost you a bit, but it’s usually worth it in the end. This can give you an opportunity to write that press release to generate free press! Most bands and artists will volunteer to preform just to get their name out to the public, saving you even more money!

Communities tend to favor companies that give back and a free event is always a way to win their hearts. So if you are having problem getting customers through the door, keep this in mind.

P.S. Don’t forget, while they are there get their contact information to promote to them in the future.

Marketing Is Never an Option, It’s a Necessity!

Sometimes marketing is an expense and sometimes it is an investment – depending on if it is working or not. But abandoning your marketing plan when cash is tight should never be an option!

First, let’s understand what marketing is. Marketing is everything you do that creates value in the customers mind so that they are enticed to meet with you. Marketing gives you the chance to sell.

Selling is when you convince the prospect that you can be trusted to deliver what your marketing efforts promised.

Based on these definitions, marketing must happen even if you are totally broke. How else will prospects learn about you, be willing to meet with you, and, most importantly, be excited to meet with you? The following are four things that can be done even if you are cash poor:

1. Create new products and sell them to your current customers.
2. Form strategic partnerships with companies that deal with your prospects. Get creative and remember to make it a win-win for both parties.
3. Create and work a referral program that gets your customer to refer their friends.
4. Learn more by buying Guerilla Marketing by Jay Conrad Levinson and The Referral Engine by John Jantsch. Both of these will provide you with tons of low-cost marketing ideas.

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

Be Sure Your Advertising is Working for You!

Advertising can have a life of its own if there are not proper systems in place to control it. By neglecting your advertising you can get undesired results. Your goal when managing your advertising is to assure that you are in control of what you are sending out as a message and to make sure you are getting what you paid for.

When it comes to promoting a brand it’s imperative that any advertising is done consistently. So when purchasing advertising consider:

• Are you advertising in the right medium? Make sure the ads will reach the customers you desire.
• Get six months or one year contracts- you can usually negotiate better rates and it forces you to do the advertising consistently. One of the biggest mistakes made by small business owners is giving up to early. It takes patience and consistency to see results.
• Make sure you have control over the message- Work with the advertiser and make sure the quality of the ad is high, after all this will represent your company. The message needs to match your goals and marketing plan in order to work for your company. Don’t just settle! You are paying for this ad and you need to be satisfied that it will work for the company.
• If you have a small budget, or a small staff - start with only one advertising tool. Choose the one that you think will most likely reach your target market. It is better to do one thing right than to do five things badly.
• Don’t invest in any advertising unless you can measure the results. Big companies can waste money doing image advertising. As a small business owner you can’t! You must be able to see a direct relationship between every ad and new sales. If not – change something and try again.

One Thing All Successful Business Owners Have in Common

Over the last 35+ years I have had the pleasure of working with thousands of business owners.  Less than 1% of these I would classify as highly successful businesses dominating their niches.  Yet all of these business owners had one thing in common:  Every extremely successful business owner has a laser-like focus on taking action.

They understand that successful businesses occur when the owner makes consistent improvements.

They start by making a list of their long-term business goals.  Then they figure out what they have to do this year in order to reach them.  What do they have to do this quarter, this month, this week, and today to reach those annual goals?

Successful business owners know that the secret to massive profits is the combination of good ideas with a laser focus on monthly action.  This is the mantra you must follow.  I believe it is so important that I have made the slogan “Good Ideas + Action = Massive Profits” the motto for our magazine and our coaching programs.

Think of how much better your company would be if you committed to working four hours per week on improving your business.  Do that for 50 weeks this year, and you will have worked 200 hours on improving your business.  How many of your competitors are making this kind of investment?  Worse yet—what if one of your competitors does and you don’t?  How far behind will you be?

But they not only have a focus on taking action, they also schedule time monthly to plan and implement the good ideas that move them toward their goals.  We recommend three steps to our coaching clients:

1. Use our Perfect Monthly Growth Tool (see the article and the form we use in our August 2013 issue).
2. Use a monthly process to plan and analyze their marketing and promotion activities.
3. Use weekly delegation meetings to ensure their employees are working on those items that move the business toward its profit goals.
   

Finally, every successful business owner hires a coach to keep them accountable.  I have a personal coach who is helping us with our online marketing funnel.

An accountability coach helps you:

• Set a realistic timeline to reach your unique goals.
• Flesh out a strategic action plan designed to reach those goals.
• Measure your progress.
• Stay focused!  Business owners who have a focus on growing their business very often get tempted by the newest shiny object.  An accountability coach reminds you why you should finish one thing first before moving on to something else.
• Find encouragement and motivation when you feel like giving up.
• See a fresh perspective based on their experience with multiple companies in different industries.
• Challenge yourself to go beyond what you are comfortable doing on your own.

The end result is usually a massive increase in sales and profits.  Why?  Because the coach pushes you past the places you have sabotaged yourself in the past.

 

The Education of an Entrepreneur

One of the main differences between a business owner who has created for themselves a “job” and an entrepreneur who has created a “business” often can be traced to one thing – the entrepreneur never stops learning!

Most start-up business owners don't know what they don't know. Confusing I know so let me explain. Most new business owners don’t understand taxes, bookkeeping and the law so they hire CPA’s (like myself), lawyer and other professionals to handle these issues for them. But, they don’t even have a clue that they need to learn how to market, manage employees, handle growth, the importance of knowing and understanding the metrics of their business, the importance of systems, etc, etc, etc, ……….

So when a new business owner comes in to see me I try to help by recommending the following three books that I feel that every business owner should own, read and re-read.

First would be The EMyth Revisited by Michael E. Gerber. All wealth is a result of the creation of a system by the business owner. This book goes into the importance of systems in order for the business owner to succeed and grow while still keeping their sanity. I have used the chapter on the importance of an Organization Chart for every business to save a couple of marriages between husband/wife ownership teams.

Second would be Guerrilla Marketing by Jay Conrad Levinson. The theory of guerrilla marketing is that your primary investment is not money (a scarce commodity in most small businesses) but, rather time, energy and imagination.

Finally, any book by Dan Kennedy. I guess I would start with his No B.S. Direct Marketing. He has so many key concepts it is very hard to pick just one. But, if forced to, I choose his statement that every business owner is in the business of getting and keeping customers!

These are my favorite three. Drop me a line and let me know if there is a business book that you think I should have put on the list.

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

Why Your Best Employees Quit

A recent Department of Labor statistic showed that the average American employee now changes jobs every 1.5 years.  That constant turnover costs business owners valuable time and money.  It takes time and money to interview, hire, and train new employees.  Then it can take a year or two for them to reach full efficiency in their job.  That is why it is so disruptive to a business to have constant turnover.  This is especially true for small business owners, most of which have fewer than 10 employees.  Losing even one can put a big dent in their ability to market and deliver their product profitably. 

Here are some of the key reasons employees quit:

• They don’t like their boss.  You don’t have to be friends with your employees, but you do have to treat them with respect.  Always remember the Golden Rule and treat them the way you would like to be treated if you were an employee again. 

• The work is not challenging.  If you want to hire superstars, you need to challenge them.  If they are bored, they will quit. 

• No vision is communicated.  People want to be part of something important.  Your employees need to believe that what they do is important and will make your customer’s life better. 

• No loyalty.  Sadly, there is little loyalty in business.  But if you want loyalty, you must first be loyal.  If you have a good employee who makes a mistake, don’t just fire them!  Counsel them.  Heck, if it a rare mistake from an otherwise good employee, just forget it and move on.  I often tell my employees that the only people who don’t make mistakes aren’t working. 

• Bad relationships with their co-workers.  One of the things that must be considered when you add someone to your team is how you think they will fit in with your current employees.  Be careful not to hire a superstar who might be disruptive. 

• Ability to work autonomously.  No one likes to be nitpicked or micromanaged.  Establish systems, train the employee, and then let them work.  Allowing employees to make independent decisions within the systems leads to happier employees. 

• The organization’s financial stability.  Your best employees will look for a more secure business to work for if they see you laying off employees, cutting hours, freezing pay, or losing customers. 

• They are not having fun.  Yes, there is work to be done, but that doesn’t mean you can’t have fun doing it.  Lighten up and look for ways to make work more enjoyable. 

• No career advancement path available.  The majority of graduates would rather work for a company that offers a clear career path over one offering a higher initial salary.  Make sure you discuss with each employee what career paths are available to them. 

• Excess stress and unreasonable expectations.  This slow economy has forced companies to cut back, sometimes to the point of overworking employees.  Be sure you are not burning out your best employees. 

• No recognition of a job well done.  “Good job!” seems to be a hard thing for business owners to say.  They worry that they will have to give the employee a raise.  A bigger concern should be that the employee will find another place to work. 

Notice that nothing on this list really costs you money.  They just require clearer communication and more planning by the business owner.

Great Marketing on a Small Budget

Many of my clients don’t have the money to do a large marketing campaign.  So they simply do nothing and hope, or they rob Peter to pay Paul in order to do a radio, TV, or newspaper ad.  They often forego paying their payroll taxes or vendors, hoping that their advertising will bring in enough money to catch up on the bills later.  This is definitely a recipe for disaster! 

The Three-Step Direct Mail Marketing Campaign 

I always recommend that they implement a three-step direct mail marketing campaign.  The three-step plan is designed to get prospects to raise their hands and identify themselves as being interested in learning more about your company.  This allows us to send them additional sales material or make personal sales calls.  It is a much better use of your time to meet with people who have already expressed an interest in meeting with you rather than making cold calls. 

A normal three-step plan could look like this:

1. A direct mail piece is sent out offering a free e-book, PDF report, or video in an area that interests your prospects in return for their email address.
2. An auto-responder that pushes for an appointment or invites them to our business.  This often takes the form of a discount on an entry-level product.  Another auto-responder also should invite them to a personal consultation where we explore ways to eliminate their problems.  “Give and you shall receive” should be your motto!
3. Their names are added to our ongoing email and newsletter lists.  They may not be ready to buy now, but we want them to remember us, and only us, when they are ready. 

At this point I am usually asked, “But why direct mail?”  Direct mail:

• allows for very targeted marketing
• can fit any budget
• is scalable
• provides instant feedback
• produces results you can track
• allows for testing of different variables to improve results
• can be tested with a small sample before rolling out a full campaign 

With all of these advantages, there is really no reason not to include direct mail in every marketing plan.  In fact if one is good, three direct mail campaigns may be better!  Some quick recommendations:

1. Targeting your most likely customers. This can be by industry type or geographical area.
2. A special mailing to your dream 100 prospects.  Those prospects that you would love to have as customers should be the target of a concentrated campaign.
3. A monthly mailing with VIP customer specials to your current customers.

What I Would Do Differently If I Started Over

I was asked recently, “What would you do differently if you were starting your business today?” 

It is a much harder question than you would think, because there is so much that I have learned about owning and operating a business that I did not know when I first started out back in 1991.  At that time, I foolishly thought that running a CPA firm would be easy because I was already a good CPA.  But to answer that question, let’s review the two biggest mistakes I made that restricted my growth. 

Big mistake number one!

This is the biggest mistake that first-time business owners make when they are starting out.  They have the same misconception I had—that being a good CPA would automatically translate into being good at running a CPA firm.  Nothing could be further from the truth!  The skills required to be good at doing the work are completely different from the skills required to be good at running the business of doing the work! 

Even bigger mistake number two!

When I started out, I just hated the idea of selling and marketing.  I didn’t want to become a pushy used car salesman.  I thought all I had to do was be good at my job and people would find me.  I call this the “Field of Dreams” sales method.  If you have watched the movie, you know that it is about a farmer who cuts a baseball diamond into his cornfield after hearing a ghostly voice telling him, “Build it, and they will come!” 

Just one problem with the “Build it, and they will come” sales model—what if they don’t come?  Well, that’s what happened to me.  You see, I picked up my first six clients in the first week and thought, “Wow this is easy!”  Then I didn’t get my next client until month seven. 

What I learned (the hard way) is best described by Bill Glazer, author of Outrageous Advertising That’s Outrageously Successful:  “I have a two thing business—Getting new customers and keeping them as long as possible.”  I was good at keeping a client, but I really had no clue how to get them. 

For me, the key to success was understanding what Dan Kennedy stresses in his No B.S. Marketing books:  Every business is really a marketing business! 

This realization that I had to become a sales and marketing expert for my business changed how I approached my business.  I no longer thought that I was in the business of preparing tax returns, preparing financial statements, and providing profit consulting.  I now understood that I was in the business of marketing and selling those things!  That meant that no matter how much I hated selling, if I wanted my business to survive, I had to learn how to do it. 

So back to the original question:  What would I do differently if I started over? 

With the benefit of 20/20 hindsight, I now know that before I opened my business (or within the first year of operations), I should have:

1. become an expert at the efficient operation of a CPA firm, and
2. become an expert at marketing and selling my services. 

I am going to assume that you have trade manuals and training materials about how to run a business in your industry.  Plus, most business owners already know how to do the work of their business, so it is just a matter of learning how to do it more efficiently and learning how to manage the business. 

But becoming an expert in marketing and selling is much harder.  Most entrepreneurs who start a business are good technicians, but many have little sales or marketing experience.  Compounding the problem is the fact that outsourcing marketing and sales seldom works.  This is a very critical task that the owner must do themselves.  The owner is the one responsible for delivering what marketing and sales messages have promised.  The owner is the only one who truly understands how their product helps solve their client’s problem.  And the owner is the only one who knows what the goals for the business are. 

So how do you become an expert at marketing and selling?  I outlined 10 steps to becoming a sales and marketing expert in an article titled “Every Business Is a Marketing Business.”  You can find it in our January issue of Innovative Small Business Strategies (still available for purchase on your iPad or iPhone). 

These are some great steps towards becoming a sales and marketing expert:

1)     Change your mindset about sales and marketing.  Understand that if you really believe your product or service will transform your customer’s life, then you have a moral obligation to provide it to as many people as possible.  This can only be done by selling.

2)     Read at least one marketing book per month.

3)     Take a variety of marketing courses.

4)     Hire a personal sales coach.

5)     Subscribe to sales and marketing magazines and blogs.

6)     Create a marketing plan.

7)     Create a 12-month implementation plan.

8)     Choose sales tools to reach your prospects that fall within your budget.

9)     Make a monthly appointment with yourself to review your marketing.

10)  Set aside some time each week to sell. 

With everything I have learned about managing and marketing an accounting firm, I could easily start over and grow my firm to its current level in five years instead of the 22 years it has taken. 

Of course, I still hate selling.  But I close about 70 percent of the prospects I meet, and our business has consistently had annual growth between 10 and 20 percent each year. 

The Race to Success - Part 2

So what is it that the very best business owners do that makes them successful?

The answer can be found in a paper released by Moya K. Mason earlier this year titled, What Causes Small Businesses to Prosper? In it, she writes,

“What does matter, it turns out, is having a strong grasp of business basics. Without exception, companies that outperformed their industry peers excelled at what we call the four primary management practices – strategy, execution, culture and structure.”

My own observation of small business owners who prosper agrees with her findings. But communicating to them that they need to increase their strategy, execution, culture and structure usually is met with blank stares or comments like, “No kidding, but how do I start?”

Because of that, I have developed detailed action steps for improving in these four areas.  The following are the key areas that every business owner must work on in order to obtain massive profits: 

• They must acquire a strong, working knowledge of business basics.
• They must have a strategic profit plan.
• They must build their strategic profit plan around a clear value proposition for the customer.
• They must be committed to marketing and selling their product continuously.
• They must make all decisions and analyze all results based on actual data.  Gut reactions are fine for small decisions and when you are a startup company.  But the best companies rely on accurate data to make decisions.
• They must concentrate their sales efforts on a particular niche (or niches) rather than trying to be all things to all people.
• They must develop a way to make their product something their customer “must have” rather than something that would be “nice to have”.
• They must continuously turn out innovative products and services rather than reacting to events.
• They must deliver products and services that consistently meet and exceed customers’ expectations.
• They must hold themselves and their people to the expectation of a high level of performance.
• They must empower their employees and managers to make independent decisions and to find ways to improve operations.
• They must make it easy for their employees and customers to work with their organizations.
• They must recruit “superstar” employees. They must hold on to their most talented employees. And they must actively work to develop more “superstars”.
• They must use a mentor or a coach.  Being the boss is a lonely job.  Don’t try to go it alone.
• They must practice the “Golden Rule” in all of their business and personal dealings.
• They must develop a good accounting system that provides them with strong management reports.
• They must become lifetime learners in their business.  It is a serious red flag when I, as their CPA, know more about trends in their industry than they do.

At this point most business owners start to get overwhelmed.  They see so many things that they need to work on that they just freeze up and do nothing. What they don’t understand is that successful business owners didn’t get that way in one big flash of inspiration.

They actually made small, consistent improvements to their business every week.  This requires them to set aside some time every week to work on improving their business.  They refuse to let the day-to-day fires of running their business stop them from working to improve their business in some small way every single week.  They understand:

GOOD IDEAS + ACTION = MASSIVE PROFITS

 So where should you start?

Simply decide to work on the one thing that, if improved, would have the most impact on your business.  My experience is that most business owners know exactly what that “one thing” is.  If you are not sure, ask your banker, your employees, your spouse, your CPA, or your coach. 

Imagine how different your business would be if you invested four hours every week in improving your business! This would be over 200 hours by the end of the year.  How many of your competitors do you think actually will make this kind of commitment to excellence?

What to do once you decide what to improve?

Educate yourself! You can do this by researching online, reading business books and magazines, following business blogs, reading articles, purchasing coaching programs, and hiring a personal business coach.  Consider calling a business owner in your industry just to trade ideas.  If you are worried about sharing with the competition, reach out to a business owner in a different city or region. 

Take some action every month! Too many business owners get stuck in the research phase and never get anything done.  The trick isn’t to become an expert on the subject.  As the Nike commercial famously says—JUST DO IT!  Get started!  Take some action!  Even if it is only a very small improvement in the first month, it is better than no improvement at all.  Remember: Excellence is achieved one small improvement at a time.

The Race to Success - Part 1

The Real Reason Small Businesses Fail and Succeed

One of the big advantages CPAs have 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.  Not only that, but we are also business owners. We face many of the same opportunities and challenges that other 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.

This is a statistic that many of us have run across before.  But very few of the articles that quote these statistics actually go into detail as to why they fail. 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.  You may love the business, but it is easier to pick a niche in a hot industry with customers eager to buy.  Dan Kennedy said it best when he said, “…the most important ingredient for a successful restaurant is hungry customers.
2. Not having actual hands-on experience in the industry before opening the new business.  The first question I ask someone who comes to my office and says they are opening a new business is, “Tell me what experience you have in this industry?”  Just about 100% of the business owners who had none before opening failed!  Go work in a restaurant before you decide to invest $250,000 in one.
3. Unwillingness by the owner to take responsibility for everything that is not working in their business.  You created this business.  Anything you don’t like about your business, you caused or allowed to happen.  So take responsibility and decide to change what you don’t like.
4. Poor management skills by the owner.  There are very few born entrepreneurs and there is no job that really prepares you to be the boss.  You will have to learn on the job. In today’s information age, there is no excuse for not learning management skills.
5. Lack of necessary effort by the owner. They often don’t understand that they are not in a 9-to-5 job anymore.  If you want a 40-hour work week (or even a 50-hour week), don’t start a small business!
6. Unwillingness of the owner to be a continuous, lifetime learner.  In my lifetime I have had to completely reinvent myself and my business at least six times.  No business model will produce a profit without adjustment.
7. Failure to have a business and marketing plan.  Business ownership proves the saying, “Failing to Plan is Planning to Fail!”
8. Inadequate cash reserves.  In small business, CASH IS KING!  If you make a profit but run out of cash, you will have no choice but to close your doors.
9. Failure to truly understand their customers’ wants and needs. This also includes not understanding what triggers a customer to buy.  What you think the customer wants is totally immaterial.  The only thing that matters is what your customers think they want.  Never stop talking to them!
10. Lack of marketing & sales skills.  A business without customers is called a hobby.  This is an area that seldom comes naturally to most business owners.  But, unlike when I opened my business, there is tons of information available on the web and many online coaching programs can help you improve your sales & marketing.
11. Failing to price your product or service correctly.  Too high, and you may not have enough customers. Too low, and you may not make a profit.
12. Failure to anticipate or react to changes in the marketplace, competition, or technology.  Change is constant.  Adapt or die!
13. An overdependence on a single (or a few) customers.  If you have one or two customers that represent 90% of your sales, you don’t have a business—you have an outsourced job.
14. Uncontrolled growth.  Too much of anything is a bad thing.  Growth without planning and systems is a guaranteed way to fail big.
15. The owner believing they can do everything themselves.  If you want your business to grow, you must be able to create economies of scale.  This means you must become good at delegating and managing your employees.
16. Poor customer service.  Sales and marketing gets you the first sale.  Customer service gets you repeat sales.
17. Unqualified or untrained employees.  Employees are one of the major expenses of almost every small business. Hiring bad employees or failing to train the good ones is a quick way to fail.
18. Failure to seek outside professional help.  Every professional athlete has a coach.  So why do so few business owners feel they could benefit from one?
19. Employee fraud.  Fraud, especially by bookkeepers (just Google bookkeeper fraud) is a major cause of small business failure.  Get your CPA to review your internal controls.
20. Poor location.  This is particularly true in retail, restaurants, and bars.
21. Poor inventory management.  Excessive inventory ties up cash and leads to old unsellable inventory that must be written off.
22. Not collecting your receivables.  It’s not really a sale until the money is in the bank. (See our article in this issue for tips on reducing receivables.)
23. No systems.  It’s very hard to manage people.  But it is very possible to manage well thought-out and designed systems.  Systems allow you to deliver a consistent experience to your customers.
24. Over-borrowing and not matching the correct loan type with your need. Closely related is not borrowing enough.  Be sure to read our interview with a commercial loan officer in this issue for many more vital tips.
25. Failing to innovate and introduce new products or services.  The quickest way to make a profit is to sell more products to your current customers.  If you don’t, your competitors might.

But while avoiding failure is obviously important, it won’t guarantee that you will make massive profits and build a business that has value once you decide to sell it.

So what is it that the very best business owners do that makes them successful?

Find out tomorrow in part #2 of The Race to Success.