Small Business Profit Maximizer!

Marketing & Selling Tip of the Week- Keep it Clean!

Take a look at your sales material, and I mean really look at it. Did it sell you? After looking and reading your material, did you have the urge to learn more about your company’s products and services? Or was it just a bunch of pictures and text put together with the hope that it would lure customers.

When designing your sales material, create a simple layout that really emphasizes your message. Images do add power to sales material as long as they relate to your message and do not overpower it. Your sales material should be clean and easy to read. Don’t clutter your sales information with non-essential pictures, logos, illustrations and text. It’s hard enough to get potential customers’ attention and now that you have it don’t confuse them with a pamphlet that has no purpose.

As I mentioned before KISS (Keep It Simple Silly), it’s always the best way to go when it comes to selling. If you need someone to evaluate your sales material, call us at 915-857-8158, to schedule an appointment.

Create a Disaster-Recovery Plan

 

Nobody likes to talk about the possibility of disaster, but that doesn’t mean you shouldn’t have a comprehensive disaster recovery plan for your business.  You may not be hit with a hurricane, tornado, or earthquake, but even a broken pipe or a minor fire can temporarily wipe out your business.

 

Big companies have committees and consultants to deal with recovery planning.  Smaller businesses are finally recognizing the need for similar plans. Here is a list of questions to get you started on developing a plan.

 

• Where would you work if you couldn’t work in your office?
• Can you arrange to share office space with another business?
• How would you stay in contact with your customers?
• Do you have a list of every employee’s name, address, and home phone number?
• Do you have copies of your customer list at home?
• Are all of your important business records backed up and stored offsite?

Are Your Customers Getting the Service They Deserve?

All of your marketing will be wasted if the receptionist has a bad attitude, your staff is not properly trained, and you don’t have systems in place to ensure that the customer’s needs are being met and exceeded.

Management consultant and speaker Tony Alessandra in The Platinum Rule describes the range of service encounters this way:

• Moments of Magic: Positive experiences that make customers glad they do business with you.
• Moments of Misery: Negative experiences that irritate, frustrate, or annoy.
• Moments of Mediocrity: Routine, uninspiring service; forgettable service.

The second and third seem to be the norm today. Moments of Magic are so rare that they make news and turn those businesses customers into raving fans who quickly spread the word through social media.

What first impression are you making? If you don’t know – shouldn’t you?

If your customers are not having Moments of Magic when they buy from you – why not?

 

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

10 Common Interviewing Mistakes

The Education of the Accidental Manager:  Part 2

Tuesday's blog discussed how most business owners are “accidental managers” who have never been formally trained. I also argued in the blog that mastering employee management is an essential skill needed to grow your business. This is the start of a continuing series that I hope will help business owners improve in this area.

Employee hiring is much more critical in a small business than in a large business simply because you don’t have the budget to carry “dead” weight.  Every employee you add is expensive, and hiring a bad employee can seriously affect the financial success of a small business.

My experience is that most small business owners hire too fast and make many of the following common interview mistakes:

1. Talking too much. Don’t spend most of your time talking about the position and your company.  I know you are proud of your company, but the purpose of the interview is to learn about the applicant.
2. Not preparing.  Think about what type of person you need for the job and what skills they need before they show up for the interview.  I know you, as a business owner, are busy putting out fires, but this is too important to just wing it.
3. Asking questions on the fly.  In advance, prepare a list of the key questions you want answered.  Don’t be afraid to ask follow-up questions.
4. Not knowing what you can legally ask. Check out this good article about 30 questions you can’t legally ask and how to get out the information without breaking the law (http://bit.ly/MKn1mv).
5. Not letting the applicant know about all parts of the job.  Tell them the good and the bad. 
6. Don’t oversell the position.  The purpose of the first interview is to narrow down the number of candidates to your top two or three. Then you can sell your finalist on the job.
7. Letting your personal bias affect your decision.  I’m a big Red Sox fan, but that should have no bearing on who I hire. You should always hire the best person for the job.  (I have to confess, a Yankees fan would have to be a superstar for me to hire them.)
8. Don’t be rude.  Treat the applicant how you would like to be treated.
9. Not making your top candidates feel wanted.  Don’t commit at the first interview.  But do let them know that they have the skills and experience that would be very useful to you and that you will be strongly considering them for a follow-up interview.
10. Making quick decisions.  Small business owners are notorious for making quick, gut-based decisions.  It’s almost a survival skill for them.  It just doesn’t work for hiring.  You should be open-minded and friendly during the interview and wait until it’s over to write down your thoughts.

Until next time, thank you for your continued support and let’s make this year our most profitable year ever!

 

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

The Education of the Accidental Manager:  Part 2

 

A blog I posted last year (http://bit.ly/N4dg10) discussed how most business owners are “accidental managers” who have never been formally trained. I also argued in the blog that mastering employee management is an essential skill needed to grow your business. This is the start of a continuing series that I hope will help business owners improve in this area.

Employee hiring is much more critical in a small business than in a large business simply because you don’t have the budget to carry “dead” weight.  Every employee you add is expensive, and hiring a bad employee can seriously affect the financial success of a small business.

My experience is that most small business owners hire too fast and make many of the following common interview mistakes:

1.     Talking too much. Don’t spend most of your time talking about the position and your company.  I know you are proud of your company, but the purpose of the interview is to learn about the applicant.

2.     Not preparing.  Think about what type of person you need for the job and what skills they need before they show up for the interview.  I know you, as a business owner, are busy putting out fires, but this is too important to just wing it.

3.     Asking questions on the fly.  In advance, prepare a list of the key questions you want answered.  Don’t be afraid to ask follow-up questions.

4.     Not knowing what you can legally ask. Check out this good article about 30 questions you can’t legally ask and how to get out the information without breaking the law (http://bit.ly/MKn1mv).

5.     Not letting the applicant know about all parts of the job.  Tell them the good and the bad. 

6.     Don’t oversell the position.  The purpose of the first interview is to narrow down the number of candidates to your top two or three. Then you can sell your finalist on the job.

7.     Letting your personal bias affect your decision.  I’m a big Red Sox fan, but that should have no bearing on who I hire. You should always hire the best person for the job.  (I have to confess, a Yankees fan would have to be a superstar for me to hire them.J)

8.     Don’t be rude.  Treat the applicant how you would like to be treated.

9.     Not making your top candidates feel wanted.  Don’t commit at the first interview.  But do let them know that they have the skills and experience that would be very useful to you and that you will be strongly considering them for a follow-up interview.

10.  Making quick decisions.  Small business owners are notorious for making quick, gut-based decisions.  It’s almost a survival skill for them.  It just doesn’t work for hiring.  You should be open-minded and friendly during the interview and wait until it’s over to write down your thoughts.

Until next time, thank you for your continued support and let’s make this year our most profitable year ever!

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

Educating the Accidental Manager!

The majority of business owners are accidental managers who have no formal training in managing employees.  In fact, managing employees is often very far from the business owner’s mind when they start their business.  Unfortunately for them, being able to effectively manage employees is a vital skill they must develop if they ever want to grow their business.

While sales and marketing skills are important in order to get customers, having well-trained, motivated employees is the key to the excellent customer service that will keep your customers coming back time and time again.

Mastering the following areas is vital to proper employee management:

            - Setting goals and job descriptions before the employee is hired.

            - Creating a good hiring system.

            - Proper training.

            - Good delegation.

            - Management through weekly meetings.

            - Catching your employees doing something right.

            - Learning to manage systems, not people.

            - Concentrating on cross training.

            - Growing talent from within.

            - Establishing a proper compensation system.

Two books I would start with are The One Minute Manager by Ken Blanchard and The E-Myth Manager by Michael E. Gerber.  Both of these are good places to start in fine-tuning your management skills.

Action Tips:

• Buy and read The One Minute Manager by Ken Blanchard and The E-Myth Manager by Michael E. Gerber.
• Review your current employee management system for areas needing improvement.  In particular:
  • Hiring process.
  • Employee training.
  • Delegation process.

Adding Product Videos Increases Sales Dramatically!

I have attached an excellent video by Drew Davis on the huge increase in sales that can result by producing videos for your products and services (www.tippingpointlabs.com/2011/04/25/steal-this-slidethe-value-of-product-videos ).

The research he includes in this video is amazing and includes:

• Videos increase web sales by 64-85%!  (0:31 mark)
• You are 53 times more likely to achieve front-page Google status with a product video.  The Google search algorithm just loves video.  (1:00 mark)
• Offline sales also increased by 6%. (1:31 mark)
• The use of product videos reduces the product return rate by 25-27%.  The video manages your customer’s expectation by clearly showing what the product or service does and what it doesn’t do.  (1:58 mark)
• Direct email campaigns showed a 96% increase in email click-through rates.  This can have a huge impact because if your prospect doesn’t read your pitch, they are highly unlikely to buy.  (2:13 mark)
• Video merchandising doubles sales when you add related products (upselling and cross-selling) that you can recommend in the product video that the prospect originally clicked through on. (2:24 mark)
• Finally, if you are selling items with a high price point (what he calls “luxury items”), a video increases sales by an amazing 20%.  (2:40 mark)

One point:  You should start measuring these items now so that you will have a benchmark to compare how much adding videos is increasing your sales.

These statistics make it clear that if you’re not using videos to showcase your products or services you better start now.  I know I will be adding them very soon!

Until next time, thank you for your continued support and let’s make this year our most profitable year ever!

4 Reasons You Should Outsource Payroll

I always recommend outsourcing payroll.  Yes, it will cost you about $50 to $150 per payroll (depending on how many employees you have), but this might be some of the smartest money you spend.  Yes, I know that you would rather spend the $2,000 to $3,000 on a nice vacation.  But trust me, the following benefits of outsourcing far outweigh the cost. 

1. Outsourcing makes your accounting simpler.  Processing payroll is one of the more complicated areas, even using QuickBooks.  Letting either ADP or Wells Fargo Payroll handle it (my clients have had good luck with both of these companies) makes this headache someone else’s problem.
2. Outsourcing eliminates the errors.  Like I said, payroll is complicated and there are so many rules constantly changing that can trip you up.  Making just one mistake can cost you thousands of dollars.  About half of the clients that I train to do payroll using QuickBooks end up outsourcing it once they receive that first penalty notice.
3. Outsourcing ensures that your payroll taxes are paid on time.  About 80 percent of the companies that I have to send to a bankruptcy attorney were behind on their payroll taxes.  The firm you outsource to will take out payroll taxes every pay period.  Now I have had business owners who say they can’t outsource because they don’t have the money.  My answer is that not paying your payroll taxes is a dangerous temporary cover-up of another problem that you need to fix now.  The longer it takes you to fix that problem, the more trouble you will find yourself in.
4. Outsourcing eliminates your bookkeeper’s annual raise.  Many business owners have had their bookkeepers approach them asking for a raise because some other idiot in the office is making more than they are.  When you outsource payroll, no one but you knows what others in the office are making.

Hiring Summer Help Can Cut Your Taxes

If you hire qualified employees age 16 or 17 for the summer, you may also benefit from a credit equal to 25 percent of the first $3,000 of wages (maximum credit of $750 per qualified worker).

 

Here are the requirements to qualify for the credit:

• Must perform work for the employer between May 1^st and September 15^th
• Must be between the ages of 16 and 17 on the hiring date (or by May 1^st of the year involved)
• Has not worked for the employer before
• Lives within a Federal Empowerment Zone or Enterprise Community

Using Systems to Improve Sales and Profits

A common complaint I hear from business owners is that they spend all day answering their employees’ questions or correcting their errors.  If a business owner is really dedicated to using their time to massively increase sales and profits, they must eliminate these interruptions.

The best way to accomplish this is by documenting the core business systems that you use to deliver your product or service to your customer.  Yes, this is a lot of work.  So why bother?

Let’s face it:  Your business has systems now.  In fact, without documented systems, every employee is using their own system of how to get the work done.  This means that a customer is likely to receive a different experience every time they come into your business.

So:  Do you want to design your systems and the resulting customer experience, or do you want to leave this up to your employees?

A second big reason to use systems is that it makes it easier to train and manage your employees. Training is easy.  Just hand a new employee the system manual and make sure they learn it.  A better way is to use your computer to record your instructions along with screen shots of your computer or a video camera with you showing how the job should be performed.  These can easily be uploaded to your private You Tube channel and shared with your staff.

Now, you are not managing the employee, but rather managing the system.  For us, putting a tax return together is a documented system that every employee who assembles a tax return uses.  All I have to do when I sign a return is review that the system was followed.  If I find an error, there is no argument, because I have communicated in advance what the process is and what the results should be.

Every System Can Be Improved

You must believe that every system can be improved in order to willingly do all of the work required to document your systems.  You must truly understand and believe that there are real benefits to doing so.  Even if all of your systems are several times more effective than those of your competitors, you can be assured that there are still improvements that can be made.

Where Do You Start

Start by reading the full article in ISB Mag! Innovative Small Business Magazine is available on iTunes newsstand. It has a lot of profitable ideas that you can use in any industry! 

Click below to download the free app!

https://itunes.apple.com/us/app/innovative-small-business/id548759791?mt=8

Myths Business Owners Believe (Part II)

Myths Business Owners Believe (Part II)         

Myth:  A widely held but false belief or idea.

 

Myth:  Success depends on hard work.  The truth:  Yes, you will work hard, harder than you may have ever worked before.  Trust me; 40-hour weeks are going to become things of the past.  But working hard isn't enough.  You have to work on the right things.  Start by setting goals and deciding how to reach them.

Myth:  I can be my own boss.  The truth:  You may be in charge, but you aren't the boss.  My name is on the door, but I have hundreds of bosses.  Every client is your boss.  Even your employees are your bosses sometimes.  You might get to decide who you work with, but whatever work you do accept must be delivered in a quality way.  That delivery of a quality product or service that the market is willing to pay for is your new boss!

And you can't do it alone if you want to grow.  Accordingly, hiring quality employees is essential.  It is your responsibility to find the right people, train them well, and give them the tools they require in order to produce the quality products or services the market expects.

Myth:  I can set my own salary.  The truth:  Most business owners were successful and making good money before they became owners.  In fact, it took me almost 12 years to get back to the same level of income I was making at my last job!  With a new business, most of the early profits must be re-invested in order for the business to grow.  Sure, many business owners make a very comfortable living, but only after they have met a need that the market pays them well for.  (Yes, I am repeating myself.  It's that important!)

Myth:  I will make a profit quickly.  The truth:  You will learn that in business, everything takes twice as long and costs three times as much as you expect.  Expect the unexpected and plan for it.  Always have two or three times the funds you think you will need to start the business, open a new store, or launch a new product.

Myth:  I can take more time away from work.  The truth:  A new business is like a newborn baby.  It needs constant attention.  The most successful business owners work many long hours and are always striving to improve their businesses.  To be successful you must achieve this single-minded focus on making your business a success.

(Continued in Myths Business Owners Believe – Part III)

 

Myths Business Owners Believe (Part 1)

 

Myths Business Owners Believe (Part 1)

 Myth:  A widely held but false belief or idea.

 Myths are harmless for most people.  They can believe them without any real negative effects.  But when a business owner believes a myth, it can cause business failure or stagnation.

 I’ll use myself as an example.  As a CPA who had assisted many business owners before starting my own business, I thought I knew exactly what was required to open and run a business.  I could not have been more wrong!

This brings us to the number one myth that new business owners fool themselves with when they first start out:

Myth:  I know what it takes to run a business because I have studied other business owners and have done my research.  The truth:  The responsibilities, pressures, and demands of running a business can only be understood by those who have actually started and owned a business.  Much like getting married, becoming a parent, or learning to drive a car; there is no single course, book, or experience that will prepare you for the experience of being a business owner.  Expect to be challenged and pushed to your limits almost daily.

Unfortunately, this is only one of the many myths stopping business owners from growing the businesses of their dreams.  Every day I speak to business owners who are struggling with the hard truths that must be learned to be successful.  Here are some of the most common and destructive myths:

Myth:  All I need to succeed is a good idea.  The truth:  Every business owner thinks they can offer their customers something better than their competition.  But there are few truly original ideas.  Even Apple's Steve Jobs didn't invent something new when he introduced the iPod, iPhone, or iPad.  He saw an opportunity to create a new product by improving or combining existing technologies in a way that the market would love.

Myth:  Offer a great product, and customers will beat a path to your door.  The truth:  Steve Jobs didn't use the "Field of Dreams" method to market his products.  Apple is a master of marketing and sales.  Every business owner must understand one thing--every business is a marketing business first!  Every business owner must become an expert at sales and marketing.

(Continued in Myths Business Owners Believe – Part II)

Creating your business dream and vision- the vital first step to your business success and happiness!

For thirty plus years I have worked with thousands of businesses. Only a handful of them these were businesses that made money and the business owners were happy. The vast majority of businesses were just scraping by. But, what is even more surprising is that the most of the financially successful business owners were unhappy with their business. The business consumed their life and money became the main goal and measurement of success.

Now, these “successful” business owners almost always had a strategic plan, mission statements and goals. That was how they got this big. But, they constantly were complaining about their customers’ demands. Oh, and don’t get them started on how impossible it was to get good employees! They will bore you to tears with stories of all the disappointing employees they have had hired and fired over the years.

Simply put – these “successful” business owners are very unhappy with the business they have created!

And, that is the key – every business owner created the business they now have. Both the things that are working and all those that aren’t, were happening because the business owner allowed them to happen. Until they accept that – nothing changes.

So what do the handful of business owners that are financially successful do to create an exciting place that they and their employees look forward to working in have in common? And don’t forget their customers are loyal because of the great service and atmosphere. They understood the importance of a creating a business that serves others – not themselves! The successful business owner understands that the only way to be successful is to create a company that serves someone else’s needs and desires more effectively than anyone else in the market is currently doing.

Very few business books are written on this. The best I have found is Awakening the Entrepreneur Within by Michael E. Gerber (the Author of the E-Myth Revisited).This book goes over these key points and how entrepreneurs can benefit from having powerful dream!

Everyone wants to make a difference in the world. We don’t just want to make money. Yes, we need money to pay the bills, but in an ideal world money would not dominant. At the end the day, what we and our employees really want is to make a difference. Actually, let me restate that – everyone wants a job where they can make a massive difference in the world!

From your dream you create your vision. Some call it a mission statement. Simply put, it’s what you see as your purpose for both you personally and the business. A company without a vision is a company that has no purpose – no soul! The vision must support your dream and quickly communicate your dream.

From this vision you must articulate your purpose. From this purpose you finally articulate the company’s mission.

As you can see it all starts with a dream. And, the more the dream is how you can serve your customers - the more successful the company will be! That is why this is the first step in the Human Resource area, strategic planning or even in creating your marketing plan. How can you succeed if you don’t know what your mission is? And, if the mission is not derived from a dream of how to serve others how will you continue to persist through the struggles that will invariably arise? How can you sell your customers if it is not something that is in their best interests? How can you motivate your employees if they are working only for a paycheck and not to serve your customer?

Marketing & Selling Tip of the Week – Trying to Figure Out Your Customer

Many business owners say they know their customers but don’t understand why their marketing isn’t working. The key in creating a marketing message is giving your customers what they want; not what you think they want.

Marketing messages sometimes get over shadowed by the owner’s agenda.

For example:

A business owner has ordered a product that has been on shelves for over six months and has had very little sales activities.  He decides he is going to advertise it and have his staff include this product in their sales pitch. The product still isn’t selling. So the owner tries a different ad and places it in a different location in the store, still no changes in sales. The owner is baffled to why the product is not selling.

The owner is not listening to their customer; they do not need that product! You can spend all your time and money on advertising a product; but, if your audience is not interested in the product, it will not sell.

So what should you do as a business owner? First you have to plan out your marketing campaigns and create a message that speaks to your customers not just at them.  Take their interests and needs into consideration.  Ask yourself questions like: What does the customer think we promised? What solution do we offer? Does the customer have this problem?

If you need help getting that right message out there, give us a call at 915-857-8158! We’ll be more than happy to help you out.

Lessons Business Owners Keep Learning the Hard Way!

For 35+ years I have worked with small business owners and watched them. This has allowed me to learn many things that worked and a whole bunch of things that don’t. This is my 20^th year running my own CPA firm and I have to confess I have repeated many of the mistakes I watched others make. Heck, since I tend to be creative, I even made a few new ones of my own.

This is the first in a new series sharing some of these lessons with you. I will start with the “myth” that most startup business owners believe and follow that with the “hidden truth” that successful business owners learn the hard way. Finally, I will finish with a business lesson to be learned.

So, let’s start ………………

Budgets – The secret to survival!

The myth most business owners believe: If you know your business, budgets are only needed by the bank when you are applying for a loan.

The truth successful business owners learn the hard way: Running a successful business requires attention to a huge amount of moving parts that seldom fall together correctly. Even the smallest business will run into cash flow problems because of the business cycle. Large growing companies are almost guaranteed to run into cashflow problems at one time or another.

In the past three years, I have met with many small construction companies who learned the “business cycle” the hard way when they won a contract at Ft. Bliss. Once they started the contract, they quickly learned that they had to pay upfront for materials and labor and that it often took 45-90 days to get paid. A quick budget would have helped them see this problem ahead of time.

What they didn’t understand is that budgets are critical to every business owner’s success! Operating without a budget is like starting off on a journey without any idea how to get to where you are going. Sounds like fun but often ends up as a disaster. A budget helps you plan to be a success rather than hoping for success.

When you budget (and I mean real-life budgeting – not Government pretend budgeting!) you actually sit down and figure out:

1. what you are going to do in order to get the sales you need to be a success,
2. what costs are absolutely necessary to deliver your product efficiently,
3. what staffing that is needed to attain this budgeted income,
4. what financing might you need during slow times.

Finally, a budget helps you stay on track. Successful business owner’s review every month what actually happened against their budget and then make the necessary adjustments needed to reach their goals. You would be amazed how many business owners only discover that they made a profit when I do the tax return after the year end. By then it is way too late to adjust for changing business circumstances.

Lesson learned: Budgeting is a waste of time only if you don’t plan on making money!

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?

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.

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!

Are You the Reason Your Business Isn’t Growing?

The short answer is yes. If your business is not growing the way you want it to, it is almost always the business owner’s fault. The business, after all, is your creation. You decided what it looked like and how it would be run.

Many times, the business owner does not know the reason the business is not growing. But frequently it is the business owner who is deliberately slowing down growth. Usually, this is due to the business owner not feeling comfortable that they have the people and resources to grow the business to the next level.

I have personally been in the same situation where I felt I had to do all the work myself. I didn’t feel I could trust my staff to do it right! They didn’t have my experience, judgment, and ability to get the work done correct the first time, every time. And since it wasn’t their business, they didn’t care about it the same way I did. This led me to believe that the only way things were going to get done right was if I was the one who was doing them!

If this sounds familiar, you are not alone! This is one of the main complaints I have heard from business owners over the years. Here’s the catch though – if you want to have a growing business that provides quality to your customers every time, you have to create business systems that allows your business to function without you micro-managing every little detail. 

Over the last thirty plus years, I have read numerous business books attacking this from many different directions. This business growth series is a brief outline of items I have “borrowed” from these books that have worked for me and many of my clients and colleagues I have worked with.

In order to grow your business, you must master the following areas:

1. Managing yourself
2. Organizing your business
3. Hiring the proper people for the job
4. Create a strong, vibrant workplace where people want to work.
5. Setting employee goals and performing well-planned, organized employee performance reviews on a weekly basis.

Are you stunting your growth? If so, what are you going to do about it?