The Top 10 Ways to Increase Your Cash Flow

Lack of cash flow – the Number One killer of small businesses! Here are some great ways to increase cash flow in your business. Put one or two ideas into practice and watch your cash grow!

1. Remove the Roadblock

Perhaps your customer’s account is unpaid because their largest customer isn’t paying or they’ve just lost a big account. Offer your customer the opportunity to make installment payments. You can arrange automatic payments from their bank account. This ensures you receive the payment monthly as agreed on.

2. Help your customer and in turn, help yourself.

Suppose your customer’s normal supplier has equipment problems and won’t be able to meet the deadline for a very important job. Connect your customer with someone you know who could help them out and you’ll be helping your customer, your business contact and yourself! As their cash flow grows, they have more money to pay you!

3. Be persistent.

When you contact your customer ask when you can expect payment. Be persistent in calling your customer for payment while remaining pleasant. It will pay off.
Most of the collection issues I’ve dealt with have related to:
- Incorrect invoices
- Client not receiving invoice (I know what you’re thinking, but it does happen more often than you think)
- Client didn’t have payment date on their schedule
- Manipulating payment schedule (60, 90, 120 day delay) This one is what everyone thinks is going on, but does in only a fraction of collection cases.  A simple friendly non-demanding call can usually do wonders.

4. Strengthen your credit policy.

Add a condition that an account at 60 days past due, is authorized by the customer to be charged automatically to a credit card the customer provided when opening their account. This eliminates past due accounts and gets the money in your account.

5. Monitor your customer’s credit health.

Compare the customer’s Days Sales Outstanding (total amount owed divided by the average daily sales. Assuming the customer owes $15,000, with average daily sales of $420, the Days Sales Outstanding would be 35.7 days ($15,000 / $420 = 35.7 days). This means, with a credit policy of net 30 days, some portion of their account is past due. Having an indicator of an account’s status allows you to be proactive in collecting accounts on time.

6. Simplify billing.

Mortgage companies, insurance companies, private schools and health clubs have two things in common – a monthly bill to their customers and the option for the customer to pay the bill by automatic payment from their bank account. You can offer this service to your customers, too. It typically costs $2 to $4 per account to separately bill and collect on a monthly basis. The typical per transaction cost for automatic payments is only $0.30 to $0.50. Benefits are:
a) a cost reduction by at least half
b) a cash flow you can count on
c) time freed up from billing and collection for acquiring more customers, revenue, and profit.

7. Avoid waiting for checks to come in the mail.

Take the customer bank account information or credit card number over the phone instead of waiting for the promised check to come by mail. You can offer automated payments from your customer’s bank account to pay their account in full or to make installment payments. Once the payment is authorized, you control when you’re paid, rather than waiting for the check in the mail.

8. Identify debit cards to eliminate the credit card fee.

Credit card transactions have a fee of 1.5% to 2% of the ticket amount plus a per transaction fee of around $0.25. A sale of $70.00 would incur $1.65 in charges ($70 x 2% = $1.40 + $0.25 transaction fee = $1.65). In contrast, debit cards incur at most $0.50 per transaction. On this sale, you’d save $1.15, more than two times the total fees charged on those transactions identified at the point-of-sale as debit, not credit cards.

9. Get connected.

If you conduct business on the road, wireless technology makes having a credit card terminal with you a real possibility. You can process those swipe transactions at the point-of-sale, where the lowest rate applies (saving as much as 0.5%), keeping more cash in your account.

10. Eliminate bounced check headaches.

Wouldn’t it be a relief if you didn’t have to make calls to collect bounced checks? Most bounced checks are a result of a math or timing error on the customer’s part. You can avoid losing a good customer to embarrassment by collecting bounced checks electronically. With a check recovery service, it is collected electronically through the U.S. banking system. You get paid the face value of the check upon collection. The customer who wrote the bounced check is charged a reasonable fee, set by state laws. And, best of all, no collection phone calls to your customers. Spend your time re-investing your improved cash flow to increase your business.

“Designer Business, Designer Life”

I love this quote from Oprah Winfrey; “Every time you suppress some part of yourself or allow others to play you small, you are in essence ignoring the owner’s manual your creator gave you and destroying your design”.  So what does this have to do with my Business you ask?  Great question!  The reality is most Business challenges are personal challenges in disguise.  OK, let’s pretend your Business looks and feels something like the following version.

 You have this money machine you call your Business that makes significant money whether you show up or not. It is fun and exciting to own and your associates love coming to work everyday. You are the talk of the town, the one to watch and are respected and admired by your peers, even your competition. When your opinion is asked, everyone stops what they are doing and listens intently. You are the E.F. Hutton of your industry.  Your advertising speaks directly to your target market, identifying their needs and wants and also that you provide the solution. The response to your ads is always good and the revenues generated are quite significant. Your customers are your friends and love sending you referrals because they know how well you take care of everyone. You are now in such a unique and profitable position you donate a sizeable amount of money every month to several of your favourite charities.

 Does this sound like your Business or are you wondering what’s really in my water bottle?  With all the design and makeover shows on the tube today perhaps it’s time to implement a strategy for an extreme makeover of your Business. Perhaps the mindset you need for this to be effective would be similar to the one you need when you are going to ruthlessly clean out your closet.  You might start tossing or donating anything you haven’t worn in the last year and further pair that down to the last six months.  Maybe it’s the garage or basement you must tackle for this to resonate for you. Perhaps it’s a complete renovation of your home right down to the framework.  Isn’t it a great feeling when you get rid of the clutter in your life and have a new and stimulating project to tackle?  You feel like a burden has been lifted, you can think with more clarity and get on with the more important things in your life.

 So let’s apply this process to your Business and see if we can create the same revitalizing sensation.  A good place to start a review is with your vision.  Is the business you are in what you envisioned it would be when you started?  If not, you might want to either change your vision or reevaluate why you haven’t achieved that vision.  Along with the vision review what isyour target market. What have you learned about your target market now that you have been selling to them for awhile?  Is it time to narrow your market or expand it?  Sometimes an effective marketing strategy is to be an expert in a narrow field.  Master one domain and you will be able to do just about anything you choose.  When people observe your mastery in one area it is often perceived you do everything that way. As T. Harv Eckert likes to say, “How you do anything is how you do everything”.  I hope that inspires and motivates you and doesn’t terrify you. 

 Sometimes stepping back and reviewing each area of your Business from Marketing, Sales, Customer Service, Employee Hiring and Retention, Financial Management and Systemization can reveal where complacency has crept in.

Often times it is only minor adjustments in each area that can produce major improvements to your bottom line.

So, What’s the Price?

Many clients are losing ground simply because they may be charging too little for their product or service.  In this price conscious economy that might sound a little weird but it’s true.  Lots of businesses will go under this year because they will discount their widgets to the point where they no longer can keep their doors open.  Here are some things to consider before you get that big red pencil out.

Basing your prices on costs, not customers’ perceptions of value  Does a Rolex watch really cost between $3000 to $6000 to make?  It would have to since they retail for between $6000 and the moon.  Prices based on costs invariably lead to one of two scenarios: (1) if the price is higher than customers’ perceived value, the cost of sales goes up, sales cycles are prolonged and profits suffer; (2) if the price is lower, sales are brisk, but companies are leaving money on the table, and therefore not maximizing their profit.

Basing your prices on “the marketplace”  Well that’s what they are charging across the street.  The marketplace is often cited as the “wisdom of the crowds”—the collective judgment of a product’s value.  But by resorting to marketplace pricing, companies accept the commoditization of their product or service.  Instead, business owners must find ways to differentiate their products or services so as to create additional value for specific market segments.  Is your product or service a commodity?

Attempting to achieve the same profit margin across different product lines
Cost accountants sometimes get stuck on this one.  Some financial strategies support a drive for uniformity, and businesses try to achieve identical profit margins for disparate product lines.  The iron law of pricing is that different customers assign different values to identical products.  For any single product, profit is optimized when the price reflects the customer’s willingness to pay.

Failing to segment their customers  A cord of wood costs a helluva lot more in New York City than it does in Watertown New York.  Customer segments are differentiated by the customers’ different requirements for your product.  The value proposition for any product or service varies in different market segments, and price strategy must reflect that difference.  Your price strategy should include options that tailor your product, packaging, delivery options, marketing message and your pricing structure to particular customer segments, in order to capture the additional value created for these segments.

RETAINING MORE CLIENTS: 9 STEPS TO GOOD CLIENT RELATIONS

In tough economic times, it’s more important than ever to ensure good client renewal rates as new business can become harder to find and close. So I thought I’d share my top 9 tips on how to create and maintain good client relations, which in turn can help you renew more existing contracts.

1. Be on time! I can’t tell you how many people I’ve met with in the past that actually show up LATE for meetings — consistently!  Be on time. Be on time for calls, meetings, everything. Being late all of the time tells others that your time is more important than theirs — and you NEVER want to send that message to a client. Clients are typically understanding if there are unique, one-time situations (traffic, etc.), but call ahead if you know you’ll be late!  It’s OK for the client to be late, but not the vendor — EVER.

2 Be a “solutions provider”, not just another vendor. What is your client’s main goal? – likely to sell more products/services. So help your client by being a solutions provider — not just another vendor. If your client is looking for a web designer, do you have one you’d be comfortable recommending?  If you see an opportunity that might fit your client, do you pass it on to him/her?  The little solutions you help provide show your client you WANT them to succeed — not just with your efforts but overall.

3. Get contracts up front — don’t begin work without having one. Seems like you’d be doing a nice thing to start work without the contract finalized, right? Wrong!  Without a document stating everyone’s expectations and responsibilities, the waters can get murky quickly.  What expectations does the client have?  That you’ll do this service with the product for this price while you’re planning on just selling a product?  It’s important to get everyone on the same page from the beginning so that there are no questions about the direction you’re taking, right from the start.  It keeps everyone happy in the end.

4. The customer may not always be right, but tread lightly here. In our world, the customer can’t always be right.  There are times when a fact about how a product or service works outweighs a client’s desire for the truth to be different. (Example: AJAX is not indexable. You have to have a workaround. That’s just the way it is!) Be sure that while you speak to your client as the “expert”, you don’t make the client feel that his/her concern is unimportant. You are both working towards the same goal, so be sure to structure your conversation in that way and be a “solutions provider”.

5. Schedule recurring calls (weekly, monthly, etc.). The recurring client call allows the client to express his/her feelings about how your relationship with them is going and to interject information you may not know — such as an upcoming event, announcement, etc. that may also help you provide better service.  Be sure to touch base with clients regularly.  I find that a scheduled call monthly allows clients time to get their thoughts together and is accepted as a regular calendar item.  If you miss a month and the call has been productive for the clients/customers they may begin wondering why you didn’t call.

6. Visit in person when you can.  Nothing beats face to face interaction.  It allows you to gauge your client’s body language.  Does the client’s body language say one thing while they are saying something entirely different?

7. Send a small gift. One thing you should always be doing with clients is showing them how thankful you are for their business.  A small gift at the holidays, on a client’s birthday, etc. is a great way to show your appreciation.

8. Write Thank You notes. More than a gift, however, a HANDWRITTEN thank you note is even better.  It tells the client that you took the time to make it personal.  People really appreciate the time and thought, so take the time!

9. If you’re upset, sleep on it.  I’ve written many an angry e-mail that I’ve never sent.  There are always times that clients frustrate us, but instead of firing off an angry email, sleep on it.  I’ve found this works well not just for my personal life, but also my business.  You need to work with clients with a level-headed approach — let yourself cool off before responding.  Don’t lose a client if you don’t have to!

How to Screw Up a Sure Thing

Problem:   Jim, a software sales rep, had been having a rough day.   He’d been bombarded with questions from several customers and had gotten behind on a proposal that he needed to finish before the end of the day.   Then he got a call from Dave, a prospect who introduced himself by saying, “I’ve heard great things about your accounting software package.   I saw a demo about a year ago, and was not in a position to purchase it at the time, but since then it’s become very apparent that I need to integrate it immediately into my system.”

“Wow”, thought Tim.   “This will be easy.   It’s about time something went right today.”

Then Dave said, “I need to know about pricing and availability.   And tech support is important, too.   Tell me how that works.”

Tim went into his pitch.   He discussed tech support in detail, covered availability and other options, and explained that the price was $8000 with 30-day terms.

Dave’s response was unexpected.   He said that $8000 was quite a hefty price tag and he needed a couple of days to consider the purchase more carefully.   He’d call Jim back next week.

Jim did a double take.   “What just happened?” he thought.   “This sale was in the bag, a sure thing, and now he’s thinking it over?   He said he needed the software right away.”   And that was the end of the call.

Analysis:   Jim got lazy, plain and simple.   He thought Dave was sold.   All he had to do was give Dave the info he needed, then write it up.   He got conned into doing a presentation without getting Dave to demonstrate why he was so excited about buying the software.   The entire transaction was conducted at the intellectual level.

Solution:   Don’t be lured into taking shortcuts.   Don’t mistake the prospect’s enthusiasm for your product or service as a sure sale.   Take the time to qualify the prospect and make sure he’s real before you make your presentation.   In Jim’s case, a couple of quick questions would have made a world of difference.   He might have said, “Before we discuss pricing, help me understand why this software is so important.   I want to make sure the application is correct for you.   Mind if I ask you a couple of questions?”   Of course, you’re probing for pain and one of the most important things to find out is the financial impact of not implementing a solution.   Having discovered the financial impact and, assuming it was significant, you will find that the cost of the solution disappears as an objection.

Don’t take shortcuts!   Don’t assume anything.   Get the prospect involved at an emotional, not an intellectual, level.   Use your system to qualify completely and get the sale.

Character Traits of Successful People

I had a conversation with a client recently that made me stop and think
about my own performance and attitude. Our conversation centered on
why some people seem so much more successful than others do.

What we discussed was a few simple character traits that seemed to
contribute to their overall success:

Drive Hard: a sense of urgency. They seemed to have a very high
commitment to achieving their goals. It was more than just not accepting
NO for an answer. These people seem to have an internal vision or
knowledge. Something that drives them. It is not fear — it is the pursuit
of the idea and a healthy dose of faith. They have the faith to believe or
know that somehow things will work.

Work Hard: these people also seem to posses a compulsive drive. They
see the goal – a vision, sense of what can be achieved. They are so
focused and committed to the goal that it seems they will let nothing
stop, hinder or interfere. Truth is they are so committed to achieving the
goal they see nothing else.

Play Hard: having fun while doing business is good. After working hard,
they take time to look after themselves, enjoy life and have some fun. It is
a sign of good mental health and indicates balance.

Finish Well: anyone can start well or sprint. These people finish what they
start. They leave nothing left undone. They have endurance. They might
appear to be perfectionists – actually they just want to finish what they
started. And finish it well!

The difference between success and failure is often just a short distance
away – the finish line! When you run a race, why quit 10 feet from the
finish line? The truth is you need endurance to finish the race. All you
might need is a little encouragement to finish well.

Surround yourself with driven, focused and passionate people. Ask them
to mentor, coach and keep you accountable. Because, you are going to
work hard and put in the time – why not maximize the results?

Carpe Diem! Seize the day!

Death of a Salesman

Death of a Salesman is a 1949 play by Arthur Miller and is considered a classic of American theater. Viewed by many as a caustic attack on the American Dream of achieving wealth and success without regard for principle, Death of a Salesman made both Arthur Miller and the character Willy Loman household names. The play is a characterization of a tragedy of the downfall of a great man, whether through a flaw in his character or a mistake he has squandered, depending on your viewpoint.
It was greeted with enthusiastic reviews, received the Pulitzer Prize for Drama in 1949, the 1949 Tony Award for Best Play, as well as the New York Drama Critics’ Circle Award for Best Play. Death of a Salesman was the first play to win these three major awards, helping to establish Miller as an internationally known playwright.
Do you remember how the story begins?  Willy Loman returns to his home in Brooklyn one night, exhausted from a failed sales trip. His wife, Linda, tries to persuade him to ask his boss, Howard Wagner, to let him work in New York so that he won’t have to travel. Willy says that he will talk to Howard the next day. Willy complains that Biff, his older son who has come back home to visit, has yet to make something of himself. Linda scolds Willy for being so critical. As the story unfolds it is one failure and one disappointment after another.  It’s a downward spiral for poor Willy and if you recall it doesn’t have the happiest of endings.

Are there days in your Business when you wonder if you will ever make another sale?  Do you sometimes feel that the selling process is a mystery with no rhyme or reason to the process?  Are you and your sales team well liked and good at building relationships with your prospects?  As we have come to learn, the sales process doesn’t have to be hard and the results can be predicted when you have a system.  Imagine, if Willy Loman had a coach, someone that held him accountable for his actions, there could have been a much happier ending.

With that thought in mind I’d like to give you our “Top Ten” checklist where you can determine and rate the overall health of your sales effectiveness and performance.  Rate each of the following questions on a scale of 1-10.  10′s are good and 1′s, not so much!

1. We use scripts in all of our initial contacts with customers (phone, face to face, walk in, internet, etc.)  Score____
2. We measure all of the variables of our sales process, including such things as the average number of appointments before the sale, the conversion rate (prospect to client), sales cycle etc.  Score____
3. We have a proven, defined and written sales system.  Score ____
4. We provide our sales team with effective tools to help them to convert prospects more effectively (demonstrations, samples, etc.)  Score____
5. Our sales staff has regular, formal training on both product knowledge and sales skills.  Score____
6. We use the most current technology to track the sales team’s activity, such as appointments, prospect lists, etc.  Score___
7. We motivate our sales team effectively using time tested motivational techniques.  Score____
8. We follow up with prospects that didn’t buy from us to find out why.  Score____
9. We have regular sales meetings.  Score____
10. Our sales team has a terrific relationship with all of the other departments.  Score____

So how did you do?  If you scored 80-100 points, you could be seriously considered as the new lead in the play called “The Life of a Salesman”. 60-79 points, you are in the running for the part.  40-59 points, you need to spend a little more time on your scripts and refining your style.  Less than 40 points, it’s time to turn off the TV, take some classes in the evening and get up early to start writing the scripts for the parts of your sales system. More importantly, it might be time to hire a coach to help you through the inevitable ups & downs you will experience!  The decision is yours, is it time to create or refine your sales process and live the life of abundance you deserve?  Will you continue to explain and blame others for your poor results?  It’s time to tell the world you mean Business!  Start a plan today to Put some “life into your salesman” and give yourself the chance to score 100 points.  Maybe, just maybe someone will even write a story or a play about you. A Pulitzer Prize? Who knows!  Imagine that!

The Lost Art of the Personal Touch

When was the last time someone sent you a card to say, “thanks”, I really appreciate you or I want to thank you for a job well done.  Maybe someone was thinking of you and just wanted to say they miss you and sent you a note to tell you that.  Perhaps a family member that lives across the country wanted to say they were thinking of you and look forward to their next visit. There are countless examples of cards or letters you could receive for a variety of reasons aren’t there?  Conversely there are numerous reasons you could send a card or letter to brighten someone else’s day.  So how come you don’t anymore?  I think we are generally a well intentioned society, it simply seems that we are overloaded and overwhelmed with so much to do that this little gesture has been pushed aside.

 Oh, there are those cute e-mail cards you can send that open and do some very cool things.  Especially at Christmas, there is a variety of talking animal’s, playful children, snowmen, angels and well, you know the ones.  Somehow it isn’t quite the same as when someone takes the time to send a very personal note to you, specific to your relationship to let you know they care.  Those e-mails are usually deleted soon after, whereas a card has a way of ending up on your bulletin board and kept for a longer period of time.  It seems a little more authentic and personal doesn’t it?

 The interesting thing about all the technology we have today is that the human element has almost been removed from the way we interact and do Business with people.  A few years ago when the internet started to become popular, there were many companies that announced this was the way they were going to do Business, totally automated, totally electronic and very efficient.  What many have learned is that loyalty and relationships aren’t built in an environment devoid of human interaction. 

The pendulum has swung back again to actions that are referred to as, online and offline marketing strategies.  Let’s face it, people want to do Business with people that they know, like and trust.  The more you can create an environment of caring and appreciation of your clients, the more stable and secure your Business will become. Don’t get me wrong, I’m all for using every bit of technology we now have at our fingertips to grow our Business as I’m sure you are.  After all, today we can reach a larger and better targeted audience who is actually looking specifically for our products or services online.  There is a much different dynamic in the sales process when a client comes to you ready to buy because they like what they have seen and read about you and your Business on the internet. The difference lies in whose decision it is to buy.  When you try to sell something to someone, it’s your decision being forced on them.  When someone wants to buy something, it’s their decision!

 The savvy companies that are marketing online today are finding a way to obtain your mailing address in addition to your e-mail as a way to keep in touch and let you know how much they value your Business.  On the flip side of the online coin there are also companies that have not embraced any form of internet or database management strategies.  I recently had an experience with a local Business that didn’t keep track of their customer list or what they purchased and wasn’t planning to implement anything in the near future either, hmmm! 

 The whole point of my discussion today, which I hope comes through, is that whatever you do online or offline, it needs to be related to building a relationship with your client of trust, appreciation and caring.  Hey, maybe give them a call or send them a card or something out of the ordinary.  Surprise them with a personal touch and that alone will have them think of you over everyone else you might perceive as your competition.  One simple rule you must understand about all good sales and marketing is that it begins with putting other people first.  Dale Carnegie said, “When dealing with people, remember, you are not dealing with creatures of logic, but creatures of emotion”.  Reach out and touch someone and find a balance between online and offline strategies and I believe the lifetime value of your clients will increase dramatically.

Entrepreneurs: How do You Empower Your Employees?

 

“The vision is really about empowering workers, giving them all the information about what’s going on so they can do a lot more than they’ve done in the past.”

                                                          Bill Gates, Co-Founder of Microsoft

 A Business owner is often lamenting about how much time they spend working in their business and wondering how they can find more time for their family and friends or just to take a vacation away from the day-to-day worries.  Have you ever thought about empowering your employees so you don’t have to be the “answer man” in your organization?

 What’s empowering?  Webster’s New World Dictionary defines empower as “1. to give power or authority to; authorize 2. to give ability to; enable; permit.”  So why is empowering your employees important?  Timothy Ferriss, author of “The 4 – Hour Workweek” said it best in his book; “If you are a micromanaging entrepreneur, realize that even if you can do something better than the rest of the world, it doesn’t mean that’s what you should be doing if it’s part of the minutiae.”  Business owners who are interested in growing their business can become stagnated and growth plateaus, not to mention the 50 to 70 hours each week they are working to keep the business viable when they are the focal for solving any issues that may arise during a business day.  By enabling, permitting or authorizing employees to solve problems that are normally solved by the business owner you free yourself to work on the business and not in it.

 How do you empower your employees to act in your best interests?  Here are several ways to ensure employees understand your philosophy of how to run your business, maintain the spirit of the company mission and ensure financial viability.

             ■ Share your vision and mission with your employees

            ■ Maintain an employee handbook (aka Policies and Procedures Manual)

            ■ Improve your communication skills

            ■ Learn motivational factors

            ■ Acknowledge people’s intelligence

            ■ Catch people doing things right

            ■ Be honest with everyone

            ■ Establish conflict resolution procedures

            ■ Educate on responsibilities and accountability

 Creating a vision and mission enables your employees to understand your aspirations for future business and expectations for serving the marketplace today.  Maintaining an employees’ handbook provides clear guidance for what is expected of them in support of the vision and mission while conducting day-to-day business and dealing with various circumstances.

 Communication is probably the single biggest problem business owners have in empowering their employees and acquiring more time for themselves.  Quality communication is critical in any organization, but it is crucial to an entrepreneur’s business success.  If you can’t tell the story to your employees, vendors and customers of why your business should be successful, you will fail to take them on the journey toward that success you envisioned when you started your business.  Learn to communicate well, in various medium, to gain the confidence of your employees and to convince them of their contribution to the success of the business.

 Learn what motivates your employees to achieve the vision and goals you’ve established for your organization and then use it to inspire your workers to great things.  It’s amazing how someone’s IQ seems to double as soon as you give them responsibility and indicate you trust them.  If you believe they can achieve great things and communicate it to them, you will develop incredibly motivated employees.  Part of motivation is to catch people doing things right and acknowledging it.  Acknowledging success breeds more success.

 Another critical element of empowering people is being honest with them.  If you don’t feel you can tell them the naked truth you will lose their respect and devotion.  Some business owners believe by not being honest about bad business news they are sparing their employees from anxiety and stress when all they develop is mistrust and fear of the unknown.  Always be honest in your business dealings and truthful with everyone and your employees will stand by you like no other group can.

 When you enable or authorize employees to conduct business on your behalf it is often prudent to establish conflict resolution procedures so employees can have consistent guidance in resolving customer, vendor and employee disagreements.  Never assume that what you know is right for correcting disagreements is what everyone within your organization knows is right.  Take the attitude that if it isn’t written down, it doesn’t exist as a policy.  It will save you a great deal of discomfort when trying to resolve customer service issues.

 Finally educating on responsibilities and accountability will help an employee to know the boundaries within which they are allowed to work for the benefit of your business.  Timothy Ferris demonstrated empowerment when he wrote to his outside vendor customer service representatives in an e-mail after he realized he was becoming overwhelmed with requests for decisions on how to satisfy customer concerns or requirements as his business grew.

 “Hi All,

I would like to establish a new policy for my account that overrides all others.

Keep the customer happy. If it is a problem that takes less than $100 to fix, use your judgment and fix it yourself.

 This is official written permission and a request to fix all problems that cost under $100 without contacting me.  I am no longer your customer; my customers are your customers.  Don’t ask me for permission. Do what you think is right, and we’ll make adjustments as we go along.

 Thank You

Tim”

 After the e-mail was sent, his e-mails requesting decisions went from 200 each day to 20 each week and customer returns reduced to 3% when the industry average is between 10 – 15%.

 If that is not the epitome of empowering the people that work for you, I don’t know what is.

BUSINESS LIFECYCLE STAGES

Just like phases of life, all businesses, and in particular small businesses go through various stages of growth and decline.  By recognizing and understanding the stages of their business, the small business owner is better equipped to employ strategies that will maximize the capital required for the business; the human resources needed to achieve the business goals; and most importantly, the equity growth for the owner and shareholders.

 There are five fundamental stages to every business:

 STAGE 1-START UP

 Key Issues:

Need for working capital

Tight financial controls

Ill-defined administrative systems

“Crisis management” mode

Choosing the correct type of entity (Corporation, S Corporation, LLC, etc.)

Tax issues related to becoming self-employed

Strategies:

Personal Protection Plans

Liability Coverage

Operational Plan

Contingency Planning

 STAGE 2-GROWTH

 Key Issues:

Focus on sales

Lack of financial planning

Inadequate organizational systems

Delegation of important functions

Proper tax planning

Strategies:

Employee Benefits

Group Retirement Plans

Formal Business Plan

Create Marketing Engine

Branding

Key Performance Indicator

STAGE 3-DELEGATION

 Key Issues:

Increasing profitability

Capital investment

Emergence of key employees

Formalized administrative functions

Strategies:

Employee retention-Elevated Employee Benefits

Estate Planning

Tax Management Plans

Enterprise Requirements Planning

5-Year Strategic Plan

 STAGE 4-EVOLUTION

 Key Issues:

Increasing bureaucracy

Standardized compensation

Changing culture

Focus on profitability

Strategies:

Wealth Protection Plans

Wealth Distribution Plans

C.I.P.  Continuous Improvement Planning

Team Building

Proper attention to Tax Planning

STAGE 5-TRANSITION

Key Issues:

New resources of growth

New direction

Stagnation

Exit plans

Should you actually wait until the end of the lifecycle to think about Transition and Succession Planning?  Should it be considered back in the Delegation stage?

Strategies:

Wealth Protection Plans

Wealth Distribution Plans

Income Management Plans

Succession Planning, including the tax efficiency of the plan

 Many times successful business owners remain in stage 4 or stage 5 because they become comfortable in their industry or their niche.  Stage 4 and 5 can also be called the declining stages.  If a business is not growing, it’s declining and mature companies can plateau in stage 4 and 5 and begin the spiraling decline into non-existence because of comfort and complacency.

 If a business is not cycling between stage 2 and 3 throughout its life, it’s time to reevaluate their vision, mission, goals and strategies to maintain relevancy in an ever changing marketplace.