Distribution

5 Strategies to Structure an Empowered Business – Part V

This is the 5th of a 5 Part series on getting and keeping your business organized

See also: Part I, Part II, Part III, Part IV

Financial

And now for the hard part. This is the diagnostic, truth revealing, red corpuscles of your business. From your financial reports, you can control the viability of your business, read historical events and predict future outcomes by carefully scrutinizing and summarizing your data. Whether it is meaningful or not, depends on how you enter data.

Let’s take a look at meaningful inputs. First of all, keep in mind GIGO. That is garbage in, garbage out. If you enter inaccurate information into your business system, the information you get out of it will be inaccurate and irrelevant. It could even mislead you into wayward strategies.

Now that you are providing good information, keep up with it. One of the biggest challenges of small businesses is keeping financials current. When you’re out there working long days and being a part of the process, it is difficult to find the energy in the evening to keep the books up to date. And maybe, you’re not quite where you need to be financially to hire someone to do it for you. Paying a bookkeeper is basically eating into your profits. It can wait. But, not really.

How does your cash flow?

How does your cash flow?

Each month (or quarter), depending on your business structure and cash flow, you need to know what your profits or losses are. The longer you wait, the deeper you risk sinking into deeper debt or the longer you could have been putting off hiring someone to do your books if the cash flow was healthy enough.

My recommendation is you contract with a local bookkeeper to do your books as soon as you can afford to pay one. Structure your agreement so you furnish them the information they need for receivables and payables. Do not yet give them electronic limited user access to your bank account for statement downloads. Download them yourself and email them. You will still have some paperwork to do to organize bills, invoices and statements, but at least it will keep you up to snuff with your business giving you a gut feel for what it should look like at the end of the month.

Make sure you monitor your cash flow weekly or even daily depending on the revenue size of your business. At the beginning or end of each day, take a look at your income and expenses, looking ahead so you will have a heads up about what needs to be adjusted. If your income is slacking, make sure you work with your bank to fill in with a line of credit to cover those slumps in revenues. Pay off the line as soon as you can.

One of the critical habits of small businesses is the cycle of marketing and advertising when business gets slow resulting on periods of inadequate revenues. The time to advertise (or network or market…) is before you slow down. How do you know when the slow times are coming? By reading your cash flow statement, looking at your funnel of opportunities, sales trends, etc. This can and must be forecasted. Decision making ahead of a downward curve allows for smart adjustments to expenses which leads to successful companies.

Expenses are either variable or fixed. Variable are those expenses that can be manipulated, adjusted and controlled. These are the ones you pay special attention to when you need to cut back, like business lunches, some advertising, etc. The fixed expenses are your lease or mortgage payments, equipment payments and any payments you have that the collateral is required to produce your products.

No matter what size or type of business you run, pay attention to the financial aspects of it frequently. How frequently, you will figure out as you go on. Don’t leave it to the last minute when you’re out of cash or when you’ve had an unexpected major expense and have to scramble for cash. Know the cash flow of your organization and be ready to react without losing a beat.

How do you control your cash flow?

Share your ideas

Thank you

5 Strategies to Structure an Empowered Business – Part IV

This is the 4th of a 5 Part series on getting and keeping your business organized

See also: Part I, Part II, Part III

Technology

Do you know of any business today that doesn’t use technology in one form or another? I hope you can say no. Unfortunately, I do.

As much as we like to complain about technology, it IS here and it IS here to stay and continually change. If you can accept this, you’ll have a much better attitude about it and be able to use it to your advantage.

The one company I know that avoids using it in a retail setting doesn’t understand what it does to their customers. Let me paint the picture for you. This is a service business where customers come to a clinic by appointment. There are multiple rooms for the clients to be seen in, so patients are scheduled minutes apart to see the practitioner. Appointments are scheduled in pencil in an appointment book. Insurances are not handled by this clinic but are the responsibility of the clients. All invoices are generated by hand with record keeping done in files (as in cabinets). They are able to dispense prescriptions, again all done manually. Yes, this clinic is less expensive and their service is outstanding, but your time better be worth little.

Inventory

Customer inconvenience

Can’t remember your appointment date and time? Try calling to verify. The administrator will have to go through micro-handwritten pages of appointments trying to find yours. Don’t expect a text message reminder. Phone call reminders are in place (when they’re not too busy).

Need to file for insurance coverage? The simplified invoice turns out to be too oversimplified; expect to have denials and have to answer questions and do resubmittals to get reimbursed.

Should you need a referral to a specialist, don’t expect email communication. No such thing here. X-Rays are mailed, yes, as in snail mail.

I could go on and on, but rather, let’s talk about other technology that works. 

I’m not that bad! Technophobia or e- frugal?

For wholesale product businesses, the savings come in ordering right, turning the products on the shelves as quickly as possible to minimize storage costs or through just-in-time ordering.

Ordering right translates into aggressive negotiations with vendors, buying to get quantity discounts and extending payments to after product sale. Managing the inventory is made most efficient with bar-coding or RFID (radio-frequency identification).  Manual tracking requires extensive man-hours and reduces accuracy. A live inventory gives you real-time access to the how much, where and what inventory turns you need for re-ordering.

Monitor your deliveries through tracking software, GPS if possible and keep track of your delivery costs, especially if you offer free delivery. Stay current on truck costs and which ones are the most cost-effective. Should you lease or buy? Tracking will tell you. Tracking vehicle expenses becomes very easy this way.

For retail products, technology tracks your inventory as well, secures the pricing and minimizes theft or discounting through the sale. It again allows for minimum quantity re-ordering, pricing controls and speed of service at check-out.

For service businesses, say a commercial cleaning company, the need for tracking employee time, performance and other metrics is key to competing on cost. While competing on quality is more important, the performance and efficiency of staff in the execution of their duties is where profits are calculated. Track all metrics to see where savings may be realized.

I can’t say this enough, technology automates and makes things efficient. Invest in it rather than people whenever possible. It’ll save you money in the long run. If you don’t know where to turn to start automating, consult with an experienced technology business consultant to assess your needs and make a plan.

What is your biggest technology fear?

Next time we’ll be looking at structuring your Financials.

5 Strategies on Structuring an Empowered Business – Part III

This is the 3rd of a 5 Part series on getting and keeping your business organized

See also: Part I;  Part II

Allied Partners

5 Lessons Capture

 

Every business has to depend on outside sources for products, services and support. The relationship you establish with them will help you serve your customers to the highest level of satisfaction. Vendors and suppliers should become business partners with your business to the point that when a problem arises, they are there to help and support you through it.

Recently, an order came through for my retail client ordering custom tables for his restaurant customer. The paint color on the furniture came in a shade different than intended. After further research, it was determined that the sample that had originally been presented by the vendor was furnished while the customer intended on a slightly lighter shade from a color swatch. When the order was placed, the customer did not notice that the color description on the purchase order was not what he chose.

Colors are typical issues when ordering of products. But the question always arises, who is responsible for the error? It could be said that either party was wrong. The end user, the customer, rarely wants to acknowledge the mistake. They remember what they said and it doesn’t matter what the purchase order had written on it. Customers also do not want to pay twice for a product they are buying (nor does the retailer or vendor).

Here is how this was resolved. The vendor offered to replace the tables at no extra cost OR give the retailer a credit that could be extended to the customer. The restaurateur chose to wait for the right color and was allowed to use the delivered tables until the new ones arrived. This is a vendor who cares about his customer’s customers. He avoided a hardship for his retailer and satisfied the customer. Allowing the customer to use the delivered tables while the new tables were being manufactured is an expensive task. He will never be able to resell those as new. But the correction is a long term investment in his retailer. The retailer gets to salvage his customer who can now tell a good story to his friends.

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With vendors and suppliers, always work to establish solid partnerships. Spell out the details of how business will be handled when things go right and when they go wrong. Don’t wait for something to happen to find out. Ask them how they have handled those things in the past. Make them a part of your business and expect the same from them. Don’t do business with suppliers you don’t trust. You have to be able to trust that they are looking out for you. They will want to trust that you will help them when they need it too. That’s a partnership. When you open the lines of communication, trust ensues.

As a customer, how do you want to be treated when an order doesn’t work out? After you’ve answered that question, ask yourself, “Are you treating your customers that way?”

Tell us what you look for as a customer.

Reply

5 Strategies on Structuring an Empowered Business – Part II

This is the 2nd of a 5 Part series on getting and keeping your business organized

Read Part I

People

Have you ever heard the statement, “If it wasn’t for the people, this business would be a breeze!”

It seems that running a business has challenges on its own, but add people to the mix and it can become down right frustrating. Whether the people are employees, customers, vendors or even friends who seem to know it all, having a staff adds a whole new dimension to management and leadership. They can be time-consuming and frustrating. So what is the answer? Here it is.5 Lessons Capture

One of the behaviors that seem to cause confusion and send people in a tailspin is “do what you say you will do”. If everyone did what they said they would do, life would be good. Unfortunately, many set unreasonable expectations that depend on everything going absolutely perfect. That doesn’t happen too often. They set expectations based on what their manager wants to hear. Then they come back with excuses of why it couldn’t happen assuming it was beyond their control and not their fault. When I ask you a question, give me the answer that includes the anticipated obstacles. Tell me you’ll get it done by 4:00 PM if you think it can get done by 3:00 PM. I’d rather be surprised with an early response than a late one.

Don’t give me excuses for why you didn’t get it done and don’t throw your employees under the bus. You’re in charge of them and you’re responsible. Take ownership of your reports and your department. Excuses are just that – reasons why you didn’t get it done. Plan carefully and if something comes up beyond your control, let me know there will be a delay and when you expect to get it done with the delay.

This is an important one. Be straightforward with the people you deal with. Don’t try to play head games to get what you want. If it’s an employee, tell him or her exactly what you expect of them. Don’t try to be their friend or get them to like you. Stick to business. You’ll be able to recognize the day you can let your guard down with them. You can do that in an assertive way without being mean about it.

If it’s a customer, find common things you can talk about. The most important thing you can do with a customer is earn their trust. That is all they want. They want to be able to trust you so they can say they are getting a fair deal. Be their business partner. Some customers keep their guard up in fear of getting taken advantage of. It may take time to get their guard down, but you have to communicate with them to disarm them.. When you do earn it, be mindful that the tide can turn easily. Be consistent in treating them fairly.

With vendors and suppliers, establish partnerships. They need to feel a part of your business and vice versa. Find suppliers that will support your business. Do they back their products and warranties.  When something goes sideways, they need to be there to help you. If you miss-order, do they take they honor an exchange? The same thing goes in reverse. They will want you to honor their needs when they ship the wrong products. That’s a partnership.

In both cases, customers and vendors/suppliers, the relationship will last as long as the trust will last. To get there, refer back to the first three items. People who are treated with respect and fairness appreciate the relationship. Showing gratitude for their honesty, service and trust goes a long way.
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I’ve always wondered about vendors/suppliers that offered trips, game tickets and other gifts in exchange for loyalty to their products or services. Why do they feel they need to do that? Is it because they are not the best pricing and need the extra oomph to keep your business? It’s the same with employees. If you need to throw money at them to get them to stay, then then they are not loyal to you. There’s nothing wrong with rewarding them with bonuses or tickets or trips, just make sure they understand your message of gratitude, appreciation AND trust.

A critical part of relationships in business is the relationship you have with your bank or the financing arm of your business. Often, these boil down to the particular bank representative you deal with. Is the relationship open? Are you able to call and get his or her support for non-financial as well as financial issues? The mark of a good banker is their ability to listen to your challenges, ask you questions about them and the conversation that follows. While bankers may seem guarded about how they lend you money, their interests are usually protected. They protect the bank, but they will also protect from over-extending yourself. If you have any doubts about whether they are being too guarded, consult with finance professional outside of that bank. Bankers must understand your business to be able to help you.

What is your biggest challenge in dealing with employees, vendors or customers and how do you handle it?

The Time is Now for your Business Upgrade

The reason you’re here is because you’ve thought about:

chalk_board_strategy_250X250

    • Improving your bottom line

    • Growing your business

    • Getting better organized

    • Improving staff performance

    • Increasing sales

Now do something about it!

Call now for a free initial consultation.

(207) 577-1948 OR Email: Paul

Business consultants pay for themselves in the improved revenues and profits generated from your business process improvements, increased sales and overall expense savings. Stop wasting precious time and call TODAY!