Are You Resistant?

These days, we build earthquake-resistant skyscrapers.  These buildings are intentionally designed from the foundation up to withstand the rocking, rolling and upheaval an earthquake can cause.  In fact, it’s code, a law of sorts.  If an earthquake hits, the building can withstand a significant shakeup. In your business the “earthquakes” are things like:

• Downturns in the economy
• Slow or no-pay customers
• Employee  Turnover
• Competition
• Poor cash flow
• Etc. (It’s a very long list)

Where is your business vulnerable? What could bring your walls crumbling down?

Surviving the Earthquake 

Like an earthquake, some things are simply out of your control. You’d be surprised though, to discover how much control you really do have. With a little effort, you can make your growing business earthquake resistant. Yes, I did say it would take some effort.  It probably seems a little daunting (and dull)  but it doesn’t have to be. In this series, we will:

• Take it one step at a time
• Apply the K.I.S.S principle (Keep It Surprisingly Simple)
• Make it as painless as possible
• Help you lay the foundation for a business you love that’s built to last

For today, I’ll leave you with this, one of my favorite quotes.

~The higher your structure is to be, the deeper must be its foundation.~

St. Augustine, 354 AD

Repeat business

Let’s take several examples.  A client who eats a $15 lunch at your restaurant every Monday is worth $780 for one year and $2,340 for three years.  It really adds up, doesn’t it?

A personal services business, such as a chiropractor, massage therapist, manicurist, or hair stylist has a similar business model where hopefully they can attract repeat clients.  A client who gets a $20 manicure once every two weeks is worth $520 per year and $2,600 in five years, and that does not include the tips.  Grocery stores, hardware stores, clothing stores, and office supply stores are just a few industries with similar models.

Large purchase with add-ons

Some businesses rely on a larger but less frequent purchase than some of the industries listed above.  This may include furniture stores, airlines, and computer sales.  Many of these larger purchases can be increased by adding service contracts, delivery charges, financing charges, and by selling more items.

Some businesses will benefit from becoming aware of the lifetime value of their vendors, partners, and employees.  For example, contractors are often reliant on their subcontractors to deliver great services so they can complete the construction projects.  Landscaping firms make great partners with nurseries and bring them much business.  And employees who sell and close large contracts can have a lifetime value to your business of millions in some cases.

Referrals

One way all businesses can increase the lifetime value of a customer is by counting the amount of referrals the customer sends you.  Let’s say Marni spent $500 with you. She was so impressed with you that she sent three clients your way.  They each bought $1,000.  Marni is now worth seven times what she originally purchased from you:  $3,500.  When each of these new clients refer more people and buy more in subsequent years, Marni’s value to your business gets bigger.

This might just have you treating your clients like Marni with a lot more respect!

Multiple service lines

The more products and services you offer, the greater your opportunities for increasing the lifetime value of your customers.   Let’s say Katie buys a $500 product from you in January.  In May, she comes back and wants the $2000 service you talked about in a newsletter you sent her.  She’s so happy she refers two clients to you that buy $1,000 apiece.  What can start out as a $500 client has now morphed into a $4,500 client and can easily mushroom into a five-figure client by the end of the year.  I’m sure it’s happened to you over and over again.

Take some time next week to create a spreadsheet that shows you the lifetime value of your clients.    I’ll think you’ll be pleasantly surprised to see how valuable your current clients really are.  If you need help with the calculations, head on over to our Hey Renee page with your question and we’d be happy to help.

As a business owner, you’ve probably acquired many skills and are wearing many hats in your business.  While that’s admirable, your versatility and capability can often lead to slower growth for your company.  This happens when you become the bottleneck.   Here are five areas to check to help you answer the question – Are you the bottleneck in your business?

Do You Manage Everything? 

It’s definitely good to keep tabs on everything that’s going on in your company, but once your company grows, you may find yourself inundated with information.  Instead, try managing by exception.

You don’t really need to know everything that’s going on in your company; you really only need to know when things do not go smoothly, or when there are exceptions.  Design a set of management reports that allow you to see these exceptions easily without having to wade through a bunch of information.  This will save you time and help you focus where your expertise and skills are needed most.

Are You the Production Bottleneck?

Probably the most common small business mistake is working in your business instead of on your business.  If you’re still generating billable work or working too much in production, it should be work that no one on your staff can do and work that requires a very high skill set.  Otherwise, it should be delegated to staff.  And if you don’t have staff, then they need to be hired.  The Goal, by Eliyahu Goldratt is  great resource for identifying and eliminating production bottlenecks.

Not Doing Enough Marketing?

As a business owner, you are the key person that will be bringing in business, forging partnerships, and creating new opportunities for revenue.  If you spend your limited time doing other things, marketing often goes undone.  Not marketing enough can dry up the pipeline, cause cash flow problems, and get a company in trouble really fast.

Being the Only One Who Knows How To Do Something

When employees have to wait on you to show them how to do something, you can easily become the bottleneck in the process.  As you train each employee, do it only once by writing procedures for the task as you train.  That way, you never have to train anyone on that task again.  The newly trained employee can show others, and you can be out of the loop, freed up for more important things.

Do You Have to Review and Approve Everything Your Employees Do?

A great employee is one who is empowered to make as many decisions as possible without further layers of supervisions getting involved.  Often, a decision can be “cookbooked” so that the decisions can be pushed down the lower layers of management.  Take a look to see if any of the decisions that you are making can be documented and pushed down so that you don’t have to get involved.  That way, your employees will have the right balance of authority in order to do their jobs.

Results

When you can clear up the bottlenecks in your business, your firm will be able to grow even faster.  How did you measure up on these five high-bottleneck areas?

Share your questions and comments with us!  We’d love to hear from you!

Photo by Stillframe via Flikr

Just about everyone suffers from a lack of time to do all the things they want, or even need, to do in their business.  One of the solutions to freeing up your time is to delegate.  The question is, what are the most effective tasks to delegate?  Here are nine  ideas for you to consider (or reconsider) to free up your valuable time for more important things.  In other words, Don’t Do This Yourself!

1. Social media 

We didn’t even have social media ten years ago, but now that we do, it can be a major investment in time.  Some companies ignore it completely, not wanting to open that can of worms, but done well, social media can have a great payback.

Rather than ignore it or take up your important time, delegate it to an intern or recent college grad who probably knows more about it anyway!  (Be sure you’re delegating…not abdicating

2. Your email

How much of your email could be handled by one of your employees?  Set up separate emails by function and not by people so that your employees can take over more of this ever-growing task.  Anything that you respond to the same way over and over again can be drafted in a procedure.   Employees or a virtual administrative assistant can be trained on what to send to whom.

 3. Training employees

Once you get one employee trained, that employee may be able to train additional hires, freeing you up from having to do so.  Well-written procedures will go a long way to reduce training time, and even writing procedures can be delegated to the right person.

 4. Vendor research and purchases

Need to find a hotel to host an event?  Or a webinar company?  Or a project management system?  All of these items require research to find good vendors, and as business owners, we may tend to do this ourselves when we can write up a few guidelines and give the task to a capable employee who would enjoy researching the topic and writing up some options for you to review.

 5.  Hiring

Hiring can be one of the most time-consuming tasks of all.  I’m definitely not suggesting delegating the final decision on hiring, just the search process.  I’ve heard of business owners who delayed hiring because they froze at the sight of a 6-inch tall stack of resumes they had to go through.

It might pay to hire an agency to do the screening for you so that you are presented with only the finalists.  

6. Bookkeeping

Bookkeeping is also one of those time-consuming tasks, with two added challenges:  everywhere you turn, there are deadlines and regulations, plus it requires special skills that need updating frequently.  All of this screams to be delegated when possible.

7.  Sales

When you first start your business, you are generally the only one selling.  To get it off the ground, you eventually need a team of people to help you sell your goods and services.  As your sales team gets better and better, you can delegate larger and larger sales opportunities to them.  Who knows, if you’re not natural at sales, you may have employees who are better at this than you.

8. Writing

Writing can be extremely time-consuming for some people.  Great writing requires a long learning curve, so if writing is not a core skill for you, you may want to look around for someone you can delegate or outsource this task too.  This includes things like writing procedures, web sites, job descriptions, marketing copy, proposals, and even something as small as thank you notes.

 9. Calendar scheduling

All that back and forth phone tag, email tag, postponements, cancellations, and other scheduling challenges can be delegated to free you up for making even more appointments.

Your time is incredibly valuable, and the only way to make it more valuable is to accomplish increasingly valuable tasks that only you can do while delegating the tasks that other people can do.  As a general rule, anything that is not in your core skill set or core business is fair game for delegation.  If someone else can do it faster, then it’s fair game for delegation.

Think about what you’re spending a lot of time on (and possibly spinning your wheels at the same time).  This is a task that can possibly be delegated, so oyu can free up your time for more important things.

It’s interesting that when it comes to being paid for their services, those same people expect to receive full price.  Then, they wonder why they’re struggling to get money flowing into their business.  The answer is really very simple…Like Attracts Like.

Do you have an attraction mindset?  If you don’t want to pay others for their services, don’t expect others to pay for yours.  If you expect discounts, expect to be discounted.  If you want your clients to nickel and dime you at every turn, by all means, nickel and dime others with reckless abandon!

Conversely, if you want your services to be valued and appreciated, it’s important to appreciate and value the services of those you do business with.   If you want wonderful clients who are willing to invest in themselves, then be a wonderful client and invest in you. Be the client you want to have.

Interested in building your business, taking it to a new level but feeling stuck?  Could you be getting in your own way? Spend some time considering where your mindset and actions may out of alignment with where you want to be.  Here are some questions to get you started.

• What qualities and attributes do you want you ideal clients to have?
• What would your ideal client expect from you?
• What kind of customer experience will they be looking for?
• Are you willing to do what it takes to provide that experience? Consider what it would look like when your biz is wildly successful. (This is the “Be careful what you wish for” question.  For example, if you hate mowing lawns, consider the wisdom of buying a house with an acre of grass. You may find a luxury condo more satisfying.)

Do you have questions? Would you like more information?  Be sure to stop by our Hey Renee page and let us know what’s on your mind.

Ask yourself what project you’ve been thinking about forever but haven’t taken action on.  We all have a wish list.  The question is, why are we waiting?

What causes us to put these important, yet inconvenient or uncomfortable items on the back burner?  In many cases, there’s a really simple answer.  Here are three questions you can ask yourself if you would like to get unstuck and move forward with your list of items.

•  What’s it costing me to delay this decision?  In six months, will I be better off or worse off having done nothing?  This helps you bring a sense of urgency to an item.

•  Do I simply need to give myself permission?  It’s surprising how this simple revelation can create the shift you need to gain momentum.  Going deeper, this can be a deservability issue, i.e., do I deserve to charge a higher fee?  If that’s the case, working on your confidence is something that will help you get unstuck.

• Am I getting stuck because I don’t feel like I have the skills, or is it possibly a mindset issue?  Making the distinction between the need to build skills and the need to work on your mindset can help you determine the next logical step to take.  Often, however, it can be both, and in that case, start by parsing out the skills you feel like you need.  When you do that, often the mindset will take care of itself.

By habit, we wait for other people’s approvals since we’ve done this all our lives.  We’re used to getting the approvals of teachers, parents, professors, bosses, spouses, and relatives, but when we’re in business for ourselves, we don’t need to ask anyone!

Is there something you’ve been delaying that you need to give yourself permission for?

• Giving your business or yourself a long-wanted gift?
• Starting a long-awaited project?
• Hiring someone or making a staffing change?
• Launching a new product?
• Raising prices?
• Making a purchase?
• Working less?
• Taking your business to the next level?

If there is, ask yourself what you’re waiting for.  The power of permission might just set you free.

Take out a blank sheet of paper, and draw a small circle in the middle.  Write your name in the circle.  This represents you.

Draw a little larger circle next to your circle.  Write your employees’ names and major functions in this circle.  Draw a similar circle for contractors’ names and functions.   If you have partners and/or affiliates, include them in a big circle.

Draw a small circle for your five largest clients, and write their names in the circles.  Draw another small circle for your five largest vendors, and write their names in the circles.

Draw one more circle for your business mentors and coaches, and write their names inside the circle.  If you have any more major groups related to your business, draw them now.

These circles represent your business and all of the people you rely on to get your job done.

Now, think about what groups you belong to that relate indirectly to your business.  It could be a professional association, a licensing agency, or a networking group.   Make large circles for each of the groups you feel connected to, and write some of the key names you know that are part of each of the groups.

Add a few more circles in the same way if you have more business associates to list or other groups that you didn’t add above.  If you want to, you can also include your personal support team:  the nanny, cook, gardener, esthetician, wardrobe consultant, makeup artist, nail artist, hair stylist, nutritionist, personal workout trainer, butler, chauffeur, masseuse, travel agent, and water boy.  Okay, maybe listing the water boy is getting a little carried away.

The sheet should now represent all of the important people in your business that support you in one way or another.  It’s a lot, isn’t it?

Now is where the aha’s come in:

• Take a look at your to do list and see if there are holes in your team that you need to fill.  Are there job openings or are you ready to bring in more support?  Mark the openings or potential openings with a yellow highlighter.

• With a green highlighter, mark the people who are most positive and supportive to you.  You may want to let them know how much you appreciate them if it’s been a while.

• With a red highlighter, mark anyone who is costing you more than supporting you.  It may be time for a change in team members.

• With a purple highlighter, list the five people you most look up to and can count on for great advice.  These people should either have expert advice or be ahead of you in business.

We’ll stop here, but you can continue selecting colors to evaluate the relationship of the people in your circles.

When you take a look at your social circles, what do you notice?

• Where are you fully supported?
• Where could you use more help?
• Where do you need to make some replacements?
• What else do you notice about your business network?

Make a list of action items you can do to strengthen your business support network.

This is a great exercise to allow you to consciously evaluate and improve the ever-important support system in your business.  When you have a great team, you can accomplish so much!

You’re not alone.  However, you may be working on all the wrong things.  One of the top time management secrets that smart  business owners implement is to prioritize their tasks in a very special way:  by the highest payback, and not the biggest sense of urgency.

The hard truth is we may not be able to get to every single thing we want to do, especially those of us who are creative business owners who have an idea every minute!  You may have a lot of them captured on your to do list, and some may still be swimming around in your head.

One of the ways that you can choose your opportunities and slim down that ever-growing to do list is to understand the concept of return on investment.   For each task, how much money could it bring you if you did it?  Some of the items that are not urgent but incredibly profitable are often the items we’re too exhausted to do once we complete all the required client and compliance work we need to do.

The successful business owner will make time for those profitable but not urgent activities.  In fact, they will do them first thing in the morning before checking their email or returning calls.

Here’s an exercise to try on your own to-do list.  Assign a dollar value to each task on your list in terms of revenue potential or cost savings.  If you got to that task, how much could it save you or make you?

Then the fun starts.  Sort your to-do list by this new dollar value column you just added.  Sort the highest payback tasks to the top and the lowest payback tasks on bottom.

What’s jumping out at you on the top of your list that you’re not getting to?  Can you find a time on your calendar to do it this week?

When we step back, become more proactive about insisting that we get a return on our time for what we’re doing, we can make a really huge difference in our bottom line.  It’s as simple as assigning some values to the tasks on our to-do list, and then re-sorting them by that value.

However you identify them, the goal is to bring to your attention the highest potential revenue opportunities so you can act on them.   Even if you only get to one more per week than you are currently doing, you’ll make progress (and more money too!).

It may take some discipline to resist tackling the urgent tasks.  When we accomplish our urgent tasks, we feel needed.  We love rushing to the rescue of clients that need us. When we attempt our high-dollar tasks, it may be a little uncomfortable, even scary.  So that’s why we avoid them.

Prioritizing is something we all have to do, since we live in a world that competes for our limited time.  Prioritizing by highest dollar return on investment is something the most successful business owners do, even if it feels a little uncomfortable in the process.

When we do the serious work of choosing what is really going to move our business forward, we will see the changes in our revenue.  If we can help you with any of your high-payback tasks, let us know.

QuickBooks, of course, can’t do your taxes for you. But it helps you lay some of the groundwork. Following up on last month’s column on customizing reports, we’ll look at the program’s tax-related reports and its powerful report-filtering options.

But first, you’ll need to make sure that this output will be accurate.

Describe your company accurately

Your tax entity setting should have been established when you first set up QuickBooks, but verify that you’ve specified the correct one. Go to Company | Company Information. Your Report Information is in the lower left corner. Click the arrow next to Income Tax Form Used to see what’s active.

Figure 1: Make sure that QuickBooks is set up for the correct tax entity. 

QuickBooks automatically assigns some of your accounts to their matching lines on the 1040 and assorted forms and schedules; this is called tax line mapping. So when you create tax reports, related transactions will be grouped by these designations.

This can be a real time-saver – as long as you’ve specified the correct entity. If:

• <Other/None> was selected
• This setting is incorrect
• You’re starting a business and don’t know which to choose…

… please contact us. If you switch entities, your existing tax line mapping will disappear and will have to be reassigned. 

Dedicated tax reports

Many of QuickBooks’ general financial reports provide tax-related information. But there are some that specifically relate to the numbers that will go on your return. Go to Reports | Accounting & Taxes | Income Tax Preparation. Here’s an excerpt of what you’ll see:

Figure 2: QuickBooks automatically assigns many accounts to the appropriate tax form lines, based on your specified tax entity. 

Here, QuickBooks shows you which tax lines have been pre-assigned to your accounts.  You can specify a tax form line for unassigned accounts, but this is something you should not attempt on your own. This report, though, will give you an idea of how useful your report output will be and where you’ll need our assistance.

Other reports provide tax-related data. You can access them by going again to Reports | Accountant & Taxes and clicking:

• Income Tax Summary. This displays totals for each tax line that’s relevant to your particular tax entity. Double-click on any number, and the Tax Line By Account report appears, detailing every transaction related to every tax-related account (you could add a column for Tax Line in Display options and make this quite a useful report).
• Income Tax Detail. This lists all individual transactions by tax form/schedule line assignment. 

Paring it down

Some tax reports can be very lengthy; you may want to filter them to look at various “slices.”

Click Customize Report | Filters:

Figure 3: This window displays a powerful set of filtering options. 

The options listed under Choose Filter are available on other reports; they help you set up incredibly complex searches using multiple filters.

Let’s say you want a report that displays your installation labor costs on new residential construction from the last year (you could also throw other variables in). You’d simply choose the filters from the left pane and then select related options in the next pane (usually a list). You’d want to also click on the Display tab to make sure that the appropriate columns appear.

Figure 4: You can apply multiple filters to your reports.

QuickBooks reports can shave time off of tax preparation, and filtered views help you scrutinize your data in quite creative – and very useful – ways. The program’s boilerplate reports have their place in simple examinations of your financial status, but filters are potent tools. They can facilitate the kind of deep analysis that helps you make critical business decisions.

If you have questions on this or any other QuickBooks feature, call or email us. We’re your partner and we’re here to make your business better.

1.      Spread the word.

Make sure all your clients know three things:

1. You are taking new business.
2. How to describe what you do.
3. What type of client you work best with.

It’s not enough to simply say, “We’re looking for more work.”  Everyone is so busy that when you make a request that is too generic, it gets lost.  Instead, be clear about what you want:

“Hi Ms. Client.  I just wanted to let you know we are taking new customers.  An ideal customer for us is a retail shop that has been in business in the Tri Cities for about five years.  Do you know anybody like that who needs temporary staffing?  We’d appreciate it if you let them know about us.”

You can get the word out through a simple email or a face-to-face conversation.  I’ve also seen a line or two added to the signature portion of an email, on invoices, on feedback forms, in surveys, and more.

2. Make it routine.

At some point in your customer workflow process, create a step that clearly asks for referrals.  It might be at the beginning or end of a project or sale, or after 30 days of working with a new client.  The key is to make it routine.  Here are some examples:

• Ask the client for two referrals as part of the business contract.  Let them know it’s a standard procedure.  A dentist I know asks for three referrals as part of being a client of his.  His clients know up front that providing referrals is part of the relationship.
• Ask the client to provide a personally-written testimonial letter to send to five other leaders (peers) in the same industry, assuming you do a good job, of course.
• Ask for referrals at the end of the engagement.  Make this a routine, just like getting out the final invoice.

3.      Provide incentives.

Let’s take a lesson from my auto mechanic, who handed me several referral cards when I offered to post a testimonial for him online.  The referral card is a card that the referral source puts their name on and gives to a prospect.  The prospect cashes it in and gets a discounted introductory service.  The referrer gets a discount on their next visit.  It’s common in many industries, and something similar may work in your industry too.  Be creative and think about how you might adapt something like this to your company.

4.      Show gratitude.

Be sure to immediately thank your customers and other individuals who refer business to you.  (It’s surprising how often this is overlooked:  I once sent $100,000 of business to someone who never acknowledged it.)

Send your referral sources a nice card or letter with every referral.  If they are a significant source of business for you, periodically treat them to a nice lunch, send them a gift certificate, or make a donation in their name to a favorite charity.

When you can boost your referrals, your revenue will go up while your marketing costs stay low.  Try these four tips to rev up your referrals in your business.