Category: Profit

Sales are good. So I must be doing all right. Right?

3/5/2017

Business owners sometimes tell me that “sales” is the only number that matters...

(“That’s how we know if we’re winning!”)

Yeah, sales are an important number.

But guess what?

There are others that are just as important (if not more important).

Let’s look at Sam, a typical kiwi business owner who wants to take his business to the next level – grow his small business into a big business.

He’s been running his company for a few years now and is doing well with his goal - steadily growing at about 30% a year.

He is taking on more staff, has lots of new customers, and has worked hard on getting more sales.

“Sales are good,” he thinks, “I’m on the right track.”

He regards sales as the “all important number” in the business.

But if we look a little closer, there are some things Sam is missing.

Cashflow has been getting increasingly tighter.

Even though he is growing, his staff seem to be a lot more stressed and are making more mistake these days.

And lately, some of his bigger customers have been grumbling that orders are taking longer than they used to.

These are all signs he is heading for trouble if he doesn’t pay attention.

Sales are important but not the most important number.

Mainzeal had 7.5 Billion in construction projects but still went into liquidation
Pumpkin Patch’s turnover was 238 Million, now in receivership
Dick Smith Electronics are in liquidation, previous turnover of 87 Million

These companies all went broke, even though they had more sales than most NZ companies can only dream about.

Those companies are gone, while much smaller ones (like yours and mine) are still standing and actually making money.

The difference is, although sales were big, some of the other numbers were way off with these companies.

Here are some of the other numbers as a business you should be watching every single month.

Margins:

Many companies who focus on growth alone compete too hard to get business, at the expense of margins.

They end up with a whole lot more work without making more profits.

Cashflow:

This can be a killer for any growing business.

If you run out of money and the bank won’t back you, in just a few months you will be dead in the water.

Ignoring cashflow and focussing exclusively on sales is like rearranging deck chairs on the Titanic.

The reality is, as you grow you will have higher accounts receivable, wage bills, you will need to carry more stock, equipment, and gear.

These things all suck up cashflow and if not managed well, can become the iceberg.

Profitability:

Keep a close eye on which jobs or products you sell are making money and which ones aren’t.

Often you can be making good profits in some areas and leaking in others.

You must know which ones are leaking and why, as those leaks can get bigger quickly.

I was recently talking with a company that was losing over $100,000 and did not know why (don’t worry; we are sorting this out, pronto).

Customers Satisfaction:

Are you staying in contact with your customers to make sure they are still getting good service.

How many customers gave you good feedback and how many gave you bad?

Marketing:

How much new business did your marketing attract and are they the right kind of customers that are profitable to your business?

Staff:

Are your employees numbers growing but you’re not making any more money?

Watch this to make sure you don’t get too top-heavy.

Your time:

Keep an eye on where you are spending your time.

Are you putting out fires all day or focussing on the important parts of the business like training staff, talking with your best customers, sales, marketing, strategy, making better systems and more profit.

Stuff:

As you grow, you will need more stuff including equipment and gear, office furniture, computers and software, vehicles and maybe even bigger premises.

If you don’t know in advance how much this is going to cost and when you'll need this, it will be a very unpleasant surprise.

Once Sam gets a handle on these other numbers, he will have a whole new level of control he never had before.

If you have the right numbers when you need them, you have time on your side.

You will know early where the problems are before they get out of hand. If things are going south, you’ll know. And have plenty of time to adjust to get back on track.

But you will only be able to pull this off when you have the right numbers, which is much more than just the sales figures alone.

Now Sam can grow his sales further, be more profitable and have more fun doing it.

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3 Ways To Boost Profit Without Having To Make Any More Sales

28/5/2016

In my last blog, we talked about 3 sure-fire ways to make more profit.

Today, I’m going to share with you 3 ways to boost profit without having to make any more sales.

There are many different ways you can go about making more profit in your business, whether you are in a growing market when profits are rolling in, or in a shrinking market when you’re a little worried. Regardless, now is the time to take control and make a solid plan to ensure your business is surviving and thriving.

Here are 3 easy ways business owners can make more profit by being just a little more strategic. You just have to know what to look for.

1. Key Suppliers

Every business needs to keep a close eye on costs. Suppliers are your biggest cost and a key area to look at. Use my 3-step system for success: First, look at your largest suppliers and write down the most significant products or services you buy from them. What does it cost you? Now, get in touch with other suppliers that sell similar products and get a comparison. You will find other suppliers will be cheaper in some areas.

Finally, negotiate with your current suppliers, quoting the better prices you have discovered from the others. Don’t just use the other suppliers pricing for leverage. Look at their offer genuinely and see if they are a better fit. If you were quoting for new business, you would want to be treated this way also.

When talking with your suppliers you might even discover you are still at old rates. If your business has grown, old pricing based on smaller volumes may not apply anymore. You should be able to get a much better deal. In most cases, just asking the question and pointing out your value as a customer and/or letting them know you can get a better deal elsewhere, will shake out improved prices and significant savings on your costs.

This will increase your margins and a little bit of attention here ultimately equals a lot more profit for you. Yay!

2. Stop Discounting

Another thing to look at: How often are you or your staff discounting when you don’t need to? Every business should have a clear policy on discounting. Without a policy, it is too easy for you and your staff to cut prices unnecessarily. It doesn’t seem like a big deal at the time, but discounting randomly means margins blow out and destroy profits.

I find that some business owners are naturally generous and discount far too often which has a big effect on their profits. You can still be generous to customers when the conditions are right, but you need to be in control. Ultimately, making good profit puts you in a much better position to give back to those around you including your customers, your staff, your family and your community.

3. Hold Your Advertising Accountable

Advertising is one area where costs can get wildly out of control. I have seen businesses waste thousands each year (sometimes up to $100k!) on advertising campaigns that are simply not working. They’re unhappy, but don't know what else to do, so continue burning cash month after month.

Don’t get me wrong: Advertising is vital, and everyone should be spending money on getting more customers into their business. But marketing and advertising must be tested.

How do you know? You must measure every dollar you spend on promoting your business. John Wanamaker famously said, “Half the money I spend on advertising is wasted, the trouble is I don’t know which half”. Always ask new customers “How did you hear about us?”. Do this for a little while and the results will be obvious. Stop what is consistently not working and you’ll spend less, in most cases resulting in significant savings on your advertising budget. And yes - do more of what is working! (which should pay for itself and then some!).

For more practical ways to increase profit, come to my "Rocket Your Profit" workshop - Tuesday 4 April 2017 - Otago Chamber of Commerce, Dunedin
Find out more here: https://goo.gl/3ZxbGL

3 Sure-Fire Ways to Make More Profit Even In a Shrinking Market

1/5/2016

I’ve heard a lot lately about “the economy” and customers spending less in some industries. There is concern from some business owners that their profits might be starting to shrink.

Now is the time you want to start concentrating on profits. Be strategic. You are the one in control, and what you do to position yourself will make the biggest difference to your profits.

With a bit of focus, even in a declining market, you can still prosper. However, you will need to concentrate on the right areas of your business to pull this off. You just need to know how.

Let’s go: Here are 3 sure-fire ways to boost profit and they’ll work whether you’re in a rising or falling market.

1. Increase Pricing

Many of my clients do this – and here’s the kicker: very few of their customers even notice! Did you know that even a 5% increase can make a big difference to your bottom line... example: if your sales per year are $1 Million, a 5% price increase gives you $50,000 extra cash in the bank!

What about the fear of losing customers? Well, say you did lose some customers. If your margin is 20%... and you put your prices up by 10%... you’d get the same gross profit even with 33% less sales. Are you likely to lose 33% of your sales as the result of a 10% price increase? Unlikely.

2. Sell More Higher Margin Products

Do you know for sure which of your products/services have the highest margin? Take a good look at your range and work out all margins (on paper). Once you know which products/services to focus on, promote promote promote, to both existing customers and new prospects.

Just being attentive and giving your best products a little push will give you much better results and more profit. Small gains add up.

3. More Leads

Okay, what is a “lead”? We're talking about connecting with a person or business that has an interest in your product or service and the authority to purchase it.

How many new leads per month do you need? How many are you getting? These are numbers you should track.

Every business needs a consistent stream of new leads. Profile your ideal customer (i.e. most profitable, will place a decent sized order, good margins on what they buy, will repeat buy). Target them specifically!

Putting into action a strong plan to get more leads will mean a nice boost in profit. (Of course, you win even more if you convert the maximum amount of these leads into solid buyers and loyal fans, but that is a whole other conversation.)

For more practical ways to increase profit, come to my "Rocket Your Profit" workshop - Tuesday 4 April 2017 - Otago Chamber of Commerce, Dunedin
Find out more here: https://goo.gl/3ZxbGL

Will your sales suffer in the current climate?

2/10/2015

If you've been watching the news lately, you'll know that parts of the economy are starting to struggle and the mood is changing. The latest ANZ business survey headline reads "Business confidence remains on the ropes, hitting a new six-year low in August". The dairy industry is struggling and construction in some sectors is starting to be affected by the oversupply of houses.

A number of businesses I talk to are concerned about the current climate and if sales will be affected over the next 6-12 months. It's important to be aware of the climate and adapt accordingly, but also remember that all these things are in cycles, so this is nothing new (some suggest every seven years, but this will vary depending on the market).

As these cycles change, what can you do to make sure any impact is minimal to sales and profits for your business?

Smart businesses who recognise the downward trends will be looking for strategies to minimise effects on their business.

Here are six strategies that will help to ensure your profits stay intact even when your market is in a downturn:

1) Be in more than one market

Every market and customer group has highs and lows every few years, so it's important to make sure that you have customers in more than one market. Often when one market is at the bottom of a cycle, another is growing. By selling to more than one market you will still have growth in at least one area of your business.

Look at your existing customers in segments or groups. Some groups will be growing - spending more each sale or more new customers coming to your business. Other customer groups will be shrinking - they are spending less, buying less frequently or not at all. Identify the customer groups that are growing and target them individually in your marketing.

Note: there may be some customer groups that might be growing - but are not attracted to your company - and you don't recognise them. Check out what areas might be growing in the market or your competition is promoting to that you are not.

In every business there are a number of different customers and markets. Let's look at two examples of companies with different markets in a downturn:

IT Company: This IT company might have four main customer groups: residential, commercial, new installs, and maintenance.
Opportunities: Commercial might be slow but there could be plenty of home based businesses starting up and commercial requiring help scaling down; there could be opportunities to decrease costs for these businesses with current telephone technology and cloud based solutions for both existing and new customers.

Water Pump Installation and Servicing: This company may have three main customer groups: farmers, new subdivisions and servicing.
Opportunities: Dairy farming might be quiet; but beef and sheep farmers could still be good. While new subdivisions, and pump servicing will still have growth.

Every small business should have a number of different customer groups, to avoid being too exposed when these cycles come and go.

2) Look after existing customers

Make sure you keep looking after your existing customers and go the extra mile. Put more focus into building good relationships. It’s much easier to keep old customers happy, than find new ones. This is also a good long term strategy, for when the cycle comes back around.

3) Look for more of the type of customers you already deal with

This seems obvious, but are you doing it?

If a trades business currently gets work from two large building companies, they should seek out others. Relying on a small number of customers is dangerous anyway because if one is lost, the business is very exposed.

4) Diversify

Think about what else you can offer your existing customers.You might be able to re-package or sell them something different, introduce new lines.

For example, a shoe shop in a recession, could expand their range to include kids school shoes, workboots, and add on's like laces, protective sprays, polishes, etc.

5) Keep things tight

It's important to make sure that any losses you incur in a downturn are kept to a minimum. So work on:

Reducing unnecessary expenses
Becoming more efficient with your production or service
Non-performing staff need to come up to speed or leave/be reassigned (this may seem harsh, but staff that are not producing results will reduce the effectiveness of the whole team)
If price is an issue, offer more economic options for customers (without the bells and whistles)
Protect your margins (be careful as selling two times as much for half the margin will not help)

6) Keep investing in the right areas

There are some areas of your business that you should spend more on like:

Sales related activities (keep marketing to your customers - but always measure what leads and sales these are generating)
Staff training (make sure your sales team keep learning and improving as this will improve sales)
Your training (as a business owner, the better you are at business, the better your business will be - so don't stop investing time and money in your own training, and seek quality advice when you need to)

Action Points
1) Profile your customers and list what markets and opportunities there are for growth.
2) Go through your expenses to see what you can reduce.
3) Decide on one area you need to improve on personally that will help the business (this might be marketing, selling, negotiation, dealing with staff, etc), and commit to improving with some formal training.

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Don't shrink your way to failure

30/6/2015

A brewery who sold a lot of beer was one day told by the accounting department that if they could just reduce the malt content in their beer and add sugar instead (because sugar is less expensive than malt), that they could increase profits significantly and no one would notice.

The brewery manager found initially that the accountant was right - no one seemed to notice - and they were making more profit. At least for the first year anyway, he found that no one really complained or no more than normal anyway. He did notice however over the next couple of years, that sales kept declining. This was easy to explain said the accountant - after all, people are drinking less than they used to, taxes keep making beer more expensive, and people have less to spend than they used to - and again it seemed the accountant was right.

But the brewery manager was not sure, so he did some investigating and started asking around some of his old customers. A number weren't drinking his brand anymore. When he asked why they said "We don't know why but your beer but just tastes a little different so we thought we would try something else for a change" or "We don't enjoy beer like we used to".

The brewery manager on hearing this, begin to wonder if maybe replacing the malt with sugar might have been a mistake. He checked the figures again and found that this beer sales had shrunk; total consumption of beer across the industry had also shrunk, but to a lesser degree.

He realised that by changing the beer recipe, although they had made more profit in the first year, they were now worse off. (NB. Take a look at the figures and you will see this is exactly what has happened in the brewery industry in New Zealand over the past 50 years. Even before drink driving and other considerations took effect.)

What is the moral of this story? Well, as a business owner, when you seek more profits by reducing your expenses and purchases, it's important to ensure your product or service is not compromised. In fact often you can make it better and charge more. Research shows that 15% of the buyers in a market will buy purely on price alone, but a whopping 85% of customers have other reasons for buying. The 85% is your market. Think about some of your own recent purchases - how often have you paid more for something because you chose to go for better quality or better service.

Here are some areas you should be very careful with when looking at reducing costs to increase profits especially when sales are in decline:

Raw material costs for your products (don't compromise on quality - this is why many of your customers buy from you)
Sales staff (if you don't have good sales staff, then you won't get the sales - especially the high performers)
Advertising (measure your results first and know which are the winning campaigns before you get rid of the losers)
Marketing (again measure and stay with the winners)
Suppliers (know what else is important to you with your suppliers, like quality, delivery times, reliability, replacement policy, etc)

These are just a few, there are many more.

Action Points
1) Identify areas in your business where you should NOT cut costs, to safeguard yourself and preserve the integrity and quality of your product (and stick to it).
2) List ways to increase profits for your business - without compromising on service or quality.

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Is your bucket leaking?

18/3/2015

Increasing profits is not always about making more sales. In fact, if you don’t control the other aspects of your business well, you can sell a lot more and actually make less money.

I come across businesses like this all the time – you might even be one of them.

Is your business bringing in lots of sales but not making much profit? You may have leaky bucket syndrome, a common ailment in many businesses.

This parable will explain further:

Celeb lives in a small village on the Amhara regions of Ethiopia with his wife and two small children. They live in a small thatch house and he is the proud owner of a beautifully hand crafted wooden bucket. Now this village does not have any running water so Celeb must get up at 3am every morning to make a four hour journey to collect water from the river using his wooden bucket.

Celeb is very careful carrying the full bucket back home and always takes the best track so spillage is minimal. But even after all this, the bucket always has less than he was expecting. However what he discovers on careful inspection is that his bucket is leaking where the slats of wood join the bucket together - and these gaps are widening, making the leaks progressively bigger.

He now has a dilemma. Does he keep going carrying water and getting less return, or does he go to the cooper in the next village and get his bucket fixed - which will cost him three days travel to another village, and one months wages to fix the bucket. The portion of water left each day is dwindling and if this continues, eventually there will be no water left for his family anyway.

Celeb comes to the conclusion that he must make the 3 day trip to the cooper and get his bucket fixed. So he takes the trip and on arrival the cooper, a master craftsman, painstakingly takes the bucket apart piece by piece, shaves the individual wood pieces until they fit neatly together again, binds them back together again with metal bands and then soaks the new bindings and the wooden bucket until the wood swells to the point that there are no more leaks. The bucket is as good as new.

Celeb travels back to his village and prospers with his repaired bucket. He accumulates extra water and trades the extra for money to buy another bigger bucket. All is well again for Celeb and his family.

A nice happy ending. Now, let’s put this in the context of your business.

Imagine that the bucket is your business, the water you carry in the bucket is the money flowing into your business, leaks are expenses and unnecessary costs in your business.

How much water do you have in your bucket, and where are the leaks? After answering this question you now have some choices to make - carry on as you are, or fix the leaks.

As a business coach I know that every business has leaks but often the owners can’t see them so they lose a lot of hard-earned-profit unnecessarily. I have seen companies who had increased their business by as much as 200–300% and had hardly increased their profit at all. What they have now is a monster of a business that gives them more problems in exchange for taking even more of their time and energy - which is a terrible deal.

One of the easiest ways to increase profit is to just to stop the leaks, but I find very few think about this part of their business much, let alone take the action to fix it.

So where do you start? Let’s take a look at some your biggest costs and work on them. A good rule of thumb when looking for leaks is to hunt out the big ones. Here is a list of the most common ones most business have:

Pricing
Increase your prices in every area you can. Even a 5% increase is significant as it will go straight to your profit. For example if you have $1,000,000 sales, a 5% increase will give you another $50,000 profit. Not bad for a little tweaking (and your customers in most cases won't even notice).

Suppliers
This will be your biggest cost and will require the most attention. Take a look at your largest suppliers and list the most significant products/services you buy from them. Write down their costs and then contact other suppliers for similar products to get a comparison. You will find that in some areas other suppliers will be cheaper. Now start negotiating!

Expenses
Here is a list of some expenses also worth looking at; this is just an initial list; in your business there will be others:

ACC
Make sure that you are on the right rate. If you don’t specify the correct rate for your business, you will probably be on a default rate which could be higher.

Advertising/Marketing
There is a very famous quote by John Wanamaker, a very successful retailer: “Half the money I spend on advertising is wasted, but I could never figure out which half”. Test and measure every dollar you spend on advertising or promotions. Then do more of the stuff that’s working and drop the others. You will spend less and make a lot more sales.

Bank Fees/Eftpos/Visa
Check with your bank that you are on a competitive rate for your level of business. Many businesses I come across have rates from years ago that are no longer relevant to their business today so they are paying higher rates on transactions than they need to.

Freight/Courier costs
These will vary greatly depending on which company you are dealing with. For example in a previous business I used to send 20kg boxes around New Zealand - depending on which freight company I dealt with, the delivered price ranged from $4.60 to $21.00 per carton.

GST
Most businesses get a staff member or book-keeper to work out the GST. Make sure whoever is doing the returns knows what they can claim and what they can’t. Ask your Accountant if you are not sure and then check the GST return before paying. Often businesses are not claiming everything they should, and are paying way too much. Amounts I discovered were being overpaid overpaid by previous clients include $35,144.00 and $8,007.00 - yes these are real figures of GST claimed back - so don’t assume you have it right without checking.

Insurance
Nearly every business in New Zealand has had an increase in insurance costs since the earthquakes, however it’s still worth looking into. Check into the excesses on your policies, a significant amount of costs for insurance companies is in paying lots of small amounts, so if you increase the excess you will have good reductions. Again shop around and get a comparison, you might be surprised what you can save.

Interest
Check out current interest rates on your mortgages and loans to make sure you are on a competitive rate. If you have long term debt, take a look at what fixed options are available.

Most businesses have times of the month where they have money in the bank until accounts are paid. Put these funds in an interest bearing account or even better have a flexible portion of your business mortgage where funds can be transferred temporarily so you are not paying any unnecessary interest.

Internet and Phone
This is becoming a very competitive industry with plenty of options. Check what deals you are on and if they are still the best for your company. Especially with mobile there are plenty of plans out there and it can be complicated to work out the best deal. Take a typical month and then get your current provider to check if you are on the best plan. It’s also a good idea to show other providers a typical month and see what they can offer for comparison.

Skype and other internet based providers are also worth looking into, as sometimes these can be free for national and International calls.

Taxes
Make sure all your taxes are up to date, and if they are not, get hold of IRD immediately and make an arrangement. If you don’t, you will be charged late payment and filing fees and interest. Left long enough this can mount up – in some cases I have seen these extras being more than the original taxes owed – not cool! Don't pay more tax than you have to.

Wages
It’s always best to have good staff and pay them well, however double check if you are getting value and have the right staff at the right times. Make sure that you are not paying for extra staff during down times. For example a cafe client I coached found that staff were taking too long at the end of each day cleaning up. Just by making it clear that staff needed to start earlier to clean up so that they were out by 3.30pm saved them another 10-15 hours per week which over a year was significant for them.

Bonus Tip 1:
Talk with your staff about areas you could save costs; there are a lot of hidden costs that they will see that you may not. This could be anything from excessive waste or dead stock through to more efficiency in areas of your business, through to better customer service.

Bonus Tip 2:
I often find that businesses I work with have not negotiated with their suppliers for years and are buying much more than when they originally started. They might be buying 2-5 times more than when they first dealt with that supplier but are still on initial rates. Remember the bigger the volume, the more negotiating power you have. A big account in most cases will get a better deal than a smaller one. Most suppliers will give a better discount for their larger customers but not often without being asked. So start asking.

Action Point:
1)   Go through all of the leaks and aim to reduce each of them by 5-10%
2)   Take out your Financials and see what other costs not listed here can be reduced
3)   Repeat this at least once a year

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Awkward conversations with my clients

2/7/2014

As a business coach, sometimes I have to have awkward conversations with my clients...

These conversations can feel awkward because FACING REALITY and making a CHANGE isn't always easy. And sometimes the TRUTH is hard to hear - but these conversations address what is really going on - and they are essential to make you and the business the BEST it can be.

Remember the main restriction of any business in nearly all cases is the owners' abilities and thinking. So take a look and see if YOU need to have an awkward conversation.

"So do you actually know how much profit you are making?"
The first awkward conversation business owners can expect when I start working with them. You wouldn't think so, but many just don't know how they are going month to month. This is a crucial piece of information to know; after all you CAN'T win if you don't know the score. And it's way too late six months after the year-end when your accountant tells you the result. There is nothing you can do then. That game is over, you are playing the next one. You can only look to next year. Don't be scared of the outcome of asking this vital question, because when you know your figures, then you can improve.

"You aren't actually making any money."
Talk about an awkward realisation! Many business owners are working very hard for very little return. IT AIN'T RIGHT! If you discover that you are not actually making any money in your business then instead of freaking out, you just need to fix it fast. Ultimately when you lose money in your business, odds are it won't be long before you will need to start dipping into your own pocket or going into more debt, to pay the bills. And if you are consistently losing money, you will not be in business for very long. For a business to survive it must make profit, so if you are not, find out WHY and make a new plan.

"If you don't sort out your cashflow, bad things will happen."
You have all heard the saying 'cash is king'. If you run out of cash you are in trouble. It won't take long before your suppliers or the bank say "enough". If your cashflow is continually stretched, this puts a lot of unnecessary pressure on you and the business. Get this one right and you halve the stress! Cashflow often gets left undealt with, but believe me, if you have issues in this area, you need to set some time aside to sort it out now (and it's not as difficult as you think).

"Are your staff really no good?"
Is it a case of "It's not you, it's me"? We all have employed staff that just did not make the grade, but this should be the exception not the norm. If you are consistently dealing with poor staff you are either picking the wrong ones or maybe it's you. I talked with a business owner once who said he "hated going to work", and told his staff this regularly - I bet with an attitude like that, his staff felt exactly the same way. Staff need leadership, reassurance and feedback good and bad. If you are not happy with your staff, then work on changing yourself and your approach first, then them. If you hate going to work - well, you are the boss, so change it.

"Are you a workaholic?"
I ask my clients how many hours they are working and if they think they can keep this up week after week, month after month, year after year. We all know many business owners consistently work 55+ hours a week. Remember friends, business is a marathon not a sprint. It's okay to work long hours for a while, but in the long term I can guarantee you that you will not be at your best and neither will your business. We are made to work AND rest. It's during the rest times where inspiration comes and we often have those 'a-ha' breakthroughs. You will achieve a lot more if you rest regularly. Remember your best asset is yourself. After all, if you get sick, how much work happens? Usually not much.

"Your family is missing out - and you know it."
This really is awkward to address but if your family starts falling apart, guess what you are going to be doing? It's not going to be working more - a family crisis puts a stop to that real quick. Not meaning to be negative but bad stuff happens sooner or later to all of us, but spending time with your family will build a solid foundation to deal with it and minimize the downside (and hey, it's a lot more fun). If you are not married/shacked up, or do not have children, the principle remains - you still need to invest in those important relationships in your life. After all, owning a business should give you a better lifestyle than being someone's employee. If it's not, then something needs to change, RIGHT NOW!

"Is your business causing stress in your marriage?"
Very common scenario, especially if your partner is involved in the business in some capacity. If the business is not going well, then despite your best efforts, you will be bringing these stresses home with you, and it will affect the people you love. If you don't believe me, ask your partner. My bet is that you will be arguing about the same business problems over and over again - maybe it's time to face them and do something about it. Don't let work problems steal your profits, happiness, or your life.

"You are getting distracted."
This is trap that we all fall into at times. If you are not making the business better in some way, every day or at least weekly, then you are not working ON your business, you are working IN it. Stop doing the small tasks, delegate them and start working on the important ones. And remember delegate, delegate, delegate everything you can.

How did you do? Are some of these relevant to you? Some of these questions may make you feel frustrated - that's good - it means it's time to do something about it. If you do, the rewards can be amazing. So dare to peek behind the curtain and tackle the issues head on.

Action Point: Spend a few minutes now writing down the top three awkward conversations you need to have and then make two action points for addressing each one. Commit to take this action - then as Nike says "JUST DO IT"!

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Is your service up to scratch?

2/6/2014

It does not matter what industry or market you are in, at the end of the day your business will be made or lost on how well you deal with your customers.

A customer is four times more likely to defect to a competitor if the problem is service-related than price or product related.
96% of unhappy customers don't complain, and 91% of those will simply leave and never come back.

In most cases, businesses spend way more money trying to get new customers - and literally nothing on looking after the ones they already have.
The probability of selling to an existing customer is 60 - 70%. The probability of selling to a new prospect is 5 - 20%.

Customer service is the lifeblood of your business so don't underestimate its power!

Recently I was waiting in line at the kids section at one of the major department stores and was enthralled to watch exactly what you should not do - an example of customer service unfolded before my eyes. The cashier was a young girl in her early twenties and this was most likely one of her first jobs. She was serving a woman with kids (their target market) who wanted to charge some clothing items to her store card. Much to the surprise of the customer, the card had declined, and in her disbelief the customer explained to the cashier that money had been put on the card just two days ago. She wanted to know what had happened.

The cashier shrugged her shoulders and explained defiantly that she did not cause the problem or have any idea how to fix it. Her advice was to go and line up at a desk in another part of the store and they might be able to help her if she was lucky - that desk was busy handling other (more important) customers. The cashier made it very clear to this customer that she just didn't care. At this stage the customer was starting to get a little frustrated and after further questioning, the cashier pointed out she could do nothing more and pointed her finger in the general direction of the inquiries department who might know something about it. The customer headed off in the general direction with the parting comment "You have been incredibly unhelpful".

We have all seen this before or been on the receiving end of this type of terrible customer service.

So what is your customer service like?

By comparison a while ago I purchased a Freeview box for my TV from another well known store. I waited quite a short time, however the cashier acknowledged that I was waiting and let me know he would be just a couple of minutes. After serving the previous customer, he apologised to me for the wait and asked how he could help. He was passionate about his store and the products, and knew the answers to every question I had about how Freeview worked and the comparisons to other systems.

He sold me the unit and started explain a complicated system for installation (complicated to me anyway). He could see I was struggling so he offered to pre-tune the box, ready for me to plug in, which would take only seven minutes. Sounded like a great idea to me as it would probably take me two hours and even then it might not be right. (As you can tell, I am great at helping businesses become more profitable but not-so-great at setting up new technology.)

He then went in for the up-sell - "Would you like a warranty with that?". Usually this is not my thing, as I am of the view that if your product will not last the distance then maybe I shouldn't buy it. He could see that I was not convinced, but remember he already had my attention with his impeccable service. So he pulled out a Freeview box that had been pulled apart and showed me how small the parts were and that they are easily damaged through wear and tear or even small knocks. I thought why not, after all he seemed to have my best interests at heart. He got the up-sell and I walked away a happy customer with my purchase.

Did I tell others, absolutely. Will I go back, yes.

So what makes good customer service?
Well, we can take a few clues from my two examples above.

One knew their products well - the other not a clue.
One was interested in the customer - the other was not.
One went out of their way to be helpful - the other went out of their way not to.

So do you staff ...............

Know about your products and how best to use them?
Know the procedures on what to do when a customer complains?
Have a good helpful attitude to your customers?
Care about your customers and your company?
Take pride in their workplace?
Have a list of questions they can ask customers to lead them to the sale?

What does good customer service get you? It gets you repeat business (remember this is a lot easier to get than brand new customers), it gets you more referrals and a good reputation, and ultimately, it gets you a lot more sales. Good customer service equals a whole lot more profit!

Action Point: Listen in on some of your staff and how they are handling your customers. Or even better, ask some of your customers how they find you to deal with. Use these quick questions:

How do you find our company to deal with?
What do we do well?
What do you find frustrating when dealing with us?
What could we do better?

Listen very carefully especially to the answers to the last two questions. They will be your biggest clues to a much more successful and profitable business.

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Two easy ways to make more profit in your business quickly

27/10/2013

In every business I come across there are always some quick simple ways to increase profits without too much extra effort. I like to call this the low hanging fruit because just like a fruit tree laden with fruit, you can pick from the lower branches with little effort. However to reach the higher branches you may need to climb or use a ladder, which requires a bit more work. So it makes sense to take the easy fruit first.

There are so many ways to increase profits but to start with, here are two quick and easy ways:

1) Increasing Your Prices

Every year costs increase which erodes your all-important margins. Often business owners are worried about putting prices up as they are concerned about losing customers. However the reality is that in most cases when prices are gently increased very few customers, if any, even notice.

But let’s say you increased your prices and a small amount of your customers left - let’s look at the numbers to see if you would be better off or not.

Say you had a Gross Profit Margin of 20% and decide to increase your prices by just 10%. You would have to lose 1/3 of your current sales before your profit fell back to what it was originally before the price increase. Would you lose 1/3 of your sales from a 10% price increase? Probably not.

A cafe business owner I have been working with has increased prices by 5-10% three times over the past 18 months, and their sales and profits just keep on increasing.

Action Point: Increase your prices by between 5-10% next month.

2) Ask your existing customers to buy something extra (Up-selling)

Depending on what business you are in, there are many ways you can do this. For example if you are a men’s clothing store and your customer is about to buy a suit from your store, a smart salesperson, just as the customer is about to pay, might suggest that because they have just purchased a suit if they buy now they qualify for 35% discount off the price of your best ties. Just by having something extra to offer (not necessarily at a discount), your staff can increase your sales with very little effort.

McDonalds have added millions of dollars in sales every year by asking “Would you like fries with that?”. Other classic upsells include - a case with your new iPhone, waterproofing spray with new boots, batteries when purchasing a toy, insurance for plane tickets, extended warranties, a chocolate bar by the checkout. Having already made the decision to buy, the customer is already in “buying mode” and if they are offered a little something extra, they are very likely to go for it.

Action Point: Pick one lower value related product each month that all staff can offer as an upsell or add on when the sale is made.

There are tons of low cost ways to increase profits; try these to get you started.

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Is your marketing costing you money? - It shouldn't!

2/10/2013

IF your marketing and advertising is not getting the results you need, then it will most likely be because it is boring or irrelevant to your potential customers.

And better to know now than waste thousands of dollars every year on advertising and marketing that is simply not working and giving you good results. Honestly, I have seen companies spending $50,000 to $100,000 on their advertising and being very unhappy with their results. Their ads aren't working but they keep on paying - burning cash month after month, year after year - don't let that happen to you!!!

So what makes a good ad, and what should it contain in order to bring a steady stream of new and repeat customers to your door?

Quite simply: A good ad is one that makes you money every time you run it.

For example:

$1,000 the cost of your ad

$10,000 sales directly from ad
x 33% margin
----------
$3,300 gross profit

$2,300 profit

This ad works - and it's profitable. If you can consistently get this kind of result from your ad, then you are onto a winner. Run this exact ad, and run it regularly!

Now I am sure you have heard the branding argument, which goes along the lines of 'get your name out there and at some time when your potential customer needs your product or service they will think of you and might give you a call'. Baloney. They will have heard of other companies as well, so unless you have something better to offer than the others in the customers mind, the chances are they won't come and see you. If you have millions of dollars spare in the bank and you are happy to roll the dice, then go for it. But most companies are not in that position - they need their ads to produce a result - more sales and more profit.

Now that we have established what a good ad is, let's look at what need to be included in your ads to get the kind of response you are looking for:

Once you have decided where to use your ad, eg local newspaper, Google adwords, flyer drop, direct marketing mailout, Facebook, in a specific magazine, etc (and this will completely depend on who your target market is), how do you go about writing a killer ad that will get results?

There is an old sales and marketing acronym - AIDA - that is known as the secret sauce of advertising. Let's take a look at this in more detail:

ATTENTION
If you don't grab the attention of the reader with you ad, then they just won't see it. The secret to this is all about the "Headline". Imagine you are looking at a newspaper (or better yet go and get one). You look through the headlines to decide which ads are worth your time to read. If it's not relevant or it's boring, you skip it and go onto the next one. Here is a great example from "The 100 Best Headlines Ever Written" - "FOR THE WOMAN WHO IS OLDER THAN SHE LOOKS" - if your target market is women over 30 you have now very successfully grabbed their attention!

INTEREST
Once you have grabbed their attention, you now need to hold their interest. Now they are reading your ad, so make it relevant, interesting, and tell them how you can solve their problem. Focus on the advantages and benefits they will get from buying your product or services.

DESIRE
Build on their interest and convince the customer that they want and need your product/service. Emotively address the buyers real concerns, the problems they will solve when they buy from you.

ACTION
Tell them what they need to do next to get the deal done - eg Phone Now!

Also remember to tell the reader your "point of difference". See my previous article on "What sets you apart from the competition" for more detail.

You will notice very few ads you come across take this approach, which is why most don't attract lots of customers.

Action Points:

Look at your current ads and marketing material to see if AIDA is there.
Test your results. Are you making a profit or loss on your advertising? How?...Ask your new customers religiously 'How did you hear about us?' and write it down.

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<<Previous

Sales are good. So I must be doing all right. Right?

3 Ways To Boost Profit Without Having To Make Any More Sales

3 Sure-Fire Ways to Make More Profit Even In a Shrinking Market

Will your sales suffer in the current climate?

Don't shrink your way to failure

Is your bucket leaking?

Awkward conversations with my clients

Is your service up to scratch?

Two easy ways to make more profit in your business quickly

Is your marketing costing you money? - It shouldn't!

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