Blog Posts

How to make 2016 your best year ever

20/1/2016

It's January again, and this is a great time of year to make a fresh start. I love this time of year, as it feels like a new beginning, to build on last year but also start something new, to create an even better business and have more impact on the world.

So I have put together 7 empowering questions that will get you focused and ready to make this your best year ever.

I recommend you allocate at least 30 minutes to go through these questions and answer them with as much detail as you can.

1) What were my biggest accomplishments for 2015?
Think back to some of the wins you had last year, the things you did well that you were really proud of. Not just in business but also personally.

2) What were the biggest mistakes I made in 2015?
This is a chance to review what went wrong - important as you don't want to make the same mistakes again.

3) What skills have I improved? What lessons did I learn in 2015?
Take a few minutes to reflect on what you learned.

4) What are my 3 biggest business and personal GOALS for 2016?
Make these into "SMART" GOALS - Specific, Meaningful, Action-Orientated, Realistic (but challenging enough to motivate you!), and Timely.
For example "To double the profits in my business from $200,000 to $400,000 by 31st December 2016. I will then use this extra money to get rid of the business loan of $200,000."

5) What new habits do I need to achieve my GOALS?
To achieve your GOALS you will need to do some things differently this year. If you do the same things as last year you will get the same results.
For example, a new habit for the goal above might be measuring sales weekly to see if you are on track; new initiatives might include developing new/different marketing strategies to get more leads or improving sales skills to increase conversions.

6) What do I need to let go of, to make room for these new habits?
It's important to make room for these new initiatives and habits. To do this you will need to decide what to let go or say "NO" to, so that there is time available. So list the things you will no longer do or will delegate. It might be limiting time on emails and Facebook, eliminating TV so you get to bed earlier, or getting a staff member to do those low value repetitive tasks that must be done but are taking too much of your time.

7) What is the first step to achieving each GOAL?
Each GOAL then needs an action step towards achieving it. If you don't have action, then your GOAL is really just a nice idea that probably won't happen. Following the example above, a first action step could be: Making a 12 month marketing plan to get the extra $200,000 profit. (Calculation: $600,000 sales x 33% margin).

Action Points
1) Set aside 30 minutes in your diary and go through the above exercise.
2) Find someone you can show the answers to, who will help keep you accountable. Writing down your goals and sharing them with someone else makes you statistically way more likely to succeed!

How I made my wife more productive

30/11/2015

Apparently when I'm not helping business owners make loads more profit, I'm inadvertently making my wife more productive.

Let me tell you how this fantastic thing happened.

My wife and I have been blessed with children - so our home is a busy one.

As anyone who has cared for children will know, not everything gets done when you want it to.

Young kids seem to have this uncanny ability of taking priority over everything else - no matter how inconvenient. I can speak from experience because I've been living this beautiful reality for quite a number of years.

I may even have some unresolved issues involving stand-offs over demands for melted cheese on toast at bedtimes. But that's another story.

In our busy family my wife often finds it hard to get everything done.

By the way, the challenges can be quite similar when you run a business, especially if you don't have good systems and you try to do everything yourself - you run around, getting interrupted constantly by urgent matters, and you are the only one who is responsible, knows what to do, and how to do it right.

Back to the story:

Over the past week I have been noticing my wife bustling around and seeming to get a lot more done than usual. Which is impressive since she juggles a lot in her day normally. So the other day I was re-assembling and putting together one of the kids little beds. Literally as soon as I was done she flew into the room with laser focus and bedding. Pillows flew everywhere and by the time I turned around the bed was neatly made and ready to be slept in.

Intrigued, I asked her what was going on. To my surprise she starts telling me proudly how she listened to what I said last week and that it was working really well for her. Now she really had my attention. I mean, I think I say a lot of cool things but I have noticed my wife does not always agree.

I've been trying out a tip I read recently - if a task is likely to take two minutes or less, then do it straight away. This avoids procrastination and will get rid of a good portion of your task list quickly. I was having some success with this myself and now my wife was telling me it was working for her.

This principle can be found in David Allen's book "Getting Things Done". In his words: "I have a two-minute rule that says: If you determine an action can be done in two minutes, you actually should do it right then because it’ll take longer to organise it and review it than it would be to actually finish it the first time you notice it."

Basically, any task that comes up in your day that can be handled in less than two minutes, should be dealt with immediately. The last thing you want is a to-do list with 100 tasks when most of them can be ticked off with very little effort.

If it won’t take long, do it now.

Give it a go for yourself in busy December - let me know if it works for you!

If you are really brave, like me, pass on this tip to your partner (or employees) and see if you can make them more productive too :)

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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Are you sick of losing money on bad debtors?

25/7/2015

I am sure at some time during your life as a business owner, you have been stung by some bad debtors. You completed the job in good faith, and then your customer didn't pay you! I have not yet come across anyone who hasn't had this happen to them, myself included, and in every case without exception, at best it has cost you profit and time, and at worst, it has put your business in serious jeopardy or even killed your business completely.

I think it's fair to say that this is a real problem for any business. Therefore it is important that you are keeping this downside to a minimum. It is a disturbing trend I am seeing more often, especially in but not limited to trades businesses.

I have put together here a list of preventative measures, from my own experience and also from advice I have gleaned from lawyers and debt collectors over the years.

I have tailored these specifically for trades and service businesses, but they will apply to other businesses also. Let's jump in!...

Your Terms Of Trade
With any quotes you complete, it's important to include your "Terms of Trade" which should be referred to in your signed quote (yes you should definitely get your customer to sign the quote to officially accept it, and prior to work starting). The "terms of trade" are the terms you will complete the job under and give an outline of responsibilities for both you and your customer. It usually includes standards of work, what happens if there is a dispute, payment terms, guarantees etc.

A good "terms of trade" will reduce potential arguments with your customer if things go wrong. When completing a "terms of trade" here are a few important things you should always include:

Notice period for any dispute or problem with workmanship (within 7 days of completion or invoice is good).
Any charges incurred for collection of payment can be added to the bill.
Interest can be added on overdue amounts.
Clause agreeing that you can register their debt under the Personal Property Securities Act 1999 (PPSA). This is a national debt register you can register your invoice against until paid - it means that if your customers company goes broke, you have a priority of payment over others not registered. You still need to list the debt on the register for this to be valid.
Personal guarantee (with larger companies you deal with, these are usually difficult to get, but can be possible with smaller companies).

I recommend that you get a personalised copy of "Terms of Trade" for your business from a debt collector. They know the rules and often already have something that is easily adapted. They usually only cost a few hundred dollars and are well worth it.

Spread Your Risk
Make sure you have a good base of customers rather than relying on one of two large ones only. Then if something goes wrong with a major customer you still have a business!

Terms Of Trade From Your Customers
Sometimes larger building companies or corporates will ask you as the supplier to them, to sign their terms of trade. Look through these very carefully as they are written in favour of them not you, and they have expensive lawyers! Be prepared to negotiate anything you disagree with. I will often cross out clauses or make additions before signing these.

Here are a few things to watch out for before signing:

Make sure there is a notice period if they are not happy with workmanship; otherwise if there is a dispute it's hard to get a debt collector involved as debt collectors can't collect disputed amounts.
Check payment terms: when, and if overdue, can you charge interest?
If a debt collector is required, can you recover collection charges?
Make sure that you are not made responsible for things outside your control i.e. other subbies work.
Any penalty clauses for work not completed on time.

When Taking On New Customers

In addition to the "terms of trade" it is also recommended that you get your customers to complete a "credit application form" - this helps gather all the relevant information about the creditor, which you then have on hand if you need to track them down later, and can be vital if it ends up going to debt collection.
If your customer is a company, then check out some of their other suppliers to see if they are getting paid; if not, this is a bad sign!
If you are concerned, get your debt collector to check out their liquidity and payment history.
Wherever possible negotiate deposits up front on starting, or progress payments at various stages of the job.
Make it clear that payment on time is important and get agreement from your customer to pay when due.

When Jobs Are Completed

Invoice the job ASAP, and state due date on the invoice.
Make it easy for your customer to pay you - put your bank account details on the invoice.
Check your debtors list at least weekly, and follow up any overdue amounts. Delegate this task if necessary - but make sure someone is doing this.

Overdue Amounts

If your customer can't pay, then get a payment plan in place, and make sure they stick to it.
Keep in regular contact until paid. Remember your customer has to pay someone or they are not in business - by keeping the pressure on, it's much more likely to be you, rather then someone else.
Be proactive. If the customer is unhappy with your work, then talk with them early. In most cases the longer it is left, the less likely you are to be paid.
Be tough and be prepared to walk off the job or stop supplying if necessary. The more jobs = the more money owed = the bigger the risk to you.

Existing Bad Debts

Don't be afraid to negotiate to reduce the debt and actually get paid something - if you need to. A bird in the hand is better then two in the bush that fly away and leave you with nothing.
If the amount is in dispute and under $15,000 one option is to file an application at the "Disputes Tribunal". You can this yourself without the cost of lawyers. Check outhttp://www.justice.govt.nz/tribunals/disputes-tribunal
If after a few months, you are not getting anywhere, then hand over to a good debt collector.

Note: In my experience a good debt collector is very proactive with phone calls and regular contact putting continued pressure on the debtor. Find out exactly how they will go about collecting the debt. If it's just sending a few letter with no follow up, this is usually not enough.

These things will help reduce your risk, but the only real guarantee in all of this is when the money is in your bank account not theirs.

Remember you have provided goods or a service for your customer, and you deserve and need to be paid. You also have bills to pay and if you don't get paid, you can't pay your suppliers, your employees, or put food on the table for your family.

This article is really about protecting you from those bad debts that destroy your profit for the year or even wipe you out. The large building company, for example, that goes broke, takes lots of subcontractors with them. So reduce the risk and keep your exposure to a minimum - if you have a few small bad debts that's okay- you will survive those - it's the larger amounts you need to really pay attention to.

Action Points
1) Get your "Terms of Trade" sorted or updated and start using them with all your customers. Yes even the old ones.
2) Be proactive with your overdue debtors - check them weekly and chase the overdue ones.

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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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Do you get bullied into bad deals?

1/5/2015

In business, you are negotiating all the time, with your customers, suppliers, staff, the bank, and almost everyone else you come across. But how often are you bullied into bad deals or just doing bad deals period?

If you look at a single day, you will be involved in literally hundreds of negotiations, with people who range anywhere from that large customer you have just signed up, to your staff wanting to leave early. Even when you get home you may find yourself locked in a heated negotiation over bedtime with your spouse and kids! Or yourself!

I have put together here some key principles that will help you get better results from your negotiations.

These principles are based on a book called "Start with No" by Jim Camp. This is an invaluable resource which I often refer to as I coach many clients through difficult negotiations they face in running a business. I particularly like his approach because it is not manipulative or deceptive, but is instead based on good honest principles that simply work and get results.

Neediness - don't do it
As soon as you start thinking that you need this deal, you are already on the back foot. Take a step back and think. If you don't get this deal, can you still put food on the table? Will your business still survive? Are there other options, other customers, other deals if this one doesn't come off? In nearly all cases, the answer will be Yes. You don't need this deal; it would be nice to have it, but you don't neeeeeeed it.

Once you realise this, it's much easier to make better decisions, and you don't feel or look needy when negotiating. Think back to the last time you dealt with a sales rep that appeared a little desperate, a little too needy. If you are like me, you were probably thinking why is guy/girl so desperate to get this sale? What is wrong with this deal?

So take the pressure off yourself, and stop being needy.

Start with "No"
This sounds strange at first but it makes sense. If you have a "Yes", you need to check if it's real. An early "Yes" can be dangerous because it can easily be changed to a "No" - it's not based on much.

If you have a "Maybe", this must to be turned into a "Yes" or "No". Don't be caught in "Maybe"-land. It sucks because if you are not careful, you start making plans on the "Maybe"s; you start counting those sales you don't have, planning cashflow around them... thinking about that new house if the deal comes off. Then before you know it you are in trouble and have become needy.

This leaves "No", which is often a good place to start. Everyone involved is forced to define exactly what they do and don't want. Once you have a "No", you can explore the real issues to see if there really is a deal there or not and if there is not, no worries, start spending your time on finding better prospects or deals, rather than wasting time in negotiations that are going nowhere.

Mission and purpose
Get into the world of your adversary (the other party), and find out what they are looking for. Then create a vision or mission and purpose they can buy into. Find out what they need and then start talking with them about how they can achieve this with your help.

Once you understand your customer and what they really want, and have the ability to provide this, then you are well on the way to a deal that is going to stick.

Stop trying to control the outcome
At the end of the day, you can't make anyone do anything unless they have a gun to their head. And guess what? Once that gun is taken away, I doubt they will stick to their agreement (would you?) After all, they never had a choice really did they, so they don't feel any compulsion to honour the agreement.

So stop trying to control the outcome. They ultimately have to decide, so give them the space to do that. Instead, get alongside them and help them make the best decision for them. Maybe it's your product, maybe it's not. Take this approach and you will find that the barriers come down, you will be more trustworthy in the other parties eyes, and with the pressure off, you will get much better results.

Blank slate
Don't assume you know everything or anything, because you are probably wrong and will blow the deal. Ask questions. Be a detective, and look for clues that will help you give the best solution for your customer.

Have an agenda
Know what you want from the negotiation, and then stay the course. This is about deciding what you want to achieve from the particular meeting. It might be a small step like "I want the customer to understand the extra benefits my product has over other competitors in the market" or "To fully understand what the customer needs or is worried about". If you have achieved this, it will bring you closer to a good result.

But be very clear on what your results should be, and be prepared to walk away if you can't achieve them. I know plenty of subbies in the building industry that are taking some terrible deals with impossibly low margins because they had not decided on their own margins, and at what point they should walk away.

Remember if you don't have an agenda, the person across the table most likely will. And their agenda, you may not like.

Deal with the decision makers
Have you spent hours negotiating a deal, only to find after you have made all the compromises, that the person you were dealing with did not have the authority to make the decision anyway?

Don't be fooled - this is a common tactic with larger companies. They will get all the compromises from you early on, only to then advise that the decision will be made by their boss. So check first and make sure the person you are dealing with has the authority to make a decision, before spilling your beans and then be asked to spill some more when your jar is already empty.

We have only just scratched the surface here, but this will get you started to win in your negotiations as a business owner. There are more principles in the book, but I have picked the ones I have found particularly effective.

These principles are simple enough, but to master them takes a lifetime.

Action Point:
1) Pick one of these principles per week and start using it in your negotiations.

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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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My beef with Apple.

24/2/2015

My son recently got an iPad. And it was faulty.

It got me thinking:

To a large degree, the success of your business will ultimately come down to your customers expectations when dealing with you.

Do they think they are getting a great product and service from you, that is better than your competitors?

If something goes wrong do they expect that you will work hard to fix it, or that you just don't care?

Because if you want them to keep coming back, they must know you care - or it's only a matter of time before they will be motivated to go somewhere else.

The telecommunications industry in New Zealand is a very good example of where customerswith poor expectations have left companies in droves. Long wait times to talk with anyone, automated phone systems that seem to go in endless loops to nowhere, and call centres repswith poor English, have resulted in many customers leaving to go to other new players in the market.

Are the new players better? I'm not sure, but for some of these ex-customers it's not so much that the new company was necessarily better, but that they had run out of patience with their previous provider. Expectation was poor.

But technology is moving so fast it's almost impossible to keep up with, right?

With all the constant updates there are bound to be some unhappy customers, don't you think?

Back to my recent experience with Apple:

So, my tech-savvy 10 year old got an iPad. And he was really, really excited. He tracked it online through its 15-stage journey from Shenzhen, China. He even insisted we videoed him opening up the box when the courier arrived.

My wife (bless her) then took control of the set up and enabling the appropriate restrictions, but imagine the disappointment when everyone realised the long-awaited Apps wouldn't open!

My wife knows me well; she knows that technology that is not working properly drives me to tearmy hair out. Those of you who know me will appreciate that I don't have that much hair left which is even more reason to protect it. However I digress.

So from a safe distance I sat back and watched their dealings with Apple over the past week or so and I would have to say despite a faulty iPad (which is now going to be replaced) and many frustrating hours, they have achieved the remarkable feat of keeping exceptions high. Everyone is confident that the problems will be sorted and Apple will eventually get it right. No mean feat considering 10 year old's and sleep-deprived wives have limited patience.

So how have Apple been able to achieve this? From watching I have been able to glean some important clues:

1) They are easy to deal with:
You can contact them by phone, email, or live chat (online 24/7) and they speak English. They answer quickly and in almost all cases, give intelligent answers to some quite technical questions, or quickly refer you to higher technical support.

2) They are polite and attentive:
Here are some comments from the transcript of the help desk conversations. I don't know anything about the kind of training Apple give their people, but obviously they give them certain key phrases to use.

"Thanks for contacting AppleCare chat support. My name is Lindsay. Please give me a moment to look over your information" (Notice here Lindsay is letting his customer know that he is solely focused on them only)

"No worries at all .. it is my pleasure to help"

"Got it!"

"I do understand it being your son's and I am sorry he is disappointed"

"Actually, I do have a senior adviser, Tim, on the line here. He will take over the chat and pick up where we are leaving off with regard to the diagnostic. He is up to date on the issue, so let me know when you are ready and I will get you over to him."

Language is always attentive, respectful and understanding.

3) They build up expectation:

"If we are unable to fix it, it would be the first issue I have ever seen that was unable to be fixed so you better believe we are going to find a solution!"

"Your request has been received by our awesome help desk staff..... we are working hard to respond as quickly as possible"

You will notice Apple are working hard right through the conversation to keep their customers happy and also build high expectations of a good result for the customer. We all know technology can be frustrating and things can go wrong. But Apple in this case have decided that this is an important area to get right - after all they could end up with a lifetime customer as this will not be the only tablet my son is likely to buy over his lifetime.

Am I saying that Apple is better than Android? No.

Am I saying Apple gets it right every time? No.

This is just one example of a time where one company got it right.

So check out what your customers are thinking and expecting.

After all - the customer that keeps coming back is the most profitable!!

Action Point:
1) Ask 10 customers how they find your company to deal with, and what problems or frustrations they have had and how these were handled.
2) Contact 10 customers you no longer deal with and find out what made them shift (ok this one requires guts).
3) Listen in on some conversations your staff are having with customers when things go wrong.
4) Every time something goes wrong, be proactive, take responsibility for the problem and start building a positive expectation for your customer.

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Your business will crash without a dashboard.

3/12/2014

How would you drive your car without a dashboard? I would say not very well. You would miss the basic indicators that you need to know. Important things like how fast you are going (especially if you are passing a cop on the side of the road), if the car is too hot, if you have enough fuel… just to name a few.

This is for small car but what about a bigger vehicle like a plane? For this you need a much more sophisticated dashboard. If you are a Boeing 747 airline pilot with hundreds of people under your care, the dashboard of your plane will have many more dials, switches and flashing lights, to cover all parts of the plane including electronics, fire suppression, passenger comfort, pneumatics, hydraulics, lighting engine control, auto pilot, air pressure, weather, fuel levels, brakes... and a whole lot more.

There are literally thousands of parts in a plane that need attention; nothing can be left to chance. A pilot who is not on top of these things will not be a pilot for long, it’s just too dangerous. These dashboards are the reason why literally thousands of planes fly every day and nearly every one of them arrives safely to its destination.

So do you have a dashboard for your business?

Even for small businesses, indicators are vital, but this becomes increasingly more important as the business grows and gets bigger. As you employ more people it’s very easy to lose control of your business and be blindsided by a problem you did not see coming. By the way when things go wrong there are always early indications or signs, the problem is that without good information you won’t see it until it’s too late and it causes more damage than it should. If you have a little time, you always have options. I am not saying you will never have problems, but that you will have much more time to deal with them, adjust your course, and reduce the severity. It’s exactly the same with your business.

When the fuel gauge falls to E, it’s time to do something about it. But what if you didn’t know? What if you were the pilot of a huge 747 and the one who was responsible for all the passengers aboard (including your employees and your family). What if you ran out of fuel and the engines stopped. What if your plane started falling out of the sky? What if it could all be prevented by seeing the early warning signs?

So do you have a dashboard in your business? And what should be on it?

Here is a checklist of some of the things you should have on your dashboard, depending on your business and industry:

Advertising

Profit/loss from each advertising campaign (yes you need to keep a record of how much money each campaign loses or makes – so you know if it is worth repeating)
Cost to get a new customer or lead

Sales – you need to know:

How many leads per month you need – and how many you are getting
How many walk-in sales per month you are getting
Conversion rate from leads to customers
Average dollar sale per customer
Sales needed each month to break even (hey, wouldn't it be great to know at which level of sales you start making money, and if you are on track each week. If you are short you still have time to get back on track.)

Margins – you must know:

Gross profit margin each month
Gross margins on largest volumes of services or products

Employees

Billable hours
Percentage of wages to sales

Financials

Monthly profit and loss
Cash position (calculated as money in the bank + accounts receivable - accounts payable)
Stock levels

There are many more, but this will get you started.

Action:
Imagine that you are on unplanned leave from your business for the next three months. You have a manager running your business for you. What would you want to know? You can’t go into work so the only way you will know if your business is okay is by the dashboard reports your manager gives you.

List the main indicators you must know about, so you can sleep at night knowing the business is okay, eg. profit, sales, key expenses, key customers.
Decide on what the target is for each of these indicators, eg. sales target $300,000 per month.
Turn this into a dashboard report you use weekly/monthly for your business.
Use it every month from now on, so you know at a glance if any of these important areas need a course correction.

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Are Bad Customers Good For Business?

1/11/2014

As a business owner, I am sure you have heard or thought at some stage that "Every customer is a good customer". After all, every customer puts money in the bank and keeps you busy, especially when things are quiet. Right?

Wrong. Be very wary of this approach - it's a trap. If you run your business this way, you will be creating a lot more headaches than you want, and will be disappointed with your profits (or lack of profits!). Let me explain:

If you think about all your customers over the last year, they will basically fall into four types:

A customers
This customer values your service, and is prepared to pay what you ask. They don't argue over price and value your service and quality. They are raving fans of your business and tell others so. Very loyal, they repeat business with you regularly and won't go elsewhere. You often get referrals from them.

B customers
Most of your customers are B customers. They appreciate your service, but are a little more price sensitive. You need to work a bit harder to keep them, but they are still good business.

C customers
Not very loyal, they will haggle over price and will shift if someone else is a little cheaper.

D customers
Impossible to make profit from, they are always complaining - something is always wrong with your product or service. Often to get the bill paid, you have to argue and sometimes reduce the bill. They never pay promptly either, and take a lot of your time sorting out their constant whining and complaining. Keeping them happy is almost impossible because they always seem to come up with some new problem or complaint.

Warning: If you are getting a lot of D type customers, you are either accepting too much of the wrong kind of work, or it could be a sign you have poor systems for quality and customer service - which is a whole different problem in your business (and you will need to fix these issues first).

Once you have identified your customers, now you need a strategy for dealing with them.

A customers (A = Awesome)
Really look after them. Go above and beyond with exceptional customer service. Keep in touch. Let them know what you are doing for them; let them know what else you do and look for new ways to add further value to them. Tell them how much you appreciate their repeat business. For every referral you get from them, make sure you recognise it with a personal thank you note or gift. They will reward you with more of the same.

B customers (B = Basically sound)
You want to turn as many of these into A customers as you can. Treat these like A customers by making sure they understand and appreciate how and why you do things. Keep in touch regularly and get feedback from them on what they like and don't like about dealing with you. Then work on improving your service.

Tell them how important it is to you that they get the best service. For example, if you are a plumber you could explain why you test the fitting to make sure there are no leaks, why you use a certain grade of fitting, and why you won't use the cheap nasty ones that leak and will cost them more money in the long run; remind them that you are a Registered Master Plumber which means that you have a standard of work they can rely on.

Again, once the job is finished, thank them for their business. For a larger job, go all out with the thank you gift - I guarantee you that your customers will be blown away by this gesture, especially if it is unexpected. Sending a thank you is a tried and true approach that still works today and a great way of creating very loyal customers who tell their friends how great you are.

Also, these strategies work best when you put them into a system so you don't need to remember. For example whenever you get a referral, a thank you card should automatically be sent; when a large job is completed, a gift is sent one week later; on the job your staff should know to automatically explain to the customer the reasons why you do it the way you do; maybe send a free sample with the invoice if the job is over $1,000, etc...

Due to the nature of some businesses, there may not be a lot of repeat business, but this strategy is still worthwhile. Maybe you build new houses? Remember a small percentage will build again in the future, but more importantly, many will know others who are also looking to build, so are an ideal source of referrals.

There are lots of ways to get referrals but first you need to have happy customers who remember you.

C customers (C = Could do better)
Do your best to turn these into B customers. (Find out what they are really looking for - then you will get a better idea if they will suit your business - in some cases they may not, which is fine.). At the end of the day if they don't respond, don't be too worried. The non responsive customers are unlikely to stay anyway.

D customers (D = Don't want to deal with)
Every business gets a few of these. Get rid of them as quickly as possible. D customers take up all of your time and you will never make any money off them. They will send you broke trying to keep them happy and then they probably still won't pay. Send them to your opposition and let them have the problems instead! Just say something like "We are not really geared up for this kind of work, I would recommend you contact x competition, they might be better equipped. Here are their details. Have a nice day". This kind of approach will work best as it avoids confrontation and means both you and the D customer keep your dignity intact.

Never be rude of course. Just be aware of who you can deal with and who you can't. At the end of the day you are running a business (which your family and your employees rely on to be profitable), and you don't have unlimited time or resources.

It is worth mentioning that I come across a lot of business owners who get scared about letting these D customers go, as they are worried about less sales. If you are still feeling unsure then take a look at recent sales you have had with these D customers and if you are a service-based business, do a quick costing on the job. Include time involved at your hourly rate, cost of extra materials, freight, time spent explaining things to them, etc. Work out how much you lost on the job and then think about what you could have done with the extra time to make more profit in your business. How much did you make or lose on this job?. I'll bet that you actually lost money and are worse off.

The point of all this and the key: is to isolate your A and B customers, find out what they have in common, and use your marketing to attract more of those excellent profitable customers. Ditto D customers, if you are getting a lot of them, ask yourself why they are attracted to your company. What is going wrong in how you market your business?

The truth is, you need to be very strategic with your customers and your business. Get your customer base right, and your business will be much easier to run and you will achieve much better profits and margins.

Task

Take a look at your customers over the past year and give a rating of A, B, C or D to each one. Then decide how you will deal with each group. Make it into a system that is automatically followed and assign one particular staff member to follow through.
Look at each group and search for similarities. You will find that your A and B customers will be in a certain location or have very specific needs or a certain income or occupation. This is valuable to know because now you can target this specific type of potential customer! And chances are they will be excellent customers for your business and bring in good profits for you.
Make a decision to stop dealing with D customers. List who they are and make a clean break.

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How to make 2016 your best year ever

How I made my wife more productive

Will your sales suffer in the current climate?

Are you sick of losing money on bad debtors?

Don't shrink your way to failure

Do you get bullied into bad deals?

Is your bucket leaking?

My beef with Apple.

Your business will crash without a dashboard.

Are Bad Customers Good For Business?

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