21 Feb

Recruiting Your Team

 

If you are a Small Business Owner you understand long hours, the stress of trying to do too many things and still have time to spend with family or loved ones.  If your business is successful and growing, at some point you will want to hire an employee.  This is all part of building your business team.

Hiring employees isn’t as simple as waking up one day, deciding you need an employee and sticking a sign in your window.  As with most things you have to plan for it and follow some sort of process.  Hiring an employee is an investment not only in your business but also in the person you hire.

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15 Feb

Grow, Grow, Grow, Could be No No No

 

In business, we have been told to ‘Grow or Die”.  We have been led to believe that the only way we can have a successful business is to always grow. 

This is not a safe or sustainable way to have a small business.  Certainly growth is important.  Certainly growth does many things for you and your family and community.  Growth can also destroy your small business.  Let me share an extreme but true story to help illustrate: 

Two people I know formed a company in a Midwestern city.  They were growing slowly building their service business up to around $300 thousand in sales and 6 employees.  They were confident and pleased with their success.  One day, an opportunity presented itself for them to bid on a large contract with a local Fortune 500 company.  They submitted their bid and won a $3.2 million dollar contract.  In less than two months they were out of business and in trouble with the state. 

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14 Feb

Build Your Business Team

Building your business team is important to the success of your business.  It provides you with the right people who will maintain your costs and keep your business balanced.  This allows for quicker more fact based responses achieving higher profits.

This isn’t a case of just hiring some people and declaring them your team.  I would caution too about assuming any friend or family member is appropriate for your team, some may not be.  In order to effectively build your team you need to do a few things:

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03 Feb

Marketing Your Small Business – More Than Just an Ad

 

I was making a presentation to a group of small business owners recently and the subject was “Growing Their Business.”  This evolved into a discussion on Marketing.   In so many words all of them said the same thing, “I market all the time.  In fact, my marketing efforts are pretty extensive.”  

So I asked them “what does that mean?”  Most told me how they were marketing, what activities they were undertaking.  I asked them if they were happy with the results.  All of them said, again, in so many words, that they were getting customers and it had to be from marketing.  I recalled an irritating question one of my sons used to ask me years ago…”How do you know?” One answered.   “I don’t know,” he said.  “I think my customers are from my marketing but I don’t know for sure.  But it must be true.” 

Now I am not opposed to marketing so please do not think this is about how bad marketing is.  In fact, marketing should not only be a part of your fixed operating costs, approximately 4-5% of your monthly operating costs should be devoted to marketing.  Equally important you need to know what value you are getting from marketing.  What does that mean… 

MARKETING SHOULD:  Define, Identify and locate at least 80% of your average Monthly Revenue in new, 1st-time prospect opportunities, defined in dollars. 

In other words, marketing is responsible for identifying new leads that are worth 80% of your normal monthly sales.  That is NEW LEADS, not REPEAT CUSTOMERS.  If your marketing efforts are not accomplishing that then they are not working for your business.  You have to measure it to know if it is doing that. 

What do your marketing efforts return to you?  If you don’t know you need to find out and if you can’t find out then you need to re-evaluate your marketing efforts and expenses as well as who is performing your marketing responsibilities.  Marketing is an investment and if you are not getting the proper return on that investment then it is an un-returned expense; a cost, a waste of financial resources. 

It doesn’t matter what kind of marketing activity you undertake.  What does matter is that it is viable for your type of business and reaches the industries your business serves or produces for?  That is right, the industries.  If too much of your revenue is tied up in one or two customers, individual companies or persons, your business is at risk of rapid failure.  It could potentially happen overnight. 

So start by identifying where your customers come from.  Not Bill, Joan, Judy and Tom, but the actual markets that provide those customers.  You are looking to identify any Market with five or more companies, with SPECIFIC needs, that have given your company an indication that they will annually be purchasing a verifiable minimum product or service type that you offer.   To make a distinction here let’s call these sources Channels or Bins (picture a row of storage bins).  

 For example, your business gets customers from the following Channels’s or Bin’s: 

 Hardware stores     Hospitals     Referrals     Radio Advertising     Internet

Your specific Channels’ will, of course, be different based upon your business.  Most small businesses that do this for the first time are only able to identify three to six different channels’s with an appropriate number of opportunities to be viable.

With this information and a bit of analysis, you can not only determine if your marketing efforts are well run and performing as they should, but also that you have developed enough sources for new business to both sustain and grow your business.  Of course, sustainment and growth are never solely the responsibility of marketing and do require careful equal coordination with all of the other areas of your business.  

Investing your efforts into areas with clearly measured and defined results will help ensure long-term success.  Not measuring the specific return on investment of your marketing efforts means all you are doing is spending money.  Simply spending money on activities will do little for you but it will make whoever you are paying quite happy…and potentially rich.  Your goal is to do that for your business.

02 Feb

How Safe is Your Business

 

 

Safety.  Safety means different things in different situations.  Here we are discussing Business Safety.  This has nothing to do with OSHA regulations or safety equipment.  However, safety equipment is something of a theme when we discuss business safety.

What exactly is business safety?  It is the ability of the business to get through periods of downturn in the business.  What kinds of downturns?  Some of these are:

Economic – One need only look back a few years, to 2008, to understand the impact of an economic downturn throughout the country to understand how this impacts your business.  Many businesses failed, struggled and conducted large layoffs. 

Legal – Laws get passed that impact businesses all the time.  Rarely are these without cost to a business.  In fact “Crain and Crain estimated the per employee cost of complying with Federal regulations at $10,585 for businesses with fewer than 20 employees.”

Environmental – Blizzards, hurricanes, earthquakes.  Each of these can have a serious impact on a business.  Most often these can be weather conditions locally that create power losses for several days or restrict access to your business.  In many states road ,construction and repairs interfere with business access for months on end causing a decline in sales.

Political – Like legal issues, political issues can also challenge a business.  Your industry could suddenly become the “political flavor of the month” and you find yourself defending what you do.  Tobacco found themselves doing that.  Here in the agricultural belt we find political issues regarding the use of well water, runoff into lakes and streams, debate over where our facilities should be located, such as large wind farms.

Each of these will have some impact on the business and could easily impact business revenue.  Having the right strategy in place will help ensure the business gets through this downturn period and in some instances even thrive while others are seriously declining or even closing their doors.

What kinds of strategies or actions can a business take to help it get through periods created by the issues above?  While not a complete list, each of these should be considered.  Not individually, but together, to ensure the balanced integrity of your business and to help ensure its safety.

Error Management – Improving quality with a goal toward eliminating error will help reduce cost and contribute to positive customer experiences.  A higher quality improves both your reputation and your brand.  Products and services that are as promised, without error, will be in greater demand than those without.

Waste Management – Improving productivity and efficiencies.  Waste is a significant cost adder.  Whether it is time, paperwork, process, it adds to your cost of production and, as a result, forces you to charge more, or profit less.

Delivery/Production Management – Refining supply change management, costing and material management.  Managing your costs, whether from the materials you use or where and when you get them, helps you maximize your overall production and ensure a better product.

Channel Marketing – Refining market research, cost of sales and improving diverse new first-time business leads.  The broader the market you serve, where you get your customers from, will provide enough diversity to meet any challenge.  The greater your reach, the greater your safety.

Customer Retention – Repeat sales from existing customers.  Keeping customers is significantly less expensive than finding new ones.  Further, their purchases from you can become predictable helping to ensure a steady revenue stream.

Team Building – Maximizing employee engagement and performance incentives.  Every business will face the same challenges.  The single greatest competitive edge you have is your people.  Engage them and incentivize them, you will prevail in any situation.

Cash Management – ensuring adequate cash supplies on hand through retained cash earnings, cash supply in an amount necessary to continue operations during periods of business shortfall.  Making certain that you have a specific amount of cash in your checking and savings account helps ensure against long-term economic challenge.  Access to credit will help your business grow.

 

Effective well thought out strategies like these will help ensure the survivability of your business in any situation.  Diagnosing the strengths and weaknesses of your business will help you determine which of the 7 strategies to give your first emphasis on, but understand you will want to focus on all 7.

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