Author: Bizink

  • Why you need recurring revenue streams – and how to start

    Why you need recurring revenue streams – and how to start

    The same advice for building a healthy investment portfolio applies to your business: diversifying will lower risk and increase growth.

    Adding a recurring revenue stream (or two, or three!) can provide a predictable, ongoing source of income which will improve the accuracy of your projections, increase profits, and provide a buffer for any unexpected sales dips.

    Business

    Here are four simple ways to start earning recurring revenue for your small business.

    Auto-renew subscriptions

    The most tried and true recurring revenue model? The subscription automatically rolls over each month unless canceled.

    Think newspapers, magazines, Netflix, and those delightful subscription boxes that arrive each month featuring food items, craft kits, cosmetics, specialty teas, books, or clothing. Some B2B examples are cloud-based accounting software, document storage, anti-virus protection, and web hosting.

    Customers depend on their evergreen subscription services because they make their lives easier or more pleasant. As long as they feel they’re getting value for their money, your customers won’t give the small monthly fee charged to their credit card a second thought.

    Tips for getting started: Research what your competitors are offering, and talk to your customers about the kinds of products and services they’d be happy to pay for on a monthly basis.

    Membership sites

    If you’re an expert in your field, a membership site can provide a lucrative opportunity to serve more clients on the web—and earn more income.

    In addition to paid, password-protected content, your membership site can offer your clients an online community portal, where they can socialize and connect with you for group mentoring outside your office hours.

    Ideal for location-independent-minded entrepreneurs, coaches, and consultants, a membership site allows the freedom to serve clients all over the world.

    Tips for getting started: If your website is built on WordPress there are a number of membership site plugins available to let you accept secure credit card payments and provide member-only access to certain content.

    Affiliate subscriptions

    Unlike set monthly subscriptions, being an affiliate may offer a less predictable income stream, but, nonetheless, an opportunity to earn some passive income.

    With the affiliate model, brand ambassadors are paid a set fee or percentage of each total sale for each successful referral. If you’ve built credibility and trust in your brand, some of your customers will likely be willing to pay for the products and services you recommend.

    How to get started: Make a list of the businesses that you regularly buy from. Check each company’s website to learn how to become an affiliate. Once you’ve signed up, you’ll be sent a unique link to share with your customers. Every time a purchase is made using the link, you’ll earn a referral fee.

    Final thoughts

    To learn more about the benefits of setting up recurring revenue streams, take a look at John Warrillow’s, The Automatic Customer: Creating A Subscription Business in Any Industry.

    In addition to increasing sales and profit margins, recurring revenue can lead to better customer retention as well as greater growth for your business.

    Now that you know a bit about recurring revenue streams, which model is right for you?

     

  • 17 ways to get repeat business

    17 ways to get repeat business

    Q. I am finding it tough. Sales are slowing but I can’t figure out exactly why. No one seems to be unhappy with what we do, and no competitor has entered the market.  People seem to be buying less often and in lower numbers.

     

    Your existing customers are your most valuable asset. This is because it’s easier and far less expensive to get an existing customer to buy off you again than to find new customers. So here are 17 ways to gain repeat business from existing customers, or to get your customers to think more positively about your business. The golden rule for success in business is to get your customers to believe that they are more important to you than anyone else.

    Because small businesses are very diverse, not all these tactics will be relevant to your particular business. But many will be, so make a commitment NOW to try at least one, if not more, of these tactics.

    Please also note that most of these ideas involve using your database of customers so make sure that you comply with the Privacy Act. (Check out the provisions of the Act at the Privacy Commissioner’s website www.privacy.org.nz where you can download the ‘Guidelines for Business’ file).

    Celebration Card Writing Concept

    1. Send a thank-you letter within two days of the customer buying off you. If at all possible, send a note the next day. It only has to be a handwritten note on a standard card—though a professionally typed letter is better. Other variations include sending a cartoon with your caricature to say thank you, or even a cartoon card (depending on who the customer is and how much they have spent).
    2. Send an offer of a product or service that’s related to what they bought, usually after one month. Offer a discount or special deal. If you don’t have any complementary products or services, then find a business that does and offers its products. Then get that business to do something similar with their customers, but this time with your products or services as the offer.
    3. If you sell products (such as printers) that use consumables, use your database date-of-sale records to predict when they might be ready to buy these consumables so that you can send them a ‘special offer’. Use the same technique for products that have a definite use-by date (such as timing the letter for when a lease arrangement on equipment is about to expire and newer technology is available).
    4. Send out a questionnaire once every three to six months to see what your customers now want, and to see if your market has changed. Use the feedback to update your database and refine your product and services mix.
    5. If you have a small number of highly loyal customers, then continue to acknowledge their customers with simple ideas like sending birthday and Christmas cards to them.
    6. Try a telemarketing exercise. Ring up the customer with a brief message about a special or new product they may like to try. If possible make the offer free, or offer some incentive that provides a genuine saving or deal for existing customers only.
    7. Send out a regular or email newsletter to your customers (even once every six months). Inform them about what is happening in your industry, community, or area. Give tips relating to whatever business you are in. If you run out of ideas, then contact another business to share the newsletter (you can also share costs). Note: an email newsletter costs only a fraction of a conventionally printed and posted newsletter and the Internet offers a huge resource of useful information.
    8. Run a customer contest that only existing customers can enter. This rewards them for being your customer — not the competition.
    9. Inappropriate instances you may be able to ask for referrals. Something along the lines of: ‘If you thought that we did a great job, then we’d really appreciate it if you could send us the names of three people who could also benefit from our product/service’. Or you could simply ask for your name to be passed on to any people the customer may see as needing your help. Sometimes you can also include a special deal for their friends. Be careful here, though: don’t make this deal better than the one the original customer received!
    10. If you have a new product or new technology just about to be released, then hold a ‘customer-only’ preview. Supply refreshments. This could even relate to someone else’s technology. For example, if you have just bought a new color printer, invite your customers to see what it can do. Get them to bring in some printing so you can demonstrate their work. You can also the supplier of the equipment to share the costs – it’s a promotion for the supplier too.
    11. Have a sale that is available only to exist customers. Send them an invitation that selects them as special and points out that the public will be excluded.
    12. A variation on the above is to offer existing customers the first choice at your sale for a certain period (such as a few days or a week) before the sale is opened to the public.
    13. Try sending a letter or card or email that does not try and sell anything, but just keeps them informed of interesting facts or information for their use. This way, they don’t always associate hearing from you with a hard sell. Instead, they come to look forward to receiving helpful information from you.
    14. If your customers spend lots of money, and the profit per item is large, then send your customers relevant CDs or videos. For instance, if you sell to other businesses, you could send them CDs or videos on selling or marketing, or motivation. Or even in the case of especially good customers a video on their interests: find out from the survey you sent them what sports they follow, and then send them the corresponding videotape of rugby’s greatest tries, soccer’s best goals, highlights of the netball series or whatever. Stick your business name on the video.
    15. Send customers a catalog of all your products, and offer to direct mail to them anything they need.
    16. A variation on this if you have a website is to offer preferred customers a special PIN number or password that allows them to log in to sections of your website (special discounts, sales, etc.) that others can’t access.
    17. Come up with a special anniversary offer one year exactly after the customer first bought off you. If the offer is taken up, repeat the idea every year.

    There must be something for every business on this list. The whole idea is to keep in contact with your existing customers, to build goodwill and positive word of mouth. By making them feel privileged and special you’re preventing the possibility that YOUR customer will be lured away by the competition. They couldn’t be possible after the way you look after them!

  • Wealth the Warren Buffett way – a short guide to value investing

    Wealth the Warren Buffett way – a short guide to value investing

    Value investing is the stock selection strategy famously used by business magnates and the third wealthiest person in the world, Warren Buffett, whose total net worth exceeds $91.5 billion.

    Developed in the 1930s by Columbia University professor and economist, Ben Graham, value investing involves screening securities to find stocks undervalued relative to peers and the market. Stocks are then assessed for their intrinsic value, determined by a fundamental metric—such as the price-earnings ratio—and purchased only if the stock price is less than its intrinsic value.

    Business Owner

    With value investing, dividends, cash flow, and earnings growth matter more than market factors on the stock’s price. The idea is that the market will eventually correct—and when that happens, the undervalued stock will rise in price and the investor will make money.

    Buffett’s investments have consistently outperformed the market, decade after decade, which is why he’s become known as the “godfather” of value investing.

    Warren Buffett’s story

    In the early 1950s Buffett enjoyed success following Ben Graham’s investing guidelines but began to assess potential stocks differently than his mentor. While Graham kept his focus on the bottom line numbers—the balance sheet and income statement—Buffett looked at a company’s corporate leadership and overall potential to generate earnings long term.

    In 1962 Buffett bought Berkshire Hathaway, a failing textile company whose shares were valued at $7.50 each. He phased out its textile manufacturing division and transformed the business into a holding company for investments. By choosing to invest in a number of assets that proved lucrative in insurance, oil, and the media, Buffett was able to build Berkshire Hathaway into the incredibly profitable company it is today.

    Value investing tips

    These tips from a Business Insiders article on Warren Buffett’s winning investment strategies can help you become a more successful investor.

    Re-think your diversification strategy

    Buffett recommends selecting stocks carefully, with an eye on the long-term future, maintaining focus on individual investments rather than hedging bets with a varied portfolio designed to minimize volatility.

    Follow the 99-1 rule

    Buffett warns investors not to sell as soon as it appears that a stocks’ value is declining—like the 99% do, overreacting as they take in just 1% of the daily financial news.

    Play the long game

    Buffett’s approach to investing requires patience and commitment. He advises investors to select stocks with potential and hang onto them for decades. Investors who constantly buy and sell may lose out on higher returns—and end up paying more trading commissions and taxes.

    Get started with a formula for value investing
    For more detailed information on value investing strategies—including guidelines for how to choose undervalued securities with excellent profitability potential—check out this article on Investopedia.

    You might also be interested in taking a look at The Essays of Warren Buffett: Letters to Corporate America—a collection of letters Warren Buffett wrote to Berkshire Hathaway shareholders—or Ben Graham’s classic book on value investing, The Intelligent Investor.

  • Getting the work–life balance right

    Getting the work–life balance right

    As a small business owner it’s hard to juggle your work and outside responsibilities. It’s important to run your business effectively and still have a life outside the office.

    You need a good balance between work and play for your health and well-being. Small business owners often fall into the trap of working too hard, ending up exhausted from the constant work demands associated with self-employment.

    Man With Daughter Raking Leaves And Woman With Child

    Why you need balance

    Working too much without taking time out for yourself and your family can quickly become counterproductive. You’ll be tired, stressed, and irritable, leaving you unable to perform optimally. As a result, you’ll be more likely to make mistakes and snap at people who are important to you and your business.

    Some dangers of overworking include:

    • Missing opportunities because you’re too busy
    • Being short-tempered with your staff affects their attitude and performance
    • Treating your family poorly results in an uncomfortable home life
    • Working to the point of burnout or illness
    • Losing the passion that prompted you to start your business.

    Avoid burn out

    There are a number of things you can do to scale down your workload and regain a sense of balance.

    Start delegating

    Delegating will take some of the pressure off you and free up time for more urgent and important tasks, allowing you some leisure time to relax.

    Create good systems

    Develop a clear operations manual for each process in your business. This lets you and key staff take a break, and speeds up training when someone new comes into the business.

    Stretch and walk

    Take a few minutes every so often to get up from your desk and stretch. It’s good for your body and will help you stay focused.

    Talk to your family

    Ask for suggestions and input – they’ll see things that you can’t.

    Network with other business owners

    Chat to fellow business owners who seem to be working normal hours. You’ll stop feeling so isolated and you might get some valuable advice.

    Take mini-breaks

    Put mini-breaks into your diary. Schedule a day off once a month, a week off every 12 weeks, or perhaps take every second Friday off.

    Person Taking Break From Working Office

    Re-evaluate your client base

    Do you have customers that take up far too much of your time for very little gain? Find a polite way to stop doing business with them or pass them on to staff members to deal with.

    Stay motivated

    Staying passionate about your business and motivated to do your best is important. If you find you just don’t have the energy you once had, your staff and business will suffer. Take action before you start to enter a negative spiral.

    You could try the following:

    • Set exciting and challenging new goals.
    • Share your goals with your staff so everyone understands what you want to achieve.
    • Set measurable ‘stepping stones’ to the main goals and celebrate each achievement.
    • Refresh your daily routine. Allocate blocks in your diary for key daily activities, such as checking emails, meetings, and visiting clients.

    By staying motivated and avoiding burn out you’ll have the foundations in place to enjoy running your business again, while also retaining a fulfilling life outside work.

  • Finding money within your business

    Finding money within your business

    Most small businesses experience cash flow problems from time to time and urgently need working capital. Many business owners immediately think of the bank or loans when they’re short of money. But there are other resources you can tap before you ask for that expensive overdraft or overdraft extension. The money you need might already be there—locked up in inventory, assets or your debtors’ book.

    Finding Money Within bisiness

    You can often free up funds from within your business by re-examining your business systems, and these funds might in themselves be sufficient for your immediate needs.

     

    Good management

    Even if the funds you free up from within your business are not sufficient, there is another payoff: the effort you make in searching for them helps to ensure that you are running your business in an efficient manner.

    To free up funds from within your business, look closely at:

    • assets
    • customers
    • suppliers

    Assets

    Your assets include debtors, stock, pre-paid expenses, vehicles, plant and equipment, fittings and property. Each of these is a possible source of funds.

    Debtors

    Are you letting some customers have the free use of your money for months? This is a common occurrence in small businesses where the owner(s) are so busy getting the business off the ground, products out the door, or services completed, that they don’t pay enough attention to basic business procedures. Many customers will take advantage of this ‘free money’. But your business is not to serve as a free bank.

    Here’s how you fix the problem:

    • Get invoices out promptly. Whatever else you do, become efficient at getting invoices out early. This is your future cash flow—the lifeblood of your business! You want to receive it as soon as possible. Start this new system NOW. Depending on your business, you can often cut out statements simply by printing at the bottom of the invoice: ‘Please pay on this invoice as no statement will be sent.’
    • Send the invoice with the goods or immediately the service is completed. Date the invoice from no later than the day it is sent rather than following the standard ‘last day of the month’ date for invoices. The earlier the invoice date, the better your chances of getting paid earlier.
    • Change the terms for some of your customers, or for new customers. For example, can you reduce ask for immediate settlement or set reduced payment terms such as 7 days or 14 days from the date of invoice?
    • Follow up promptly when invoices aren’t paid by the due date. This is critical. Be polite but firm. If you haven’t the time to do this yourself, then appoint someone to do it for you.

    Monitor your debtor collection days and set an improvement target each quarter. For example, can you find out the benchmark standard for your industry? IF the average in your industry is 30 days, but you are taking an average of 45 days to collect outstanding debts, then there’s clearly room for improvement. If your customers or clients have been taking advantage of you because of your previous laxity in invoicing, then you may need to re-educate them. Do this politely so you don’t offend customers:

    “Have you received our invoice, Peter? I’m just checking that you’re happy with the goods/services we provided? “We’ve got a new invoicing system going here because we’ve been a bit lax in the past. My accountant has set some tough goals for me to meet in reducing our average debt collection cycle, so if you could settle that invoice promptly I’d be most obliged.”

    Consider factoring. This simply means selling your outstanding invoices to a finance company. So instead of having to wait 30 days or more until an invoice is paid, you receive most of your money upfront from the finance company that then, in turn, collects the money from your customer. The finance company will of course charge you a commission for this service. Be aware, though, that there are pros and cons to factoring. For example, check that the finance company will not antagonize your customers with a heavy-handed approach. Talk to them first about their collection methods.

    Consider offering a discount for prompt payment. If you’re going to pay a fee for factoring, why not try offering a discount to your customers instead? Discounts are not a good option for low-margin businesses but can be an option for high-margin operations. You have to work out whether the use of money gained earlier is worth the discount you’re offering. NEVER give the discount if the person has missed the due date for the discount offer. (Yes, some will try this on.)

    Inventory

    Do you have excessive capital tied up in stock? This can occur in two ways:

    • carrying high levels of items that you could obtain from suppliers at short notice
    • having too many slow-moving items (and too few fast-moving items).

    A quick sale?

    Review regularly your stock levels, your stock turnover rates, and your purchasing policies. Can you free up money by reducing stock? What about moving out of the slower-moving lines or having a quick sale of dust-collecting stock? It might pay you to reduce some items quite heavily to get some money in quickly.

    Can you approach suppliers to take back any excessive stock you may have ordered? They might help you out of a temporary tight corner as a goodwill gesture if you explain you have a temporary cash-flow crisis, but that you do wish to build a long-term relationship with them.

    If you need additional funds to purchase more stock, make sure that you’re replacing the slow-moving stock with faster-selling lines.

    Pre-paid expenses

    This is another area you could look at. These pre-paid expenses often relate to services. For example, you might pay your insurance bill for the year all in one hit, but you could arrange to pay small monthly amounts. There might be an additional cost for doing this, but you must weigh the extra cost against the advantages of 12 small payments which your cash flow can comfortably handle versus one large annual payment. Try a similar approach with your accountant. Instead of facing a substantial bill once a year, ask if you can pay a set amount monthly.

    Assets

    Assets can drain significant amounts of cash out of a business. Do you really put all your assets to full use? You might be able to:

    • Sell off little-used assets and hire suitable replacements when you require them.
    • Lease or rent assets and equipment that depreciates rapidly such as computers and or vehicles

    Customers

    Don’t forget your customers can be a source of business funds. Apart from debt collection improvements already discussed, try these tactics:

    Here’s a ‘thinking outside the square’ tactic. Ask some of your credit customers (start with the ones you know best) if they would be willing to use their bank credit cards for purchases from you, instead of using the account facility they have with you. For example, if they purchase say $2,500 worth of goods or services from you, they would pay for this by means of a business credit card. They still get 30 to 55 days credit before having to pay the credit card company, but you get your cash as soon as you sent in the voucher to the bank. You have to pay the (around) 5% commission, but otherwise, it’s almost as good as a cash transaction.

    If you’re starting a new business, consider establishing it on a cash-only basis to keep the funds inside your business rather than locked up in Accounts Receivable.

    Ask for progress payments

    If you supply goods over a period of time, or if you’re a service business, ask if you can invoice for progress payments. This is quite a common method of ensuring you get some cash flow during a project instead of waiting until the end of a project or delivery period to invoice—and then still waiting at least another 30 days for payment.

    There’s another benefit here too. If the customer turns out to be dodgy, you’ll discover this quite early on instead of at the end and you can cut your losses before they mount up and perhaps drag your business down. This tactic is therefore very suitable for tradespeople subcontracting to a developer.

    Suppliers

    Finally, consider your suppliers as a possible source of funds. Ask for extended payment terms to give you the opportunity to sell the goods first before you have to pay. If the supplier won’t budge, try this tactic: split the order in two and offer to pay normal credit terms (30 days) on the one half of the order and 90 days on the other half. Your suppliers will be more likely to agree to this kind of arrangement if you’ve paid them promptly in the past. After all, they have a vested interest in helping you succeed.

    • Quantity breaks – incentivize customers to order more through quantity discounts.
    • Re-order levels – Set up minimum stock levels to avoid stock outages on important lines.
    • Default reorder quantity – Setup re-order quantities so the most economic order quantity is placed.
    • Receive Stock – Receive items into stock so you can sell them before receiving the final bill

    Take advantage of discounts

    Pay accounts that give discounts on time. This is an easy one. If any suppliers offer a discount for early payment, then take it (and there is no harm in asking for a discount).

    These are just suggestions and may not be suitable for your business. Feel free to contact us about ways to find money in your business.

  • From Apple to Avon: six inspiring marketing successes

    From Apple to Avon: six inspiring marketing successes

    From Mac computers to make-up, here are six examples of super-strong brands that cornered their markets using different marketing strategies.

    If you look at their histories and analyze the pivotal moments, you’ll find parallels and pick up tips on how your company can follow in their footsteps and stand on the shoulders of giants.

    Businesspeople Meeting Plan Analysis Graph Company Finance Strat

    Apple’s call to arms

    Anyone who remembers Apple’s computers from the 1980s knows its brand loyalty wasn’t always product-led. Many of its computers, including the famous Macintosh, proved too expensive, too limited, or too ahead of their time to find traction (anyone remembers the Apple Newton PDA? Didn’t think so).

    What sustained the brand through the ‘80s, as Microsoft grew to dominate Silicon Valley, was its success in building on its underdog status and turning its philosophy into a cause – and its 1984 Super Bowl TV ad was its watershed moment. Directed by filmmaker Ridley Scott, the ad took its cue from George Orwell’s novel 1984 to make Apple’s proposition significantly more emotive than its competitors’ – as if those buying a Macintosh computer were making a stand against conformity.

    Advertising Age later named it the the1980s Commercial of the Decade, while in 2007 it was named the Best Super Bowl Spot in the history of the event.

    Lesson:

    You don’t have to be the biggest to be the best. Consumers love innovators and underdogs, and if you can frame your offering into a struggle to be recognized, then you can appeal to people’s hearts as well as their heads.

    VW confronts its demons

    In the 1950s, VW was seen by most Americans as a European oddity with links to Nazi-era Germany. In other words, it had the kind of baggage that just can’t be stowed away in the trunk. However, Doyle Dane Bernbach’s Think Small ad campaign changed all that by turning one of the VW Beetle’s biggest perceived failings – its diminutive size compared to American cars – into an asset, and a social statement that would grow throughout the next decade.

    Before America knew it, the “people’s car” commissioned by Adolf Hitler in 1933 was the ride of choice for the flower power generation of the ‘60s. That’s quite a trick–- no wonder Think Small is ranked as AdAge’s top ad campaign of the 20th Century.

    Lesson:

    Don’t ignore criticisms or misconceptions about your product. Challenge them, face them head-on and turn them on their head. Why concede and start making products like everyone else, when all you’ll do is lose your point of difference?

    IKEA – Swedish for fun

    When IKEA founder Ingvar Kamprad first struck the idea of building flat-pack furniture that could be delivered cheaply to the masses because it cost less to transport and store, he scarcely could’ve imagined 50-odd years later his company would be opening 20 new stores a year and have a catalog more widely read than the Bible.

    But IKEA’s almost slavish following from the middle classes isn’t just about product and logistics. In fact, IKEA’s growth and success as a truly global brand without borders rest quite significantly on the experience – one Kamprad first started honing back in 1965 when he opened his flagship store in Stockholm.

    Anyone who’s visited an IKEA store would recognize it – its vast size, the showroom circuit which slows down foot traffic, the storeroom and check-out area that’s more like an airport terminal than a till, not to mention the restaurant seating 350.

    Kamprad reinvented the shop as a theme park, and today the IKEA faithful return to their local stores for the “experience” of buying and the lifestyle it offers, as much as for what they buy. IKEA’s strong product range and support via its iconic catalog (which gets randomly mailed out to more than 100 million households each year and is said to gobble up 70% of IKEA’s marketing budget) help keep the concept fresh, but much of the heavy brand lifting is done by its PR department.

    Not one store launch goes by without a competition rewarding the first at the door, generating masses of free publicity as cameras follow the lines camped outside, while others vie for the chance to be an IKEA Ambassador for Kul. What is Kul? It’s Swedish for fun.

    Lesson:

    Providing entertainment and an “experience” beyond shopping is added value consumers can find priceless. Instead of selling a product or a service, market a lifestyle or an experience.

    Marketing Advertising Commercial Strategy Concept

    Ford takes Detroit digital

    Until recently, The Ford Motor Co. was known primarily for two things – Henry Ford’s automated production line and its complete disdain for marketing. If there was ever a company besotted by the power of the car salesman, it was Ford, a brand that struggled with its image in its home market for decades. In fact, up until the global credit crunch hammered home the need for a rethink, Ford’s US car division’s brand slogans used to change every 18 months to two years. No wonder US sales dropped – Americans no longer knew what Ford stood for.

    However, if there’s one company that really stood up and took notice of the recent need for change, it is Ford. And nothing epitomizes its efforts more than its Fiesta Movement strategy, which was hailed on its completion in 2010 as a textbook use of the medium that has changed how Detroit looks at social media.

    The strategy simply saw Ford selecting 100 social media users to live with its Fiesta super-mini for six months in the run-up to the car’s US release. Ford gave them missions to carry out with their Fiestas every month – such as delivering meals on wheels – while these social media brand ambassadors blogged about the experience, posted videos on YouTube, and generated comment streams on Facebook, Twitter, and Flickr.

    So far, so what – but what really made the strategy shine was its execution. Few brands, large or small, really get that using social media requires subtlety, but with Fiesta Movement Ford really stood back and let other people talk about their product to not only generate brand awareness but brand credibility. Ford created a website for all the crowd-sourced content being generated, but crucially, they didn’t edit it.

    In 2010, consumer protection trackers ALG had Ford leading all other car and truck brands in gains of perceived quality, while Ford car sales in the US had a growth rate double that of the industry average.

    Lesson:

    Businesses looking to grow their brands via social media often think it’s all about creating your own content. It’s actually about kick-starting content from others who can add credibility to your brand with their independent voices.

    Guinness settles a few arguments

    For a beverage company making a product that, shall we say, isn’t everyone’s cup of tea, it takes real creativity and lateral thinking to generate near-universal positive association for the brand.

    But that’s exactly what Irish stout brewery Guinness did in 1955 with the Guinness Book of Records. It was four years earlier that Guinness Brewery’s then Managing Director, Sir Hugh Beaver, famously came onto the idea of distributing a free publication of record facts to pubs as a marketing exercise. It came to him during a shooting party in County Wexford when he was arguing about which game bird was Europe’s fastest and realized he was having the kind of argument many of his customers have while supping a pint of Guinness in a pub.

    After a positive reception with drinkers, Guinness released its first retail edition for Christmas 1955. It became an immediate bestseller and a new edition was soon being printed every year.

    Today it is known as the Guinness World Records and isn’t even owned by the brewery anymore. However, the publication has become the world’s best-selling copyrighted book, and the Guinness brand is one of the best known in the world (enjoying an almost unprecedented 98% prompted recall rate among tested consumers in the English-speaking world).

    Perhaps the biggest irony, though, has been the services Guinness has carried out for marketing along the way. After all, few brands can claim to have created an entirely new category of PR which, on average, can generate £250,000 of media coverage for companies involved in record-breaking attempts.

    Lesson:

    When it comes to promotional material, think outside the box because a promo item doesn’t have to be directly related to your product or service to be relevant. In fact, a niche product brand can greatly benefit from being associated with a promotional item popular with a wider audience.

    Ding-dong, Avon calling!

    In the late 19th Century, when societal pressures confined many women to the role of house-bound housewives, door-to-door salesman David H. McConnell stopped selling books and started selling perfume instead – in essence bringing the department store to their door.

    However, the real stroke of genius came in 1886, when his business, the California Perfume Company, hired Mrs. P.F.E. Albee as its first female rep. Shunning the traditional male door-to-door salesman, who’d often talk down to the customer, in favor of empowering other women in the role so they could be relatable for their customers was a brave move, but it soon paid off.

    By 1920, McConnell’s company – now known as Avon – was selling $1 million of cosmetics every year, dwarfing the annual sales of many department stores of the period.

    Lesson:

    Distribution choice is just as important  part of marketing as advertising and R&D, and if you can find a profound and effective way to reach your customer, you can use that choice as a point of difference to build a strong, unique brand. Reach out to us to learn more.

  • Growing your business without borrowing

    Growing your business without borrowing

    Taking out a business loan may be your first plan of action for financing business growth. But there are excellent reasons to consider other options for finding capital to expand your business.

    For one, it can be very difficult for a small business to secure financing, especially in the early days. You’ll need to prove to a lender that you aren’t a high risk, with financial documentation that shows your company has been profitable for a few years.

    Business Finance And Loans

    When you take out a loan you’ll need to consistently make payments toward the principal, interest, or both, depending on your agreement. If for some reason you can’t make your payments, the problem can snowball from losing the assets you pledged as collateral to more devastating losses, including bankruptcy.

    Consider these four ways to finance growth without approaching a lender for money.

    Ask for pre-payment

    This option is as simple as asking your customers to pay you in advance of receiving your products or services. Explain that you are changing your payment policies and your new terms are that you receive payment on the first of the month, at the beginning of a project—whatever works for you. As the owner of your business, you get to decide when and how much you need to be paid in order to deliver your products and services.

    On a related note, you might consider using a subscription model for a new income stream. Some possible subscription-based services with a recurring pre-paid fee are:

    • a password-protected website offering valuable info and community for your customers
    • a monthly service membership website (i.e. beauty, dry cleaning, home maintenance)
    • box kits for DIY enthusiasts (i.e. cooking, crafting, and other hobbyists)

    Try Crowdfunding

    Crowdfunding campaigns connect individuals with a community of willing donors via a platform such as Kickstarter, Fundable, or Indiegogo in exchange for some reward.

    In addition to providing an inexpensive source of financing, crowdfunding allows entrepreneurs to gain market validation for a new idea before overinvesting—and provides an opportunity to market to potential new customers. You’ll be able to start selling before your new product or service is ready so you can continue to avoid the small business debt trap.

    Form an alliance
    Partnering with other businesses is mutually beneficial: each company can increase its sales by introducing each other’s products and services to its own customers at no added cost. You can potentially attract brand new customers, too, by increasing your range of offerings by way of your alliance.

    Likewise, a marketing alliance is a simple strategy where two companies agree to spread the word about each other’s products and services with their customers. Each partner would earn royalties on sales to the other partner’s customers, bringing in easy growth revenue without any additional marketing or advertising costs.

    Final thoughts

    As you move forward with your next phase of business growth—no matter how you fund it—be sure to touch base with a business advisor. Seeking the guidance of experienced business experts who can help you update your business plans, and choose the best strategies to cut costs, increase profits, and achieve your short and long-term goals, will lead to greater success.

  • Encouraging word of mouth

    Encouraging word of mouth

    If you have any doubt that word of mouth referrals are important, consider these recent stats:

    So how can you encourage positive word of mouth for your small business?

    Try these three strategies.

    Offer exceptional customer service—every time

    There’s no way around it: positive word of mouth has to be earned.

    Unfortunately, it is exceedingly difficult to prevent negative word of mouth. People are much more likely to share a bad experience than praise a business. (Research shows that 95% of consumers will pass on a negative run-in with a company and more than half will spread the word to at least five other people).

    Encouraging

    The best way to earn positive referrals is to make your customers feel special each and every time they come in contact with you and your brand.

    Here are a few simple ways to win over your customers:

    • Be friendly and approachable in person and online
    • Get to know your customers personally
    • Ensure customers are greeted promptly and don’t wait long to complete a transaction
    • Express gratitude for ongoing business
    • Offer perks for loyalty
    • Pay attention to the details
    • Be honest, always
    • If something goes amiss, take immediate steps to resolve the problem to the customer’s satisfaction.

    Invite—and reward—referrals

    You can increase the odds that customers will spread the good word about your business with an incentive—such as a freebie or discount on their next purchase for completing a review on your website, Yelp, or Angie’s List.

    Try an app like Wufoo to set up a simple referral form right on your website. Make it easy to pass on your e-newsletter to more potential customers with a web-based referral system that automates the process.

    Don’t miss an opportunity

    Remember to ask the folks who praise your products and customer service that you’d love a testimonial for your website, or a shout-out on social media.

    On that note, it’s essential to keep track of what people are saying about your brand online—whether the talk is positive or negative. Be sure to take a moment to thank your fans for their kind words. As an added bonus, replying to positive business reviews can help give them a bump in search results.

    Be sure to respond appropriately to negative reviews, too. Consider a bad review an opportunity to make things right. It’s much better to know what people are saying and respond than allow a problem to fester.

    Check out this article for useful tips on the right way to respond to positive and negative reviews.

    Final thoughts

    As you make efforts to increase word of mouth for your business, remember this: it’s the element of surprise that really gets people talking about a company. Think about how you can do more than meet your customers’ expectations, but dramatically exceed them. They’ll not only tell their friends about you—they’ll keep coming back for more.

  • Is a business mentor worthwhile?

    Is a business mentor worthwhile?

    “Mentoring is a brain to pick, an ear to listen, and a push in the right direction.” — John Crosby

    The opportunity to learn from a mentor can do more for a small business owner than any course, educational program, or degree. Being a mentee means you get the benefit of first-hand experience, without having to make all the mistakes yourself.

    Business

    There are, in fact, a host of reasons why a well-matched mentor is an invaluable asset for an entrepreneur. You’ll have someone you can trust and confide in, lean on for advice, bounce new ideas off of, and get help refining your business plans.

    Read on to learn how to connect with a mentor and get the most out of a mentor-mentee relationship.

    Finding the right fit

    The first step to seeking out a mentor is to know the kind of guidance you and your business would most benefit from, right now.

    For business owners in the early start-up stage, someone who can provide advice for surviving the first few lean years—and someone you can touch base with more often—may be the perfect fit.

    In this scenario finding a mentor with experience in your industry is a plus, but not absolutely necessary (which can make your search for a mentor a bit easier).

    If you’re in a highly specialized field (like IT), if you’re running a business in a niche market, or if you’re at the point where you’re ready to scale, you’ll likely want to narrow your search to a more selective pool of mentors with pertinent experience.

    Where to look for a mentor

    Start your search for a mentor in your current network. Think about who you know through your previous jobs, educational history, professional associations, and the local business community.

    Your social media networks can be a great place to find a mentor, too. Be sure to get the word out via your LinkedIn groups, Twitterverse, and Facebook. You never know who might be out there, just on the periphery of your social network, by one or two degrees of separation.

    Another option is to search for organizations in your area—like Australia’s International Business Mentors—that help match up to business owners with trained mentors.

    Alternatives mentoring opportunities

    Let’s face it: all business owners are busy people. And although it’s most beneficial to meet with a mentor consistently, doing so in person on a regular basis can be a challenge for both parties.

    For some mentors and mentees what works best are facetime chats. Other options to consider are “flash mentoring” via quick lunch-hour sessions, or connecting with a mentoring group that meets online. If you’re willing to pay to work with a mentor, a group scenario can also help reduce costs. 

    Final thoughts
    To get the most out of mentoring—and to demonstrate how valuable your mentor’s help has been—be sure to follow up on your progress. A mentor will appreciate hearing how you’ve put their advice to work, your milestones and successes, and the goals you’d like to work on in the future. Acknowledging your progress will help you stay motivated, too, by seeing how far you’ve come.

  • Lean canvas – a new way to do business planning

    Lean canvas – a new way to do business planning

    Few business owners have extra time to devote to a lengthy business planning process. But every entrepreneur needs a solid blueprint to get their business successfully up and running. The Lean Canvas—designed by Sparks59 CEO and Running Lean author, Ash Maurya—is a simple, effective planning tool that helps entrepreneurs assess and test their ideas before investing too deeply in building a product.

    For the small business owner, the Lean Canvas is an ideal “bare-bones” business plan template—a one-pager that can easily be updated and meaningful action taken for greater success.

    How to use a Lean Canvas

    An adaptation of Alexander Osterwalder’s Business Model Canvas, the Lean Canvas provides entrepreneurs with a quick visual sketch of their ideas via a simple nine-block matrix. What makes this online planning tool so useful is it gets entrepreneurs thinking, upfront, about one of the biggest obstacles facing every start-up: risk.

    Maurya’s goal was to build a planning tool that was “as actionable as possible while staying entrepreneur-focused.” Many business owners love using the Lean Canvas because it can be adapted for a number of purposes—for drafting a basic business plan, evaluating business models, or even identifying new revenue streams.

    What’s unique about Lean Canvas

    The main idea behind the Lean Canvas was to craft a tool that could actually increase an entrepreneur’s chances for success, by deeply considering its purpose: the actual problem it will solve.

    Unfortunately, the reason many start-ups fail is that they are focused on a big idea: the solution. The product is built before its market viability is adequately researched and tested.

    With a Lean Canvas, you’ll focus first and foremost on the problem, then list your customer segments, unique value proposition, revenue streams, and key metrics. Finally, you’ll define your “unfair advantage”.

    Although recognizing any advantage can be tough for new business owners, understanding how your company stands out is key to your long-term success. An unfair advantage can be many things—for instance, it might be your loyal customer base or an enviable talent pool.

    As you complete your Lean Canvas—whether you’re drafting a business plan or using it as a “testing lab” for your latest start-up—think about how you can nurture and protect your unique advantage, so you always have an edge on your competitors.

    Final thoughts

    Although a Lean Canvas isn’t a substitute or shortcut for the kind of detailed business plan a lender will want to see before approving a business loan, it can serve your business well as a starting point.

    Some business owners begin with a Lean Canvas just to record their ideas, then expand them into a longer plan. Others use the Lean Canvas as a quarterly planning tool, or to communicate their updated mid-year outlook.

    The beauty of the Lean Canvas is it’s free to sign up—and how you use it to serve your small business is entirely up to you.

     

     

     

     

     

     

  • 3 easy and inexpensive ways to look more professional when you’re starting out

    3 easy and inexpensive ways to look more professional when you’re starting out

    For bootstrapping young businesses, making a professional first impression as you build your brand is key.

    Although hiring a branding expert may be too large an expense in the early days, you can still help your business stand out in the best possible way without breaking the bank.

    Just follow these simple marketing moves that will help people to know, like, and trust you.

    1. Build credibility with your own email address

    A custom email account isn’t costly but is well worth the effort. Sending company emails from a Gmail or Hotmail account will raise questions about the legitimacy of your business (if they ever make it past your customers’ spam filters.)

    If you’ve already registered your company’s domain name for your website it’s a snap to set up a custom email address. Many web hosting services such as Bluehost include a free custom email account with their service packages.

    If you’ve never registered a domain name, search what’s available at GoDaddy.com or NameCheap.com. Most companies can help you find a memorable domain name with SEO keywords.

    2. Build your brand with a customized logo

    An effective eye-catching logo will attract new customers, help you stand apart from competitors, build trust in your brand and, ideally, inspire customer loyalty.

    Should you have the funds to hire a logo designer, you’ll save time and get a unique, professional result—but best be prepared.

    A professional designer will want to discuss your company’s brand identity with you. Being clear on your brand before your first consult will streamline the process, ensuring you get exactly what you want.

    This article from LeanLabs helps you pin down your unique brand identity with twenty questions. You might also find this free downloadable brand character workbook useful.

    And if budget is a concern, try one of these free graphic design tools that help you combine visual elements to quickly create your own logo:

    3. Build trust with a professional photo

    Before strangers will buy from you, they need to get to know you.

    A high-quality photo for your website and social media accounts, in addition to professional web content and engaging social media posts, is a must. Nothing makes a business appear more “fly by night” than a faceless LinkedIn avatar—or less professional than a grainy, out-of-focus selfie.

    Expect to pay in the ballpark of $100 for a headshot (or more, depending on the photographer’s hourly rate and the length of your shoot). You can also do it yourself if you’re on a budget following these quick headshot tips from HubSpot.

    Next steps

    Marketing is an ongoing commitment for every business, and as your business and bottom line grow you can invest in new strategies to maintain a profitable company.

    In the meantime, these simple “must do’s” will help you make that positive first impression with your customers and with would-be investors, potential partners, and lenders.

  • How to license your business ideas

    How to license your business ideas

    Looking for a cost-effective means to create another income stream? Consider this: ambitious companies are always on the lookout for the next lucrative business idea.

     Business Ideas

    Licensing your intellectual property to another company can be a win-win when both parties see eye to see, and result in a worthwhile payout for all concerned.

    Wondering how to get started licensing your bright business ideas? Read on.

    Intellectual property 101

    If you’re running a successful small business, you already own valuable intellectual property (IP)—some of which could be licensed to another party for a profit (e.g. your logo, brand, trade secrets, or unique business processes).

    Each of these “intangibles” is a valid financial asset that can be legally protected or licensed to another party.

    In fact, any creative work—ideas, designs, and products—that have value for a business are IP. A licensing agreement ensures your intellectual property is recognized and you are fairly compensated for their use.

    Generating million dollar ideas

    Now that you understand how licensing works, you can begin to brainstorm some original, unpatented money-making ideas.

    A good place to start is with a review of your industry and market. Take note of any gaps that could be filled, and problems you’d like to see solved. A great advantage of looking within your own industry is you might already know an interested licensee within your existing network—or just a quick phone call away.

    Come up with an extensive list and then research your top ten promising ideas. Before you get too far (and to avoid disappointment) make sure someone else hasn’t already registered your ideas with a patent office via Google’s patent search.

    The business of licensing

    To learn more about licensing agreements, it’s best to get in touch with your government’s intellectual property (IP) office. Rules can vary in different jurisdictions so seek advice from an officer who can best advise on next steps to apply for a patent, file a trademark application, or draft a legally binding licensing agreement—as well as any costs for doing so.

    Be sure to visit the World Intellectual Property Organization website, too, for a wealth of information on how to license intellectual property internationally.

    Building credibility with potential licensees

    Stephen Key, entrepreneur, and IP strategist, calls success with licensing a “numbers game”—contact a long enough list of prospective licensees with enough good ideas and eventually, you’ll hit pay dirt.

    However, you’ll make a better first impression—and protect your valuable IP in the process—by demonstrating you are already running a successful, legitimate business in your own right.

    If you haven’t yet, register:

    • your company name
    • a unique URL for your company website and
    • your intellectual assets

    By demonstrating you are credible and IP savvy, you’ll put yourself in the best possible light—someone an interested licensee could easily picture themselves doing business with.

    Registering your business, domain name, and intellectual assets will also put your business in a much better financial position if you ever decide to sell.

    Final thoughts

    If you hate cold calling, get discouraged easily, and can’t stand rejection, promoting your business ideas to potential licensees may not be the right fit for you. The good news is, there are a host of other ways to generate more income for your small business—and there’s nothing wrong with keeping your best ideas for yourself.

  • 5 Cheaper Ways to Advertise Your Business

    5 Cheaper Ways to Advertise Your Business

    Advertising is an essential component of success for any business. Proper advertising ensures more sales, but if you choose the wrong options, it can be a very expensive proposition.

    Advertise

    Let’s look at five ways you can reduce your business’s advertising expenditure without affecting your results.

    Referrals

    A referral program encourages your current customers to send their friends to your site, and to earn rewards for their efforts. It’s a great way to generate low-cost advertising: your customers send visitors and earn a small percentage of every sale (or another reward), then those new customers refer their friends, who refer their friends, and so on!

    Before long, you can have an army of loyal customers actively promoting your business – with every new referral, you exponentially increase the chance of getting more customers. And all for the price of a small commission on each sale or some other loyalty reward.

    Joint advertising

    A joint advertising campaign works like any joint venture: you find a related business and you share the cost of the project. At the same time, you share target audiences, increasing the number of interested people who see your mutual ad campaign.

    Good examples of this kind of advertising build on complementary industries. For instance, if you run a home aquarium cleaning service, you could work with a local pet shop. Together, you could offer a discount on your cleaning services, provided the customer buys their equipment (and fish) from the associated pet shop. Both businesses benefit: you get access to the pet shop’s clientele, and they get a chance at more sales to people who would love an aquarium but don’t like the idea of doing their own maintenance.

    Note that joint advertising is rarely an equal proposition: one party almost always pays more than the other, as they stand to gain more from the advertising or bring less to the combined project. Be flexible and ready to compromise.

    Most relevant advertising medium

    Choosing the most relevant advertising channel is absolutely critical in decreasing your advertising costs. You’ll have to do thorough demographical research or invest a little money in trial-and-error learning to figure out the best medium for your business.

    For example, television and radio offer a massive return on investment for some companies, but if your business targets young adults who spend the majority of their time online, they may be a bad choice. You would almost certainly be better off investing in online advertising, or a social media marketing campaign.

    Create loyalty

    It is often said that it is more expensive to get a new customer than to keep an existing one. For this reason, it is important that you strive to build a relationship with your customers. Answer queries quickly, make sure complaints are dealt with swiftly, and always try to exceed their expectations. This will ensure that you build a positive, rewarding relationship with your clients, and allow you to decrease your advertising costs in the long run.

    Don’t forget the real world

    Depending on your target market, “real world” advertising – as opposed to online, virtual adverts – can still be the best choice. For example, flyers and leaflets can be a very successful, yet inexpensive, form of advertising. The important thing is to ensure that your ads reach the right audience.

    For example, if your target market is women, you should distribute your flyers or leaflets in areas frequented predominantly by them. Ideal areas are near beauty stores, clothes shops, hairdressers, and gymnasiums. This will help ensure that your flyers are reaching the right audience, and are therefore more effective.

    Most successful businesses spend a large chunk of their money on advertising, so it is critical that you get the best possible returns. Don’t just assume that throwing money at an ad campaign will make it work better: research the best medium, consider all the options, then run tests to figure out where and how to invest most effectively.

  • Choosing your business name

    Choosing your business name

    One of the most important decisions you’ll ever make in business is your choice of business name. A good name can create the perception of integrity, professionalism, or value-for-money. It could be your business’s biggest asset. A poorly chosen name can discourage potential customers by making your business appear farcical, or even offensive.

    Business

    What’s in a name

    If you haven’t thought of any names yet or the names you’ve come up with aren’t suitable, the first step is to relax – hardly anyone comes up with the perfect name straight away.

    Take some time to play with concepts, ideas and words to find a name that fits your business and its intended market. Running ahead with a name that isn’t really appropriate will result in additional costs further down the track.

    There are some handy tools to get you started:

    • A basic thesaurus or dictionary – This will give you endless options and allow you to gather words together to create potential names.
    • Free or low-cost naming programsThere are a number of computer programs that will calculate names for you on the basis of keywords you enter from a database of common words and phrases.

    Draw up a list of words and names that appeal to you, as well as a list of words applicable to your business. Try different words and combinations, then create a shortlist of potential names for your business.

    Make it memorable

    Being creative can help your business stand out, but its name also needs to be easy to spell and remember. If a potential customer types in your web address, it only takes one misspelled letter for a browser to declare they can’t find the server – or worse, take them to the site of another business.

    Think about how your name sounds when spoken and whether it’s easy to spell when searching for you online. Short, simple names are easier to remember for word-of-mouth referrals. Avoid SMS-style abbreviations or slang unless you’re sure this will suit your target market and won’t discourage customers.

    Using humor

    You might be tempted to play on words or incorporate humor in your business name. For example, a hair salon owner might have their heart set on the name Curl Up and Dye. Whether this works or not will depend on the nature and size of the business, whether you need to portray a professional image, and what appeals to your target market.

    If you’re at all uncertain about the name:

    • Canvass the opinion of close friends
    • Run a poll by possible customers
    • Get some professional advice from a marketing expert.

    Invoke an image or positive connotation

    This can be tricky but try to think of a name that invokes an image or a feeling, preferably related to what your business offers. These names are both easier to recall and link a positive feeling with your product. If you sell skis and snowboards, a name such as Adventure Ski and Snowboard would be more effective than Dave’s Ski and Snowboard Store.

    Reference what you offer

    For a business on a budget, having a name that tells potential clients what you offer is a good way to minimise money spent on marketing. For example, if you named your mobile coffee business Express Coffee, it’s easier to market than if you called it Red Yak.

    Names that reference what you offer are also better for Search Engine Optimisation (SEO) and Internet advertising. If someone’s searching for a product or service you provide and it’s part of your business name, your results will be more prominent in search engine results. You’ll have a competitive advantage over businesses with more abstract names.

    Testing the market

    Testing the market is a good way to gauge responses before taking the plunge.

    • Ask family and friends to comment on the name – they might point out some issues.
    • Ask existing customers or a sample segment of your target market for feedback.
    • Ask a marketing professional for advice before you make a final decision.

    This is also a valuable way of generating a profile for your business that could result in future sales –once, of course, you decide upon your business name.

  • What to do when reopening your business

    As many business owners look to life after COVID-19, an important question comes up: how do we plan to reopen our business? For most businesses, the easing of restrictions doesn’t mean a return to business as usual. There are rules and regulations in place about how companies can operate, including how many people can be on their premises at one time and how employees must be protected. Customers may not come back quickly and supply chains may still be disrupted.

    Your main goal is to keep your business going after COVID-19, but reopening requires careful planning.
    Here are some tips for restarting your business.

    1. Examine your business model

    The pandemic may have shown you some ways you can pivot your business model to adapt to economic turmoil. Exploring new ways to earn money—such as additional revenue streams—can provide your business with financial stability, and help you be successful.
    Here are some questions to ask:

    • Is my current business model viable following the pandemic?
    • If not, are there ways to adjust my business model?
    • Can my expertise be used to create additional revenue streams?
    • What are current market trends that could affect how I run my business?
    • What are my competitors doing to adapt?

    Many small business owners have expertise that could go into consulting. If you own a restaurant, you could consult with new restaurant owners on setting their menu or hiring staff. You could also create passive income by writing eBooks or running courses related to your specialty.

    There are also new business models you could consider, including having clients or customers pay a monthly retainer or membership fee, selling your products online, or adapting your goods and services based on market trends. Look to businesses similar to yours to see how they’re changing, and how successful their adjustments are.

    2. Have a safety plan and procedures in place

    Given the rules and regulations regarding businesses reopening—to protect client and staff safety—it’s important that you have a safety plan in place, and ensure your teams knows and follows the rules.

    • Be clear about what needs to be disinfected and how often
    • Ensure staff knows about the safety gear they are required to wear and provide it
    • Make sure workers knows about hygiene rules and procedures
    • Train employees on social distancing within your location and post guidance throughout your premises
    • Consider including physical barriers to further protect customers and staff
    • Stagger shifts and appointments if possible
    • Determine if any areas can be repurposed—for example, see if you can use a conference room as an additional waiting room for clients or as office space to keep staff physically separated
    • Talk to your employees about their levels of comfort and their concerns
    • Be willing to adapt based on customer and employee needs

    3. Access funding and financial programs

    Even with restrictions easing, customers may not be eager to return to your business, for a variety of reasons. Many people now have limited incomes and are concerned about safety measures. It could take a while for your income to balance out.

    Local, regional and federal governments have programs available for small businesses. Additionally, financial institutions and local organisations that represent business interests may also have financial programs you can access to help you through the turmoil caused by COVID-19.

    Final thoughts

    Unfortunately for most businesses, the easing of restrictions linked to COVID-19 won’t mean an immediate return to pre-COVID-19 operations. There will be a period of transition in which you may have to make adjustments to your business.

    Evaluating and adapting your business model and strategies, planning for your business to reopen safely, and accessing financial assistance and programs will help during this time.

    What’s next for you and your business? If you’d like to chat about future-proofing your business, please get in touch with our advisors.

  • How to Avoid Costly Inventory Problems

    How to Avoid Costly Inventory Problems

    Inventory is the lifeblood of your business. It is the largest asset on your balance sheet and your company’s biggest revenue-generator.

    It goes without saying that poorly managed inventory can do serious damage to your bottom line. Businesses without clear strategies for streamlining the in and out flow of goods will have trouble meeting their customer’s demands and will see mismanaged stock corrode their profits.

    Follow these tips to ensure your business doesn’t fall prey to common – and costly – inventory problems.

    Implement a system for accurate stock tracking

    Whether you have a modest stockroom or a large warehouse, it’s important to know precisely when products are coming in or shipping out, so you’re able to re-stock efficiently.

    • Factor in lead time when calculating your basic stock, so you don’t run out of a product before new supplies can be delivered – disappointing your customers and missing out on revenue opportunities.
    • Implement an automated inventory management system to track fill rate and inventory returns for all products, and get a better handle on exactly how much stock you have at any given time.

    Avoid excess inventory

    Excess inventory is a financial drain on your business in more ways than one. It costs money in extra overhead, increases insurance costs, and reduces your liquidity – not to mention the space taken up by extra merchandise could be better allocated to more profitable products.

    Here are a few ways efficient inventory management can help avoid the problem of dead stock:

    • Don’t purchase large orders of stock simply because they’re being offered at a discount. It might take much longer than anticipated to sell the products and turn a profit – in the meantime, your order gathers dust in your storage room.
    • Calculate and stick to a realistic safety margin so you only buy what you are reasonably sure you can sell. A good system for tracking sales and profits – and checking it often – is essential to making better buying decisions.
    • Liquidate your overstock by selling products at discounted prices. You also might consider returning excess inventory to your vendor (it may be worth it even if you have to pay a re-stocking fee).

    Prioritize your inventory needs

    You can avoid inventory mismanagement by putting better systems in place to prioritize your inventory needs. You should always know which products have the highest turnover ratios and ensure those items are always on hand.

    One approach is to divide your inventory into three groups (A,B, and C) based on their dollar impact on your business . You’ll get a clear sense of which items to purchase more of and avoid needlessly tying up cash stocking up on the non-essentials.

    Final tips for better inventory control

    If you’re looking into switching to or upgrading your accounting software, look into a solution that includes inventory pricing and availability features. And be sure to invest in training to ensure your staff knows how to use inventory tools – and has a firm handle on overall inventory management practices.

    With enhanced customer data at your fingertips, your business will earn a reputation for personalized service. You’ll be able to respond quickly when a customer calls with a question about a product or an order. And you’ll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap.

    How will you use accounting software to grow your small business?

    Savvy business owners take the first step toward better profitability when they stop thinking of accounting software as simply a financial management solution and start thinking of it as a comprehensive tool for business growth.

    You may be surprised at the many ways accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential.

    Now that you have a handful of ideas for making better use of your accounting software, what will you do differently to enhance customer care, improve your profits and continue to grow your business?

    Inventory needs and stock tracking are key elements of a business, however in order to maintain these elements, having a good accountant is a must. S & H Tax Accountants is a small firm that prides it self on the service that we provide, as we aim to offer the highest possible level of service to our clients. Our accountants are well-qualified, vastly-experienced and extremely professional. Book an appointment today with S & H Tax Accountant, contact us info@sahtax.com.au or call us at 03 8759 5532.

  • Strengthening your balance sheet

    Strengthening your balance sheet

    Your balance sheet (now more correctly called a Statement of Financial Position) reveals a great deal about your business, including the total value of your assets – the things you own; how much you owe to others – your liabilities; and the level of your solvency.

    These three aspects will be studied carefully by lenders and investors − and by buyers if you intend to sell your business. But they should also be important to you, because it’s important to be solvent at all times. In other words, you need to have more assets than liabilities available to pay your debts.

    If you can’t pay bills when they fall due, your business may be technically insolvent. Fortunately two simple tests can quickly reveal your solvency.

    1. The Current Ratio test

    This test simply involves dividing your assets by your liabilities (you should find both figures on the balance sheet). For example, if a business has assets of $435,000 and liabilities of $180,000, the current ratio is 435,000 divided by 180,000 = 2.42.

    In other words, the business has $2.42 in assets for every $1 of debt. On the face of it, the business is solvent, as the minimum ratio most banks would regard as acceptable is $2 for every $1 of debt.

    But wait a minute. Your assets include stock (your inventory). What’s your stock really worth? If you had to sell it all tomorrow to pay off your debts, could you really get out the full amount shown on the balance sheet?

    1. The Quick Ratio test

    Let’s try a tougher test – this time leaving out your stock. The aim here is to find out if your business has enough quick money (ready cash) to pay your bills if your creditors demanded repayment tomorrow. Let’s say the business has $325,000 in stock. Subtract this from the assets figure of $435,000 and the assets reduce to $110,000.

    Now for the Quick Ratio: $110,000 divided by $180,000 = 0.61.

    Hmm − the picture is no longer so rosy. The business has only 61 cents in ready cash for every dollar of debt, meaning it could not immediately pay its debts.

    Your aim should be to have at least $1 in assets available in quick cash for every $1 of debt, a ratio of 1:1. You’ll sleep better, and so will your bank manager.

    Strengthening your balance sheet

    A positive step to strengthen your balance sheet is to take a closer look at the quality of your inventory. If you had to sell all your stock in the next week or month to pay your debts, would you get the full amount shown on the balance sheet? In many businesses, the answer would be no.

    If you know you have obsolete or slow-moving inventory sitting on your shelves, talk to us about ways to get rid of it. We can discuss ways to reduce or get rid of obsolete stock, such as:

    • Holding a sale.
    • Bundling unwanted stock with more popular items as a ‘special offer’.
    • Choosing the most advantageous time of year to write it off if necessary.

    We can also show you how to measure the stock turn rate in your business to improve stock management and profitability. In broad terms, the faster you turn over your stock, the more efficient your business. A fast turnover rate can also reflect more efficient inventory management.

    Closing tips

    1. Many business people find a balance sheet more difficult to read than a profit and loss account. If this applies to you, we can help you understand it better so you can gain more from the figures.
    2. Getting a balance sheet just once a year is certainly not enough! A balance sheet offers important insights into your business. With the right accounting software you can generate a balance sheet whenever you need one

     

    A Balance Sheet can be an essential financial document, as it entails the financial position of the business. S & H Accountants offer services to businesses, where we assist with their financial documents. S & H Accountants have a great team, as it consists of well-qualified, vastly experienced and extremely punctual. We always aim to provide our clients with the best level of service possible. Book an appointment today with S & H Accountants, you can contact us on 03 8759 5532 or you can email us on info@sahtax.com.au

  • How to set your small business payment terms

    How to set your small business payment terms

    Healthy cash flow is important for any business, but particularly for small business owners in those first few “make it or break it” years.

    Business owners who set clear payment terms with their customers, invoice quickly, and follow up on late payment can avoid the dreaded cash flow crunch that can quickly put them out of business.

    These simple guidelines for setting payment terms can help you get paid quickly and maintain a steady cash flow.

    Decide on your terms

    The purpose of your payment terms is to outline exactly how and when your customers must pay you.

    Some business owners draw up a document to share with potential customers outlining their fees and terms. Others just include them in their work contracts and invoices.

    However you decide to communicate your payment terms with customers, make sure they include:

    • when payment is due
    • accepted forms of payment (i.e. cash, credit, debit, Paypal, e-transfer)
    • your preferred currency (if you serve international customers) and
    • early payment discounts and/or late penalties

    Payment now, NET10 or NET30?

    In the business world it’s customary to be paid within 30 days of invoicing. However, as a small business owner you can set the payment terms that suit you best.

    If you’re a freelancer, you might require partial payment up front with the balance due upon completion of services. Depending on the industry standard and whether your clients pay electronically or by cheque, you might stipulate a shorter or longer payment deadline.

    In the digital age it’s not uncommon for small business owners to set a NET10 or NET 14 deadline – or to negotiate payment terms on a client-by-client basis.

    Taking into account what works best for you and your customers and being clear about expectations will make it more likely you’ll be paid on time.

     

    When to invoice – and when to follow up

    It’s in your best interest to invoice immediately. After all, the sooner you request payment, the quicker you’ll receive it.

    Some small business owners offer an early payment discount as an incentive to pay faster – typically for NET30 invoices at a rate of 1.5-2%. Many customers will appreciate the opportunity to save money, and many business owners don’t miss the small amount taken off the bill.

    Customers who routinely pay late may be motivated by a late payment penalty – also in the 1-2% range of an early payment discount.

    Make it a policy to email a friendly reminder on the date payment is due. If payment is late, follow up with a phone call the next day to find out when you can expect payment.

    Final tips

    • Take advantage of cloud-based accounting software that can be accessed anywhere there’s an internet connection, including via your smart phone, to generate invoices
    • Be willing to negotiate with late payers; partial payment is better than not being paid at all.
    • Make sure you have the correct name on your client’s invoice to avoid payment delays.

    Having clear payment terms outlined on paper can help avoid misunderstandings and frustrating payment delays.

    And should you ever need to take legal action to deal with a late payer, having documented evidence that you clearly communicated your payment terms up front will be in your best interest.

     

    Starting a business, can be a little difficult. However, S & H Tax Accountants offers business services, which include from starting your business, to bookkeeping, all tax related services and etc. Our accountants are well-qualified, vastly experienced and extremely professional with their clients. We prioritize the needs of our client and aim to provide the highest level of services to all of our clients. Book an appointment today, call us on 03 8759 5532 or you can email us on info@sahtax.com.au

  • Planning the year ahead

    Planning the year ahead

    The turn of the year usually prompts most people to think about some business planning for the year ahead. Here are some tips to make the planning more productive.

    Get your team involved

    Business planning works best when it’s a team effort. Involve your key staff and your advisors, such as your accountant, your mentor (if you have one), and others who can contribute meaningfully to the planning, such as an IT expert if you envisage a major website overhaul.

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    Ask people to bring their ideas to the planning meeting and try to hold the meeting away from the business to avoid getting caught up in daily activities.

    Review your business

    Start with a review of your business as it currently stands, focusing on three key questions:

    What’s working well for us at the moment that we should continue doing?

    What’s not − what should we drop or do less of?

    What has the most business potential for the future?

    Decide on changes

    Your combined thinking may produce some required changes. For example, you may need to adapt your existing products and services, seek new markets or distribution channels, or change your business model entirely.

    These changes are more likely to occur if there is consensus. Bear in mind that resistance often comes when people feel their comfort zones or their jobs are threatened. Address these issues right at the start.

    Figure out capacity

    Any changes will likely require some investment in new skills, new products or services, or other changes incapacity.

    Get help from your accountant to complete a return on investment (ROI) analysis if you need new equipment or even new staff. You need to know how much extra business needs to be generated for a reasonable payback and also how the business can access the funds for growth. For example, will you need a larger credit line or new capital?

    Get everyone on board

    Once you’ve established where you want to take the business, concentrate on the next 12 months. Set some end-of-year goals, and then work backward to create the stepping stones that will take you there. Your role now is to get everyone on board by clearly communicating the plan to them.

    Consensual goals are more motivating than imposed goals, so get at least your key staff involved in the goal setting. Immediate goals are easier to focus on than longer-term goals so make sure each person understands what is required from them this week, this month, and this quarter.

    Follow up

    A major challenge with all business planning is that it is often done at the beginning of the year when optimism and motivation are high. However, these emotions can quickly fade as people get caught up in their daily activities and new projects.

    Business goals won’t be taken seriously unless you set regular dates to review progress – such as every 90 days. Once people know that you will be calling them to account at these progress meetings, they will be more motivated to keep your planning on track.

  • Why Keep Your Data in the Cloud?

    Why Keep Your Data in the Cloud?

    Cloud computing is quickly moving from an obscure concept to an everyday reality for small businesses all over the world.

    A 2015 survey of small business owners found that 52% had already adopted some form of cloud-based data storage; however, a general lack of awareness regarding the logistics and advantages of cloud computing has made others a bit more resistant.

    The truth is, there are several very practical benefits to moving your data into the cloud, including reducing operating costs and boosting efficiency. Here are three more ways cloud computing can help your small business run even better.

    Easy file-sharing with team members & clients

    Businesses are increasingly decentralized. Some employees work from home, while others are on the road serving clients and making sales. Relying on email to share and collaborate on important documents can make it difficult to track files, consolidate revisions and get the right information to your client on time.

    Cloud storage options like Dropbox, Google Drive, Apple iCloud, and Microsoft OneDrive offer small businesses convenient access to files at work, from home – or anywhere else there is an internet connection.

    Plus, it’s easy to share documents with clients, track work in progress and back-up your files to prevent data loss.

    Save money on hardware and maintenance

    Small businesses can easily spend thousands of dollars on the installation and maintenance of physical data storage, including:

    • setting-up the server, device, networks, facilities and other equipment
    • deployment and configuration
    • regular maintenance of back-up servers, storage, network connections and software updates.

    Cloud-based storage, on the other hand, is operated and maintained by a dedicated team of experienced professionals who focus on maintenance and cyber security so your small business doesn’t have to.

    Cloud based solutions are also scalable. Providers offer solutions for businesses of all shapes and sizes, with prices and features tailored to fit your specific needs and budget.

    Online storage offers advanced data protection

    Not only do cloud providers implement the latest cyber-security protection, they also offer your business safeguards to prevent data loss in case of an unforeseen disaster.

    Cloud computing giants like Google can afford to have multiple data centers, each with several internet connections and the capacity to replicate data at every location. They’ve got generators to handle power outages and back-up systems that help servers keep running even if certain components fail.

    Consider how your business would be impacted by a local power outage that rendered your data inaccessible? Loss of revenue and client confidence would likely be substantial. You’d be left to rely on your internal IT team to reboot your system and recover your files. This would likely be costly and time-consuming, not to mention stressful.

    Cloud providers have the resources and expertise small businesses simply can’t otherwise access when it comes to data storage and protection. Tapping into their strength can help your business stay nimble, grow faster, and even compete with bigger players.