Category: Business Development

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Does Your Small Business Need a CRM?

Have you ever stayed at a hotel and then returned, finding that they have stocked your room with everything you asked for the last time you were here?  Your special allergenic pillow was already waiting for you, you were asked if you would like a dinner reservation made just like you always do the first night, and there were even extra hangars because you always need extra hangars.  None of this would be possible for the hotel if it didn’t have a CRM, customer relationship management, system in place.

Would your clients be impressed if you remembered all of the details about your last conversation, their last purchase, or their preferences?  If so, your business might benefit from a CRM system.

Businesses that have more than 30 or so clients may benefit from a system that allows you and your employees to enter detailed information about each client interaction that they have.  It can work for both current and future clients, i.e., prospects.  A CRM is basically a great big customer database at its core.  It contains master file information on a customer or client, such as name, company, address, contact info, and custom fields.  It is also transaction-driven in that you can log activity such as calls, meetings, proposal dates, and more.

A good CRM system is also integrated with your other internal systems, such as your accounting or POS system or both.  In some CRM systems, you can see invoice and payment history, so that when a client calls in, you can also peek to see whether they owe you money or what goods they ordered that they may be calling about.

There are literally hundreds of CRM systems to choose from.  The gold standard for large companies is SalesForce.com; however, some small businesses use it as well.  SugarCRM is the largest open source CRM, meaning its programming code is available to the public.  ZohoCRM is one of the largest small business CRMs and offers a suite of products for small businesses.  And Act! is also very popular and plays well with social media.

Before choosing a CRM, decide what you want it to do and how you will be using it.  One of the most important aspects of profiting from a CRM is to make sure it gets used, and that takes some habit-changing from you and your staff.  Once you have your requirements, you can evaluate the software options available, and choose the one that works best for you.

When your clients start talking about how great your service is and how much attention you pay to the details they care about, you’ll know your CRM is paying off for you.

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Five Essential Components of an Entrepreneur’s Compensation

The two major ways entrepreneurs can take money from their business is through draws or by receiving a paycheck.  The type of entity in which their business is set up will determine which method can be used. In either case, entrepreneurs need to be careful not to shortchange themselves.

Especially if you’re running a service business, it’s easy to initially think you can do well with a similar hourly rate that you earned as an employee.  Here’s a quick list of five elements that should be included in the compensation of every entrepreneur:

  1. Competitive pay 

    If you were doing the same work for a company that hired you, what would your pay be?  Are you making at least market equivalent or better?  A lot of times, as entrepreneurs, we tend to focus only on this piece of our compensation when we set our pricing, and that’s a big mistake. It’s only 75 percent of what our total pay needs to be.

  2. Profit.

    As an entrepreneur, you take extra risk when you own your own company, and you should be compensated accordingly.  Your capital is tied up in your business and should be earning a good return in addition to your reasonable compensation.

  3. Benefits

    Employees get vacations, health insurance, and bonuses; and you should too.  This should be part of your compensation package as an entrepreneur.

  4. Taxes.

    Although our individual taxes are not deductible as business expenses, we need to compensate for them so that we’ll have enough cash for our living expenses.  It’s a huge chunk too.  We work about three and a half months every year, just to pay for our taxes.

  5. Retirement plan

    When you work for yourself, no one is going to fund your retirement for you.  Although the Social Security program helps a lot of seniors, it’s up to you to set additional money aside for a comfortable future.

Complete Compensation

Your compensation should include all of these components.  If it doesn’t and you feel like you can’t afford to pay yourself that much, then your pricing might not be reflecting all of these items correctly, you might have a volume problem, or your business model may need some adjusting.

It’s normal to take a smaller paycheck the first few years as we’re building our businesses, but if you’re still doing it after several years or constantly having cash flow issues, then something may be wrong.

If you’d like our help in this area of your business, please reach out and let us know.

Make sure your future is bright and financially secure by including all five components in your entrepreneur compensation.

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Do You Know Your Weakest Business Link?

You’ve already built a solid business that you have great pride in.  Yet, if you’re like most entrepreneurs, you’re on a constant search for how to make your business better.   One way to focus your search is to look for the weakest link in your business.

From a return-on-investment standpoint, working on and fixing your weakest link is the highest payback thing you can do.  It lifts your entire company up and makes it stronger.   The key is to look as objectively as possible at what might be holding your business back from being even greater than it already is.

Here are four major areas where you can look for your weakest link:

  1. Client-facing interactions

    A great area to start looking is where you have interactions with clients.  These include things like phone greetings, email, websites, your storefront, your presence at networking meetings, client service interactions, your proposals, invoices, and thank you notes.

    What jumps out at you as the weakest link when you look through the above list?  Perhaps it’s as simple as recording a more friendly voice mail greeting or as complex as getting your website redone.  Don’t get overwhelmed if a lot of these items need attention; instead focus on the one weakest link.  That’s the place that needs your attention.

  2. Your team 

    The toughest area to have a weakest link is when it involves people.  If you have an underperforming employee or contractor that is undermining sales or service, you’ve got a tough decision ahead of you.  If it’s your weakest link, don’t bury your head in the sand like we all want to do.  You need to act so that the person does not drag down your entire business.

  3. Internal systems

    If you feel stymied at the lack of information in your business, you might be in need of better internal systems.  As your business grows, this is the area that changes the most over time.

    Businesses that are newer or smaller need a great accounting system as well as a good point of sale or billing system.  As the business grows, it might need better inventory systems, a good CRM or customer relationship management system, a project management system, or more specialized systems depending on the industry it’s in.

    As the business matures, the functionality of the accounting system should expand to meet the growing data demands.   Integrating the accounting system together with the company’s other systems can become important to control costs and improve margins.

    If you feel like your weakest link may be in your systems, we’re happy to help.  Please reach out and let’s have a conversation about your needs.

  4. Skill set

    No one was born an entrepreneur; it has to be learned.  What keeps it more exciting is that new skills are required at each level you master on the entrepreneurial ladder.  Some of the skills that you need at the entry level include client service, delivery of your service or product, and sales and marketing.  As your business grows, you’ll need to master financial skills, negotiation skills, hiring, and supervisory skills.  Leadership and strategy skills will serve you well when your business is mature.

    Which skill set do you consider your weakest link?  If it’s finance, you’re not alone.   Let us know how we can help.

    5. Focusing on the Payback

    The good news is when you’ve improved your weakest link, you end up improving your entire company and lifting it up to a new level.  Once you’ve fixed your weakest link, congratulate yourself.  Give yourself a reward, and wait a little while.

    Your old weakest link is no longer the weakest area in your business, but something else is.  Since you’re on a constant search for improvement in your business, you can repeat this formula over and over again to keep lifting your company up using this low risk, high payback approach.

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Five Ways to Reconnect with Your Passion for Your Business

As business owners, we are a highly self-motivated bunch of people.  We love our businesses, we love helping our customers, and we work very hard at what we do.  Sometimes we work so hard, we get disconnected from our passion.  Occasionally, it’s a good idea to step out of the daily details of business and get ourselves re-energized, reconnected, and rejuvenated about what we do.  Here are five ways to do just that:

Remember Your “Why”

Do you remember why you started your business in the first place?  Many people saw a need and created their business to fill that need.  Others want to help people with the services and products they offer.  Still others have a wonderful skill that when shared, leave people better off.

To help you remember your “why” on a regular basis, consider posting visual clues around your office.  It could be pictures of you and your partner, you and your first sale, you and a product you’ve created, or you and a customer.  Posting these pictures will leave you feeling great and remembering why you sometimes work so hard!

Start a Long Desired Project

It might be time to give your business a gift and get around to that project you’ve wanted to complete.  The project might be a website update, a new internal system, some new equipment, or that new employee you are ready for.  Take the leap and make the change that will breathe fresh air into your passion.

Receive Gratitude

Gratitude always feels great – when we give it and when we receive it.  Ask your customers for testimonials of how your product or service has impacted them.  Then just receive and enjoy.

It always feels great when you know you are appreciated and are recognized for doing a good job.  And since we don’t have bosses, who else will tell us how we’re doing except our customers?

Take a Break

Stepping away from work brings perspective and fresh ideas.  Take a day off, or go on vacation.  Unplugging allows our brain to rest and relax, and when it does, you’ll have a whole new set of creative and passionate ideas to consider when you get back.

Give Yourself a Raise

If you’ve lost passion for what you do, then you might just be due for a raise.  Take a good look at your books, and see if you should increase prices or can find a way to improve your profit margin. Either way, you’ll boost your profits and be able to keep more of what you make.

Try these five ideas to restore the passion you have for your business.  When you are refreshed and rejuvenated, your customers will feel it too.

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Six Business Topics and Trends to Study for 2014

Happy New Year!  The New Year brings new areas to benefit from and be aware of.  You’ve likely heard these topics mentioned in the news.  The question is, have you stopped and thought about how they will be impacting your business this year?

The Biggie:  The Affordable Care Act

This new law impacts both employer insurance and taxes of small businesses.  The law is complicated with many definitions and varying effective dates.  It impacts self-employed individuals, business with fewer than 25 employees, and businesses with fewer than 50 employees.

You may be eligible for tax credits, and under certain circumstances, you could be subject to penalties if you don’t act.  It’s best to consult with a tax professional to sort out what it means to you.

Big Data and Data Transparency

In large businesses, big data refers to all of the data that is collected from customer’s habits and purchases.  In small businesses, we do not collect data on the scale that large businesses do, but we do collect customer information.  It will become more important than ever to be transparent about what data is being collected and how it is used.

If you do not already have a privacy policy that you provide to your clients, this may be a good first step in becoming more transparent with your clients about data collection.

Mobile Accounting

Mobile everything is as hot as any trend out there, and mobile accounting is certainly keeping up.  You can now do so much on your phone:  swipe credit cards to take payments, scan receipts and upload them to your accounting system, check credit card and bank balances, pay for things, create invoices, and pay bills.

The days of men with green eye shades and long paper receipts in the back office are long gone.  Accounting goes where you and your phone go.  If you have not downloaded your mobile bank and accounting apps, let us know how we can help you get mobile.

Government Budgets, Shutdowns, and Last Minute Tax Laws

Last year’s tax filing season was compressed due to laws that were enacted at the last minute.  As you might imagine, last-minute tax law changes put the tax software companies and the IRS into a tailspin.  Once forms are finalized and interpretations are published, the accountants then get busy figuring out what’s changed.

Many forms were not finalized last year until early March, but the April 15th deadline remained fixed.  This makes tax accountants have to do a year’s worth of work in about six to eight weeks.  And it’s going to happen again this year because the government was shut down during a key time that the IRS needed to get their systems ready.

To help avoid adding stress to this year’s tax season, you can help your accountant as well as yourself by having your books up-to-date and accurate, getting as much as you can ready early by scanning key documents into digital files, and having a checklist of questions you want to cover at your meeting.

Nexus

As states scramble to balance their budgets, they are constantly looking for new ways to tax businesses, and sales tax is one of their favorite ways.  Nexus means “presence.”  If your business has a presence in a state, you may need to collect and pay sales tax in that state.  If you hire employees or contractors that work from home and are located in a state other than where you are located, you may have nexus in those states.  Check with a sales tax expert who can guide you on these issues.

Engagement and Collaboration

Products and services in the accounting marketplace continue to experience a renaissance in accessibility and enhanced functionality.  This is exciting because small businesses can benefit most by the increased ability to collaborate with their accountant.  Gone are the days of once a year tax consults and never hearing from your accountant.  Now accountants can reach out more often, learn more about your business, and provide valuable collaborative advice to help you reach your financial goals.

If we can help you monetize any of these current events in accounting, please contact us, and let’s have a conversation.

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Create a Theme for a Prosperous and Meaningful New Year

It’s almost 2014, and at this time of year, it’s natural for us to pause and reflect on where we’ve been and where we want to go.  For business owners, it’s especially important to raise our minds above the daily fires for a moment, take in some fresh air, and elevate our perspective.  Creating an annual theme is an easy and fun vehicle to do just that.

Deciding on a theme for the year will give you a focus and a new perspective on your work and your routines.   It can be highly rejuvenating to look at things through the lens of your new theme.

Ideas for themes are limited only by your imagination.  Some possible themes include:

  • Organizing, detoxing, or cleansing.   Consider cleaning out your garage (or your office), upgrading your systems, re-designing your filing system, or going on a cleanse or a vacation or a retreat that will leave you feeling clutter- and worry-free. 
  • Growth.  You might want to consider a growth-related theme, such as productivity or profitability.  You might also want to develop a new skill such as learning a new language, developing your computer skills, or taking a philosophy class at your local junior college. 
  • Abstract themes, such as abundance, creativity, or diversity.  At the risk of sounding a little fluffy, an esoteric theme might be just what you need in 2014.  A theme with abundance will allow you to think big, be abundantly generous with others, and search for large contracts.   A theme with diversity will challenge you to be more open-minded.  You may also want to consider forgiveness, gratitude, humility, or service. 
  • Relationships.  Your year might be dedicated to meeting new associates and building business relationships.  Your action item might be to spend more time networking, participating in groups, or going to your industry conference.
  • A new service.  Perhaps you’re launching a new service and need to focus on developing this new line of business. 
  • Giving back.  On a personal note, you might value volunteering and decide to organize your year around a couple of volunteer opportunities. 
  • Exploring.  If you’ve retired or the business is starting to run smoothly without your day-to-day input, it might be time for that trip around the world.

As you choose you goals for 2014, make sure the majority of them support your theme for the year.  Themes can bring an overarching focus to our practices and our lives.

What’s your theme?  Let us know what your theme is and we’ll share ours!

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Optimize Your Revenue Mix for More Profits in 2014

Many small business owners focus on generating more revenue every year, and that’s a great objective.  But not all revenue is created equally.  If you sell more than one product or service in your business, then you can benefit from looking at your revenue mix.

Although it’s fun to watch our revenues grow, it’s the profit number that really matters.  If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make, which is what really matters.

An insightful exercise to try is to take a look at your revenue mix.  Then you can ask “what if?” to optimize your profits.

Your Revenue Mix

Let’s say you offer three different services: Services X, Y, and Z. Your revenue pie looks like this:

X:  $1.4 million or 70% of the total

Y:  $0.3 million or 15% of the total

Z:  $0.3 million or 15% of the total

Total:  $2.0 million

In this example, Service X is clearly the service making you the most revenue in your business.  But is it making you the most profits?

The profit you receive from each of these service lines is as follows:

X:  $160K

Y: $20K loss

Z:  $60K

Total:  $200K

While Service X is generating the most profit volume for your business, it’s actually Service Z that’s the most profitable.  Earning $160K on $1.4 million yields 11.4% return on Service X, but earning $60K on $300K yields nearly double the return at 20%.  Service Z generates the most return.   And if possible, Service Y may need to be discontinued or turned around.

Optimizing Profits

Your strategy for a more optimum revenue mix might be to sell as much of Service Z as possible, while eliminating or fixing the problem around Service Y.

It’s fun to experiment with different revenue mixes.  And of course, there are many more variables besides profit, such as:

  • Which service do you prefer to work on?
  • Are you able to sell more of the most profitable service or are there marketing limitations?
  • Is one service a loss leader for the others?
  • Are you able to adjust price on the lower margin services to increase your profits?

There are many more questions to ask and strategies to consider to make you more money, which is why we love our job!

A New Year, A New Mix

We hope you’ll spend some time analyzing your revenue mix and having fun asking yourself “what if?”   If we can help you expedite the process or add our perspective, please reach out anytime.

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Five Fall Projects to Refresh Your Financial Results

As we move into the fall season and the final quarter of the year, it’s a perfect time to commit to a project in your business that will help you reach the year’s end in better shape.  Here are five ideas:

 1.      Back-to-School Time

If payroll expenses are one of the higher costs in your business, then it makes sense to boost your team’s productivity and maybe also your own.   Fall is back-to-school time anyway, so it’s a natural time of the year to take on a course, read a business book, or hire an organizer to help you get more from your workspace.

If you spend a lot of time doing email, consider taking a course on Microsoft Outlook® or even Windows; learning a few new keystrokes could save you tons of time.  If you need more time, look for a book or course on time management.  Look for classes at your local community college or adult education center.

2.      A Garage Sale for Your Business

Do you have inventory in your business?  If so, take a look at which items are slower-moving and clear them out in a big sale.  We can help you figure out what’s moving slowly, and you might even save on taxes too.

3.      Celebrate Your Results

Take a checkpoint to see how your revenue and income are running compared to last year at this time.  Is it time for a celebration, or is it time to hunker down and bring in some more sales before winter?  With one more quarter to go, you have time to make any strategy corrections you need to at this time.  Let us know if we can pull a report that shows your year-on-year financial comparison.

4.      Get Ready for Year’s End

Avoid the time pressure of year’s end by getting ready early.  Review your balance sheet to make sure your account balances are correct for all transactions entered to date.  You will be ahead of the game by getting the bulk of the year reviewed and out of the way early.

Also make sure you have the required documentation you need from vendors and customers.  One example is contract labor that you will need to issue a 1099 for; make sure you have a W-9 on file for them.  If we can help you get ready for year-end, let us know.

5.      Margin Mastery

If your business has multiple products and services, there may be some that are far more profitable than others.  Breaking these numbers out to calculate your profit margins or contribution margins by product or service line can help you see the areas that are adding the most income to your bottom line.  Correspondingly, you can determine if you have any items that are losing money; knowing will help you take the right action in your business.

Refresh your financials this fall with your favorite idea of these five, or come up with your own fall project to rejuvenate your business.

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Five Fun Things to Add to Your Invoices

When it comes to marketing, the company invoice might be the last thing you’d think about.  But think again:  it’s a great place to make every attempt to get paid faster and have your customer coming back for more services and products.  Here are five fun easy-to-implement ideas to add to your invoices:

 1.      A Thank-You

A simple “Thank you for your business” or a “We appreciate your business” is a nice added touch on the bottom of every invoice.

QuickBooks invoices include a comment line where you can choose your comment or write one for yourself.  You can also customize the form so that it appears on every invoice.

2.      Your Current Special Offer

A customer that just purchased from you now trusts you; it’s the perfect time to let them know what else you have available that they could benefit from.  Your offer could be a small amount off their invoice for referrals they send you, your monthly special, a sale item, or an item related to what they purchased.

Just add a quick text line to your invoice letting them know the special and where to call for more information.  If you haven’t ever tried this, you will be surprised and delighted at the results.

3.      A Prominent Due Date

Most invoices include terms, but you can make it even easier on your client by computing their specific due date.  If at all possible, include the due date on your invoice so the customer can see clearly when they need to pay you.

Make the due date stand out, too.  Bold it, print it in a different color, increase the font, or do all of the above.  You want it to be really clear when that payment is due in your office.

 4.       A Payment Link

Can you take payments online?  If so, include the web link that customers can use to pay you online.  This might be to a shopping cart, PayPal®, or another online payment system.  If it’s convenient for your client to pay, you’ll get paid faster.

5.      A Friendly Warning for Overdue Invoices: “Does your mother know you haven’t paid this invoice?”

If all the above fails and the customer does not pay you by the invoice’s due date, you’ll want to have a process for re-sending the invoice and/or statement until the customer pays or until you’re ready to turn it over to a collections agency.  Here are some sample sentences you can choose from:

“We hope you’ve just overlooked this bill and can send your payment right away.”

“We’re re-sending this invoice in case it got lost.  Please send payment right away.”

“Could you check on the status of this payment for us? Our records show it’s past due.”

“Please contact us if you have questions or issues with this invoice. Payment is now past due; please remit immediately.”

“Hey, we need to pay the rent!  Please send your payment as soon as possible.”

When the invoice gets older, sometimes it helps to add a little humor:

“Does your mother know you haven’t paid this invoice?”

Marketing to Get Paid

With these five low-cost ideas, you’re sort of “marketing” to get the payment sooner.   They are easy to implement, cost very little, and will improve your cash flow.   Try them and let us know how they are working.

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Do You Know Your Small Business Vitals?

On a doctor’s visit, the first thing the nurse does is take your vitals:  your temperature, blood pressure, pulse rate, and respiration rate.  These basic measurements are the first place doctors look to see if something is wrong with our health.

Knowing your vital signs, and especially when they are out of whack, is good for your health.  In the same way, knowing your business’s vital signs, and especially when they are out of whack, is good for the financial health of your business.

Vital Measures

If you’ve been in business a while, you might already know the “vitals” you like to track.  Here are some common ones for a small or new business:

  • Checking account balance(s)
  • Amounts owed (bills, payroll, and loans)
  • Revenue for the month and year-to-date
  • Sales by customer so you can see the top five to ten largest customers

As time goes on and your business grows, you may want to add some of the following:

  • Revenue for the month and year-to-date compared to last year
  • Net income for the month and year-to-date compared to last year
  • Days Sales Outstanding which is a measure of how long it take to collect on an invoice from a client
  • Revenue by service or product line in a pie chart

These are just a handful of the many options there are when it comes to measuring the results of your business, and it would be difficult for us to list all of them here.  The point is to decide proactively what you’d like to track on a monthly basis.  Then you can set up the process it takes to get those numbers delivered to you in the format you prefer.

Once you decide on the numbers you need to run your business, you’ll be able to take your “vitals” whenever you want.  But you can take this to the next level with one more idea:  exception reporting.

Being Exceptional

It’s great to glance at your numbers periodically, but there can be a lot of data to wade through.  How about getting a report that tells you only when the numbers go out of range?  This is called exception reporting, and requires that you set ranges for each measure you want to follow.  If the measure stays within range, you do not have to be alerted.  However, if it falls out of range, then you can get a report to tell you what’s going on so you can take the right business action.

Exception reporting is not all that common in small business, but can save a busy owner a lot of time.

A Clean Bill of Health

By determining the vitals you want to watch for your business and putting a process in place to monitor that information, you will be helping your business stay healthy.  If we can help, please reach out and let us know.  The doctor is IN.