How many Lifetime Customers does Your Business have?

May 25, 2011


Companies like Verizon and AT&T have millions of customers who have been with them for many years. These companies spend a lot of money in acquiring new customers. For example, they give new customers subsidized phones in return for them signing a 2-year contract. Many customers continue to remain with the company after the initial 2-year contract term is over. The reason they can spend money to acquire new customers is because they have guaranteed return for at least the initial contract term. This is what Seth Godin is referring to when he talks about embracing this concept of lifetime customer value.
Most small businesses, however, do not have luxury of asking customers to sign up for a contract. They have to do hand-to-hand combat with their competitors one customer at a time every day. For proof, download a report from your POS system showing how many customers have not ordered in the last 90 days. You may be surprised to find that more than 70% of your total customers have not come back to your business in the last 90 days. And you are not alone. Most small businesses have far less repeat customers than what their owners would like to think.
[Read more…]

Filed Under: Customers, Employees, Operations Tagged With:

7 Steps to a Great Customer Service

May 22, 2011


A business cannot sustain competitive advantage for long time based on product and price alone. Competition eventually will find a way to beat you on that game. Competitive advantage built on customer service, however, cannot easily be copied. For proof look no further than Zappos.com. Here is an E-commerce company that sells shoes, of all the items, on the Internet. However, with a laser like focus on customer service it is selling a billion dollar worth of them annually!
After consulting with number of small business owners over past several years we have come up with a 7-step process that companies need to adopt to achieve the success enjoyed by Zappos. It will not be easy to follow these principles all the time and success will not come overnight. However, when you do master them you will have a lasting success that your competitors will find difficult to beat.
[Read more…]

Filed Under: Customers, Employees, Management, Sales Tagged With: , , ,

List of Documents to Prepare for Business Sale

May 15, 2011


Opportunity favors those who are prepared to take advantage of it. This has been the consistent theme in the last several posts we have written on how to prepare your business for sale. We mentioned that you need to start planning for business at least one year in advance. In addition there are additional items you need to take care of as the time to list your business for sale approaches.
Your primary goal as a seller is to allay potential buyer’s biggest financial fears as well as other FUDs related to the operation of the business. It is only through proper planning and careful preparation that you can dispel buyer FUDs and make your business sale go faster and smoother. After all the longer it takes for the sale to go through the more chances of something going wrong and the sale falling through.
One of the most important aspect of getting prepared for the sale is compiling all the documents related to the business finances and operations.
[Read more…]

Filed Under: Buyers, Employees, Finance, Marketing, Operations, Sellers Tagged With: , ,

How do you overcome Buyer FUDs when selling your business

May 12, 2011

In the previous post we discussed two biggest fears your potential buyers have when they are considering purchase of your business. We showed how you can help buyers overcome these fears and make the sale of your small business go through quickly and smoothly.
In addition to the two fears related to business finances, there are other operational FUD (Fear, Uncertainty, Doubt) factors that buyers, particularly those who have not owned small business before, are likely to have. With proper planning you can help alleviate these FUDs and make the selling process go faster. After all, it is in your best interest to shorten the sale process as much as possible. The longer it takes for sale to complete the more chances of something going wrong and the sales falling through.
Based on our experience with both buying and selling business, we have come up with several questions that are likely to surface in buyer’s head when he is going through due diligence. The sections below document those questions along with our advice on how you can deal with them.
[Read more…]

Filed Under: Buyers, Employees, Management, Operations, Sellers Tagged With: , ,

What do you need to do 3 months prior to listing your business for sale

May 4, 2011


We mentioned in the previous post that selling a business is a long, arduous process. It is not uncommon to take more than a year to sell the business. In the post we showed items you need to take care of 1 year prior to putting your business for sale.
As the date of putting the business for sale approaches there are additional items you need to start working on. Just like selling your house, you need to get your business ready 3 months prior to listing date. The goal is to spruce up the image, both physical and virtual, of the business so that the buyer will find it attractive and worth paying for. You should also aim to remove the fear and uncertainty in buyers because this is the single most reason why many buyers are reluctant to sign on the dotted line at closing.
So, what actions do you need to take 3 months in advance? Here is a list of items we think are important based on our prior experience.
[Read more…]

Filed Under: Buyers, Employees, Management, Operations Tagged With: ,

Why Embracing KISS Principle Leads to Happiness

April 6, 2011


KISS -Keep It Simple Stupid.
Many small business owners like to take the road less simple. If a task takes 2 steps to finish they will manage to stretch it to 10 steps. They are wired to think complex. We have pondered on the question for some time – when you are running a small business should you opt for a simple operation or a complex one?
You can see the examples of simple and complex operations in franchises as well. On one hand you have a pizza franchise such as Little Caesar’s – home of $5 Pepperoni Pizza with no delivery. On other side there is Pizza Hut with large number menu items and toppings and it not only has carry out; but also delivery and dine-in. Which one is easier operation to run?
There are number of reasons why you should try to keep things as simple as possible.
[Read more…]

Filed Under: Customers, Employees, Management, Operations, Sales Tagged With: , , , , ,

How Can your Employees Help Improve Sales

March 16, 2011


It is our belief that your employees can help improve sales at your business by more than 20% if you help them help you. Most business owners don’t really think of their employees as ones who can help them improve sales; however the front line employees – the ones that interact with customers – can make a big difference in improving your business. These employees are talking to and interacting with your customers all the time. They are responsible for making your customers come back by providing great customer service. In short, they are representing your brand and your business.
So what are the specific ways in which your employees can help improve sales? In our experience of running business for 5 years we have come across multiple opportunities.

  1. They can make your existing customers come back by providing excellence customer service.
  2. They can also help bring new customers by word-of-mouth from existing ones.
  3. They can help you up-sell and cross-sell at the point of order taking and payment.
  4. They are aware of where opportunities exist for improvement in customer service and operations.

It is your responsibility as business owner to make this happen. You have to provide them with the necessary resources and incentives that will motivate them to give their best in front of customers. We have identified below several areas that you need to address.
[Read more…]

Filed Under: Customers, Employees, Marketing, Operations, Sales Tagged With: ,

How to succeed in running absentee business

March 13, 2011


Small business owners run their business absentee for variety of reasons. Some owners are still holding full-time job while starting a business. Others have more locations than they can handle themselves. While still others just don’t want to spend their entire time on the business. Our estimate is that while majority of small businesses are owner operated, there are number of businesses that are run absentee for the reasons mentioned above.
While it is possible to run and succeed in absentee owner business you need to be aware of the problems that arise when you are doing so. Ignoring these problems can lead to deterioration and even disaster for your business. The most common issue in running the business absentee is that you may not be aware of what’s going on with your business or at least not to the same degree as when you are present 24×7. Even if you come to know about the issues it may be too late to act on. The issues can surface in all areas of the business ranging from operations, quality, purchasing and customer service.
[Read more…]

Filed Under: Buyers, Employees, Management, Operations Tagged With: , , ,

How to Ask Customers to do Marketing of your Business

March 9, 2011


Most small business owners are at a disadvantage compared to their large competitors when it comes to marketing. After all, small businesses do not have the marketing muscle and budget of the large companies. They have to find innovative ways to do marketing and advertising that is not expensive yet is equally, if not more, effective.
Many small business owners get intimated by this challenge and think that there is no way they can succeed against Goliath in marketing. We believe that is not true. In our earlier post on 5 fundamental rules of marketing we argued that good marketing strategy does not have to cost much. We also showed how you can improve your sales in a low-cost fashion through community involvement. There is another aspect of low cost marketing that is not utilized well by small business owners. That involves seeking help from your existing customers to do the marketing for you.
[Read more…]

Filed Under: Customers, Employees, Marketing, Sales Tagged With: , ,

Improve your Sales with Up Selling

March 6, 2011


“Would you like fries with that?” – We have all heard this while ordering burger at a fast food place. How many times have you answered it with – “sure”? Well, this is the power of up selling. In its simplest form, it is just a matter of asking customers if they want to add more items to their order. In a more subtle form, it could be something like placing a complementary item to the one that you intend to purchase in a grocery store and enticing you to buy it.
If you are not taking advantage of up selling and cross selling opportunity in your business you are probably losing 20-30% of potential sales. Some companies have really mastered the techniques of up selling by making customers buy additional items at a high price. For example, Ford has increased the average selling price of its cars by making customers want and pay for the extra options in their basic cars. When Apple introduced its next generation of iPad on March 3 it also showed a screen cover that will be sold for $39 for basic model and $69 for leather version. Can you imagine what their profit margin is on these items?
[Read more…]

Filed Under: Customers, Employees, Management, Operations, Sales Tagged With: