Reports you should use to assess business performance

July 15, 2010


In the previous post we mentioned that as a small business owner you should know the key numbers of your business by heart. These key numbers provide valuable insight in your business and act as early warning indicators. Without them you may not realize if the business is heading for trouble and by the time you do it may be too late.
We also advise you to spare some time from daily operations and spend 15 minutes daily and several hours weekly and monthly to go over the reports that show how your business is performing. In this post we will provide more details about these reports and what you should look for in them.
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Do you know how well your business is performing?

July 14, 2010


If you answer this question with “Oh! It’s OK” or “Just like everyone else”; without backing that up with the sales, cost or profit numbers your business may be heading for trouble.
Whenever we meet with our business colleagues and clients we ask this general question to get a sense of whether the business owner has a grip on his/her business. Many times the answers are what we mentioned earlier. We probe them further by asking follow-up questions such as “why do you say so?” or “how is it compared to others or last year?” and if they don’t have good numbers to explain, we know they need to work on getting a handle on their business.
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Importance of Due Diligence in Buying a Business

June 29, 2010


Whether you are buying a business for the first time or you have purchased and sold number of businesses you cannot underestimate the importance of due diligence before signing on that dotted line. The mistake made at this stage can not only be costly in terms of financial losses; but it will get you stuck with bad business for a long time.
So what is due diligence? Due diligence is the process of looking at the business you are planning to purchase from multiple angles to verify that the financials match with what the seller promised earlier. Presumably, you have already done your homework in terms of market analysis, competition, and future potential before putting an offer with the seller. The due diligence comes into picture after the seller has agreed to your offer. It is usually one of the last steps in the buying process before you start preparing the closing documents.
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Deadlines are Your Best Friends

June 28, 2010


In 1961 President John F. Kennedy made a bold statement in his speech. He promised to American people and the world that before the end of the decade America would land a man on the moon and return him safely to the earth. When you think about it this was an enormous challenge. We didn’t even know what technology we would use to accomplish this. Many aspects of this mission had huge risks. And still, we found a way to accomplish this goal.
Such is the power of deadline. By setting a challenging deadline for the mission he set the entire nation into motion. Having a deadline somehow springs everyone into action. People simply find a way to make it possible one way or another.
The reason deadline works is because of how human mind is wire to react. When you give someone, or even yourself, a deadline they don’t want to disappoint the promise. Deadline gives them a target to shoot for. Without it they will not only not push themselves to complete it; but also keep the work going forever.
So how can you use the power of deadline to help you accomplish your goals even if they may not be as ambitious as putting the man on the moon? We have identified several ways from our own experience.
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Filed Under: Management, Operations Tagged With: , ,

Do not Fall into “Busy Trap”

June 25, 2010


If you are like many small business owners you do not put together a plan when starting your day. Instead you just react to whatever comes your way throughout the day. And even if you do plan your day in the morning; you start reacting to the requests and tasks that come your way throughout the day – things like customers calling to complain, employees calling in sick, store emergencies and many other operational issues.
In the previous blog post we mentioned that the ”to-do list” is a very powerful tool to plan your day and accomplish more in less time. However, when emergencies mentioned above start coming your way the to-do list gets thrown out the window and people start reacting to those emergencies. This is what we call the “Busy Trap” – you always seem busy; but don’t seem to accomplish much of whatever you had set out to do at the beginning of the day. At the end of the day you look back and think – “what the heck did I really accomplish today?”
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Filed Under: Management, Operations Tagged With: ,

Your Best Time Management Tool – To-do List

June 24, 2010


Chances are many of us today will have forgot to complete at least 1 task they set out to do at the beginning of the day even though they had all good intentions and time to do it. The problem is we just couldn’t remember it at the right moment. If you have got a feeling at some point where you think you need to do something; but can’t recall what it is then you know what I mean.
There is a simple, yet effective, tool we have used that is sure to help you remember things and increase your productivity. The “To-do List” in its various forms can make sure you remember what you need to do when you need to do it. In the previous article we have mentioned other techniques you can use to improve productivity.
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5 Effective Techniques to Get More Done in Less Time

June 23, 2010


People often say that once you have started your small business you can pretty much forget about your wife, girlfriend, kids, friends or everyone else that matter in your personal life. We tend to disagree. While it is true that running a business is no small task – they don’t call the owners Chief Everything Officer for no reason – there are ways by which you can get more done in less time and have time left to enjoy those personal moments.
Here are five techniques we have found useful in our experience in running the previous business as well as the current one.
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Filed Under: Employees, Management, Operations Tagged With: , ,

Do you know Why your Customers are Dumping you?

June 14, 2010


If history is any guide; you will lose about 20% of your current customers by the end of the month and 40% by the end of the year. I know it sounds terrible; but that’s fact of life. While 30-40% of sales for any business come from existing customers; the rest comes from customers using revolving door. They will come and go for a variety of reasons.
This customer churn can be costly for your business. You need to constantly recruit new customers to fill the gap left by those customers who have dumped you. This costs money reducing your profit. It is said that it is 4 times more expensive to get new customer compared to retaining the existing one. We will look at the ways to stop customers from dumping you in a later post; but let’s understand why they leave you in the first place. The reasons are quite varied and some are easier to correct than others.
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Filed Under: Customers, Employees, Management, Marketing, Operations Tagged With: , ,

Pros and Cons of Multi-unit Operations

May 25, 2010


Many of the business owners who expand from a single unit to multi-unit operations fail and even end in a worse situation than before. It’s human nature to think of a simple math – if you are making $100K from one unit; you should be able to make $200K from two, right? They may go even further thinking that the outcome should be more than $200K when you include all the synergy you can derive from multiple units.
Even though there is some truth in this argument the reality is operating a multi-unit business is hard work. You need to think long and hard before expanding and consider the pros and cons of multi-unit operations before making a decision. Below I have tried to highlight some of the key points to consider in terms of the benefits and pitfalls.
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Filed Under: Management, Operations, Sales Tagged With: , ,

How to Make Partnership Work

May 19, 2010


Statistics show that more than half of partnerships usually end up in failure. This is a reason enough to discourage many would be partners from getting into business with partners. However, it doesn’t have to be this way. Given sufficient precautions the partnerships can not only avoid failure; but can thrive.

There are a number of successful partnerships at a larger scale that have worked well. For example, the triumvirate at the helm of Google – Sergey Brin, Larry Page and Eric Schmidt has grown the company’s sales to more than $23 billion in 2009. So what makes a partnership successful and how can you use it in your situation? Below we have identified several traits of successful partnership from our own experience and that of others.
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