Insights, Ideas, Results
Guest Contributor Chris Blanton is a former serial entrepreneur and business
advisor. He is currently editor of Ingenious Business Guide, a collection of proven practical techniques to ignite business growth and profitability. He can be reached by email
Do you know that every company loses potential profit on every sale? It’s true. You could be earning much more income than you are now. The key is to reduce your price flexibility.
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A while ago we wrote about how most small businesses are overpaying for credit card processing. In our conversations with number of small business owners we have not come across a single owner who does not hate credit card processing companies for the exorbitant amount of money they charge. In this article we showed several techniques that can help you save money. Many of our readers have found it helpful.
We have recently come across a web site – TransFS that makes it easy to compare rates from various credit card processors. Not only that, but they go one step further and bring you quotes from various credit card merchants by auctioning your business to them. Here is how it works…
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All businesses have “good” customers and “bad” customers. We like to call “bad” customers the “undesirable” customers. You don’t mind losing them because they do not contribute much to your bottom line. In fact, they usually drain too much time, energy and money from you and your business either directly or indirectly. We showed how you can identify these “undesirable” customers in the previous post here.
As a business owner you do have a choice as to who you want as a customer. However, you don’t want to be seen as rude when dealing with these customers, even though at times you may feel compelled to do so. You have to figure out a subtle approach that gets the job done, while at the same time doesn’t appear rude.
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All businesses have “good” customers and “bad” customers. The “good” customers make you a lot of money – directly and indirectly; while “bad” customers do not make you much money and in some cases incur you losses. These “bad” customers not only make you lose money directly; but they also drain your energy and resources in other ways. For many small business owners, the “bad” customers appear to be helping your business on the outside; but when you scratch the surface you may realize that it may not necessarily be the case. They may be doing you more harm to your business than you may realize.
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The majority of goals set by people are never fulfilled or at least fall short. If you want the proof; go and check out health clubs in the first 2-3 weeks after New Year. They are so crowded by the people who have made resolution to lose weight, that it is difficult to find free exercise equipment. And then the crowd fizzles out after 3 weeks and only the regulars keep coming.
The reasons majority of goals go unfulfilled are multiple – they are too vague or too difficult or they don’t have any time limit. Because of this, people setting the goals either don’t know how to achieve them or they give up thinking they can never fulfill them.
We came across the S.M.A.R.T. goal setting technique a while ago that can help anyone achieve what they want in a reasonable time period. S.M.A.R.T. stands for Specific, Measurable, Attainable, Relevant and Timely. Essentially S.M.A.R.T. goal setting ensures that you know what you want to achieve, how to achieve it and when to take actions. Below are the details on how to go about setting S.M.A.R.T. goals.
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In the previous several posts here , here and here we have discussed how looking at performance metrics helps understand how your business is performing. We also mentioned that you should be looking at the reports on a daily, weekly and monthly basis to stay on top of your business.
The reason you want to look at the metrics is simple – numbers don’t lie; people do. However, from our experience as past business owners we have noticed that numbers tell only part of the story when trying to assess business performance. The metrics tell you what is happening to the business. They don’t tell you why. You have to dig deeper to understand why the numbers are what they are. For example, let’s say you are looking at sales going down for the last several weeks. You want know why this is happening. Further investigation shows that the customer count has been declining in that same period. But this still doesn’t tell you why customers are not coming to your business leading to declining sales. It may be because they are not being served well; maybe there is another competitor in town and so on.
So how do you go about collecting the anecdotal stories to understand the reasons behind the numbers? There are several ways you can do this.
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In the previous blog post we indicated that many types of small businesses have “standard” set of metrics that you can use as a starting point to determine the key metrics you should track for your small business. We discussed key metrics in the retail and restaurant business in the previous post. In this post we have shown the metrics for additional businesses – hotels / motels and service businesses.
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Every small business owner needs to look at the business reports daily, weekly and monthly on a regular basis to stay up-to-date with how their business is performing. You need to understand what key performance metrics to look at in those reports. We showed how to identify and track key performance indicators in this post.
You don’t have to start from zero when looking for key performance metrics for your business. Many types of small businesses have “standard” set of metrics. As a small business and franchise owner you should be aware of these metrics. In this post we will summarize the key metrics for retail businesses and fast food / restaurants.
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In the previous post we mentioned that many small business owners find it difficult to explain how their business is doing with the numbers backing up their words. It is even more difficult to predict how the business is going to perform few months down the road. However, it doesn’t have to be this way.
By identifying and tracking few key performance indicators (KPIs) any small business owner can not only figure out how the business is performing; but also forecast where it is headed. This is no different from when the doctor checks vital signs such as blood pressure, pulse, weight, etc. of the patient to find out what is wrong or could go wrong. You only need 5 or so KPIs to get a feel of the business performance.
Typically, these KPIs will be different for different industries. For example, the retail store should look at comparable sales and inventory turnover; while exercise facility would track customer turnover and average sales per customer. Most large publicly traded companies include these KPIs in their annual reports or in the financial analyst reports.
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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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