Archive for the ‘Profit Improvement’ Category

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10 Ideas to make your summer in business a success

Saturday, July 16th, 2011

We are just over half way through 2011 and the summer (and hopefully good weather) is with us.  It can be easy to lose focus at this time of year as thoughts drift to holidays etc.  So at Accountancy Extra, we’ve created our top ten tips to making sure your summer is a resounding business success.

 Review your goals, targets & aspirations

 Take time out to take a look at why you do what it is that you do.  What do you want from your business? What do you want from life? Summer is a great time to review what you want to achieve.  For some reason the sunshine helps with clarity.

 Review your Products & Services

 When was the last time you looked closely at the products and services you supply to your customers? Are they still relevant in today’s changing marketplace? Are you delivering what your customers want in a way that they want?  Today’s marketplace is more demanding than ever, and it’s essential that you keep completely up to date with what those demands are.

 Get Rid of Nightmare Clients

 Now is the time to take a good look at your client list and get rid of those clients who are a nightmare to work with.  We’ve put together our own guide on nightmare clients, together with some top tips on how to avoid them here

 Focus the right type of clients

 As opposed to the nightmare clients, focus on getting hold of the clients you really want to work with.  Start by listing your top 10 existing clients and then write down why you love working with them.  After a while, you will see some common characteristics appearing across most or all of them.  Use these characteristics for identifying prospects and opportunities.  Why not create a list of the characteristics and share them with your team?

 Create a dashboard

 What are the key numbers in your business? I’m not talking here about just your profit and turnover (which are lagging indicators), but the key numbers that drive the success of your business – your profit drivers.  How do you measure and record them?  Having a visual dashboard really helps focus the mind – I’m not necessarily talking about a fancy software solution with dials etc. (although there are some really good ones), as a simple spreadsheet or wall board may give you all you need to know

 Get a marketing plan

 Don’t leave your marketing to chance – plan it.  Take a good look at what activities have been successful in the past and work out a plan to concentrate on those things going forward.  Ensure you think about your customers and what you can do to make you even more attractive to them.  Book time out of your diary to work on the marketing of your business.

 Invest in yourself & your team

 Motivating a team is one of the hardest tasks a business owner faces.  Take time to invest in the development of your team and the relationships within the team.  Perhaps take them on a development day, share with them the vision for the business or just take them out for a bit of fun!

 Understand what’s happening with your cash

 We all know that lack of cash is the number one reason small businesses go bust.  Make sure you are closely monitoring the cash position of your business.  Forecast ahead over the next 6-12 months and identify pinch points (including the payment of future tax liabilities).  Use our guide here for ideas on how to improve your cashflow

 Review the first half of the year

 Take a look at the successes you have already had this year and replicate them.  Similarly find the failures and stop them happening again.  Be proud of your achievements and celebrate your successes – you’ll feel great for doing so and there hasn’t been too much for small business owners to shout about this year so far!

 If you repeat this exercise in 6 months time, what would you like your biggest achievement to have been?

 Have some fun

 Take some time out, relax and have some fun.  It’s hard to run a small business and relaxation helps refocus your mind.  Turn off the email alerts on your smartphone and kick back once in a while – after all, you deserve it!

Posted in Business Development, Profit Improvement | No Comments »

8 Types Of Client To Avoid At All Costs

Saturday, June 18th, 2011

No matter what industry you work in, you will meet both good and bad clients.  Of course, to make the absolute best from your business, it’s important that you attract as many good clients as possible and avoid the bad ones at all costs.

 But how do we know what makes a bad client?  Thankfully, they are pretty easy to spot and also (on the whole) fairly easy to deal with.  Here is my list of the most common types:

  1.  We all want to make it easy for new clients to pick us, so in a lot of industries it is now the norm to have a free initial consultation.  This gives us the opportunity to showcase our talents and convince the prospect that we are his/ her best choice for the job.  However, occasionally, we will meet “Mr Something for Nothing”.  This is the guy who uses the free meeting to gain the absolute maximum amount of technical information as possible, often with no regard for the cost of your time.  If you are a lawyer, he will possibly want all his legal working discussed in that first  meeting.  Luckily, this guy is easy to avoid by setting out the “rules” of your first meeting, and sticking to them (however tempting it might be to give more in order that you can “seal the deal”)
  2. The “Dreamer” prospect has unrealistic expectations of what can be achieved and what the budget should be for doing so.  I’ve had many conversations with digital clients who tell me similar stories of prospects who ask them to “build the new Ebay/ Facebook/ Google” with a budget of £500.  The secret to avoiding this guy is to create a list of high quality questions that you can ask before agreeing to a meeting with them.  These could be around project timescales, overall framework, background to the idea and the prospect, maybe even budget.  It will save you a lot of time!
  3. The Scope Creep client often agrees to a project specification and a price and then starts adding those little extras in as you go along.  For example, the guy whose laptop you fix for a pre agreed price who then expects you to fix his printer as well, for free! Or the bathroom you fit for a customer, who then expects you to do half a dozen extra plumbing jobs around the house “whilst you are there”.  Be careful, these extras, soon mount up.  To avoid scope creep, document what is included in the price and maybe even include a list of what isn’t and typical prices for doing these tasks.
  4. Have you ever been told “XYZ down the road are cheaper than you”? Then you’ve met the Discount Seeker prospect.  He’ll often low ball your fees with promises of loads of future work (which never materialises!).  His cheapness is often seen to match his ability to be ever demanding of your time.  Know your worth and stick to it!  If he wants a cheaper price, then take something out of the deal to match his budget.
  5. The Discount Seeker is often morphs in to the Time Vampire.  This is the client who e mails you regularly, often without reason and who expects an instant response.  If you don’t provide one, he’ll be calling you within the hour to ask why not! He may want regular meetings “just to stay in touch”.  Ask their expectations up front and agree a support package to suit them and their project and then price properly for it!
  6. The High Profile Client often will lowball your fees in the same way as the Discount Seeker, but will justify his move by claiming “As a high Profile client, my XYZ project will be great for your portfolio”.  Unless you are planning a targeted strategic move and need this client’s testimonial in your portfolio desperately, avoid his ploy. It’s just his way of getting his work done cheaply!  Try telling him that you provide first class service to all your clients and it would be unfair on the others to subsidise him.
  7. The Impossible to Please client will constantly bombard you with complaints, changes, queries, price objections and will almost never say thank you, even if you have really gone “the extra mile” to make them happy.  Stick to the script and refer back to your brief wherever possible.
  8. The Can’t Pay, Won’t Pay client.  These are a difficult beast to spot!  All starts well when they agree the scope of the work you’ll be doing and even agree the price.  You then do the work and start the waiting and excuses game! Weeks or months will pass and they’ll make no attempt to contact you to discuss the invoice.  When you do speak with them, there will be a raft of excuses for non payment, including the infamous “the cheque is in the post”.  Structure your contracts so that you get paid up front (in part at least) and include milestones and payment milestones within the contract.  That way, even if they default, you’ll only be ever down one stage payment.

 By avoiding these types of clients, you can concentrate your efforts on the good ones, the profitable ones and above all, the ones are that great to work with.

What other stories of bad clients have you got?

Posted in Business Development, General Business, Profit Improvement, Recession | No Comments »

One simple way to increase profits

Monday, September 6th, 2010

How do you increase your profits?

The most common reply I hear is “get more customers”.  However, getting more new customers can take a long time and be costly.  Instead, wouldn’t it be easier to sell more services to existing customers?, the customers who already have an established relationship with you and like the service/ product you provide. 

When trying this approach, an common mistake is to market every service you provide to every customer.  The problem with this is that the one service a customer needs may be hidden in the middle of a list of loads of services or you may be marketing inappropriate services to the wrong customers.  For example, there would be little point in me sending marketing messages about payroll services to all my clients who work alone.  They (currently) have no need for this service and it would be obvious that I wouldn’t have put much thought into their needs.

How to get the right messages to the right customers

There’s a simple and practical way to get the right messages to the right customers.

Firstly, open a blank spreadsheet.  Start at column “B” and list all the services/products you supply across the remaining columns.

Then, in each row, list the name of each of your existing customers.

Once you’ve done that, work through each customer and “tick off” the services they currently buy from you by highlighting the relevant cell.  When you’ve finished doing this for every client, you’ll be left with a chequerboard effect, the white spaces being where customers doesn’t buy those services from you.  You’ll be amazed at how much “white space” there is left!

The second, and equally important, stage is to work through the list again, this time highlighting irrelevant services for each customer e.g. payroll for single person businesses.  Once you’ve done this, you can start to market your products/ services intelligently to the customers who may have a need for them.  As customers buy more from you, you can update the matrix, crossing off each service as it is purchased.  Once the spreadsheet is completely shaded in, you know you’ve maximised your income potential.

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Posted in Business Development, Profit Improvement | 1 Comment »

Stress proof your business and your life

Friday, August 27th, 2010

Owning and running a business can be incredibly stressful. So we have decided to do something about it by producing a book called “Stress proof your business and your life”.

 You can find it on Amazon at £12.99 – but you are welcome to a copy with our compliments.

 But please don’t be put off by its title, since it is categorically not only for people who are stressed. In fact, one of the key benefits from reading it is that you’ll get dozens of excellent ideas for putting a great deal of extra cash into your business and personal bank accounts.

 There are four parts to the book.

 Part 1, Stress proofing the business stuff, looks at what people can do to reduce and prevent the stress caused by their business and its financial situation. And it provides simple yet effective solutions to common challenges such as:

  • Not making enough profit
  • Running out of cash and other similar cashflow problems
  • Being forced to work more than you want to
  • Having too many things on your to-do list
  • Too much depending on you, and too many things that can only be done by you
  • Not getting the right life-work balance
  • Not having the information you need to make sensible decisions
  • Losing too much of what you earn to the taxman
  • Other people, especially customers and your employees, behaving unreasonably or unfairly

 Part 2, Stress proofing the money stuff, looks at what people can do to reduce and prevent the stress caused by their personal financial situation.

 In these first two parts much of the emphasis is on strengthening the financial and business fundamentals – since they are so often the primary sources of stress and anxiety for business leaders. But strengthening them is also extremely worthwhile for people who aren’t suffering from stress.

 Part 3, Stress proofing the personal stuff, broadens the discussion by explaining how to reduce and prevent the stress caused by the other things going on in people’s lives.

 Finally, Part 4 brings it all together into a practical action plan.

How to get your FREE copy 

So, would you like a copy?  We would be happy to send readers of the blog a complimentary copy….all you need to do is drop us an e mail or call the office on 01422 365981 and we’ll get one sent straight to you.

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Posted in Business Development, General Business, Profit Improvement, Recession, cash management | 1 Comment »

Lessons From The Recession

Monday, August 9th, 2010

I don’t think many will disagree that the last couple of years have been difficult for most small business owners.  The lack of readily available cash and customers has made some small businesses think hard about what they are doing, whilst some still seem to be content to “baton down the hatches” and await economic recovery.  During this period, the businesses I have seen perform the best have all  possessed similar traits.  They have applied the lessons below and all still talk positively about their business and it’s prospects.  Sure they admit it’s been tough but some of them are experiencing better periods of growth than ever before.  So what have the key lessons been?

 Lessons

Pre recession we were lazy with our finances.  If debtor days reached 90 days we didn’t bother too much as the banks would bail us out with loans and overdrafts.  Now we need to live on cash generated from our customers and the effective collection of cash has become a priority.  We didn’t concentrate too much on pricing as there was plenty of business to be had to make up for margin shortfalls.  Now pricing and margins are critical to business success.  We need to avoid models which are just centered around lowering prices and offering discounts, unless there is an infrastructure in place that backs this up.  Price wars rarely work as there is always someone who can do it cheaper than you.

We were lazy with our marketing.  In times of abundance there was plenty of business around and we didn’t have to fight very hard to get at least our natural market share of what was out there.  Now the markets are smaller and customers are more choosy where and how they spend their money.  I remember talking to a mortgage broker not long after the recession had started.  For many of the years prior to the recession he had had constant leads passed to him from estate agents.  He had never had to market his business and was making lots of money.  As soon as the housing market went “pop” he had absolutely no idea how to attract new clients.

 Innovation and creativity in small businesses wasn’t always considered.  There has been an explosion of “me  too” businesses in the good times, businesses which were essentially copycats of all the others in the same industry.  Even now, when we attend networking events, we see many businesses that look the same (apart from the name) and there is no differentiation in their promises or offers.  No longer is it acceptable for a business owner to say that their unique selling proposition is “great service” or “personal service” because that’s what they all claim to offer!  There needs to be clear difference in the service offering, tangible benefits to fit with consumer needs.

 We were lazy with our processes and systems.  We may have had labour intensive businesses, but it didn’t matter because the sheer volume of work available meant we still made a good profit.  Now, we need to think “McDonalds” and ensure that we have systems which help deliver better and more consistent service, which are much more cost effective and efficient than what we are used to.

 Customer service certainly wasn’t king.  How many times have you received poor service in a restaurant or shop?  How many times has it taken your website designer weeks to return your e mails?  Pre recession it didn’t matter as there would be someone else along tomorrow to take their place.  Keeping your customers happy and keeping them coming back for more is now vital to making a success of your business.

 The Frog and the Boiling Water

 I’m sure you’ve already heard the story….If a frog is dropped in a pan of boiling water it jumps straight back out.  It takes action!

 During the last two years I have seen many business experience fantastic growth.  These businesses weren’t necessarily business built up to deal with particular recessionary issues.  They had been around well before the recession started.  However, they realised what was going on around them and took action….they did something.  By considering the above points and taking action they have not only survived, but some have experienced some of their best years of growth.

 What lessons have you learned over the past couple of years?

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Posted in Business Development, General Business, Profit Improvement, Recession, cash management | 9 Comments »

Who is your ideal client?

Thursday, June 17th, 2010

At a networking meeting yesterday, all the members were asked to make an elevator pitch about their business.  As part of the pitch, each member had to include “who would be an ideal referral for your business”.  It was surprising, how many members responded to this with “anyone” or “any small business owner”.  From attending these meetings regularly I have learned that the more specific I am about asking for referrals, the more I seem to recieve.  For example, one week I asked to speak specifically to hairdressers, the next business owners looking to buy commercial property (as we can help them reduce their stamp duty).  Now the reason most others don’t do that is that they are frightened of missing out on other potential introductions.  However, the reality is exactly the opposite – I know, I’ve tried it!

Why the “anyone” strategy doesn’t work

The “we’ll take anyone” strategy doesn’t just apply to asking for referrals at networking events.  It’s often present all the way through a company’s customer acquisition drive.

By using this strategy, you attract all the wrong types of customers, who don’t help you move towards your end business goal.

Typical examples include customers who are fee sensitive, non profitable, are a drain on your resources, don’t take your advice or who constantly scope creep projects.

If  your business is full of these types of customers, will you ever reach your goals of profitability or being happy in your work?

Ok, it’s easy to say don’t accept just anyone, but it’s not that easy when you are trying to build a business quickly.  However, if you can accept that the business will grow a little more slowly, then there is no doubt that you’ll see the benefits – both in terms of profitability and hassle.

How to get that ideal customer

First things first, do you know what your ideal customer looks like.  What industry do they work in? How big is their business? What age group are they in?

Take time out and draw up a list of all the differant attributes that your ideal customer should possess, and take note, the list should be longer than “anyone with cash!”

You may already have some ideal customers on board.  What characteristics do they have in common?

Think like the big boys here – Supermarkets, Banks and other major players all use this type of method.  Once they have identified their ideal customer, they target them through marketing.

Once you have your list, you then need to work out how your service will benefit them and how you can get to speak with them.

A great example I saw of how not to do this was some time ago with a company that wanted to target Accountants.  He approached me at a business networking event where I was the only accountant present (and always would be due to the exclusivity “deal” you get with the networking group when you sign up).  So, by attending this meeting he got to talk to just one Accountant.  Sure, he’d done his homeowrk on his ideal client type, but then had put no research into where he’d get to meet them.  If he continued in this manner, it’d probably take him the rest of his business career to speak with only a small proportion of his intended audience!

Do you know what your ideal client looks like?

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Posted in Business Development, Profit Improvement | 1 Comment »

Working on your business – Whats that all about?

Friday, June 11th, 2010

Here at Accountancy Extra we are huge fans of Michael Gerber and the book E Myth Revisited.  So much so, that we provide new clients with a copy of the book.

In the book, one of the concepts discussed is “working on your business, rather than in it”, but what does that really mean?

Working on the business includes activities such as

  • Networking meetings
  • Researching a new product
  • Working on your cashflow
  • Putting together a business plan
  • Reviewing your gross margins, or
  • Systemising your business

How often do we start to do one of the above and then abandon it as a customer calls wanting something, or we need to attend to an urgent e mail from a client?

I often think about running a business a bit like preparing for the World Cup.  A top class footballer doesn’t just turn up 10 minutes before kick off and expect to be brilliant on the pitch.  Instead they invest years of training for their big moment, and, once they’ve made it into the international team, they continue training in between matches.  If they don’t, their performance will not improve – in fact it’ll probably go backwards and their place in the team will be taken by another player.

So what does that mean for your business?

Well firstly, it’d be great if you could do your preparation before starting your business.  Sadly, this is rarely possible.  However, constant investment in improving your business should be high on your list of priorities, if for no other reason than to stop you slipping backwards!  A lot of business owners start off with the right intentions and then let them slip as they get busier, i.e. they revert to Technician Mode.

You should set time aside each week to work on your business, think about the footballer in training each day.

Working “on” your business is exactly that – setting time aside each week to do all of the things mentioned above and more. Taking the time to look at how your business is performing and how you can improve. The main reasons why most Business Plans and Budgets don’t work for you is because they have no clear action plan broken down into what you need to do on a monthly and weekly basis (We’ll cover this area more in future posts).

 How much time have you scheduled into your diary in the next few weeks to look at how your business is performing?

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Take Care Of The Details

Thursday, May 6th, 2010

How many times have you heard the phrase “the devil is in the detail”? and how many times do you consider the impact of details on the performance and image that your business portrays to potential and existing customers?

When we are in our businesses 24/7, we often lose sight of the small details that actually have a major impact on the people we need to impress most – our customers or clients.

Have you ever been to a networking event where someone has passed you a “dog eared” business card or one of those poor quality cards that you get free?

Have you ever visited your solicitors office to see files and paperwork scattered randomly across their desk?

The president of an American Airline once said “coffee stains on our flip trays tell our customers that we don’t service our engines properly”. OK, it’s unlikely that if you are reading this you run an airline, but can you see the point?

The state of your business cards or desk gives an impression about the standard of service he can expect from you, however right or wrong that is.

Step Back

Take the opportunity to step back from your daily grind and look around at your workplace, your marketing materials, your website and the way you are dressed.  Decide whether each of those things are up to scratch and if they aren’t, then do something about it before you  lose any more business.  Make sure everyone in your team is aware of how important detail is and ensure they know and apply your new business standards

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Posted in General Business, Profit Improvement | 1 Comment »

Boost your Profits – instantly

Wednesday, February 24th, 2010

Business owners are always looking for ways to increase their profits, or to keep more of what they earn. 

There are two common ways that a business uses to try and generate more profit, which are:

• Increasing their sales volume
• Cutting costs

But there is a third and much more successful way

Consider a small retail business which turns over a modest £100,000 a year, with a gross profit margin of 40% (The gross profit margin is calculated as sales less cost of goods bought divided by sales) and other expenses of £20,000.  The profit statement for his business would read:

Sales                                        £100,000
Cost of goods bought                    £60,000
Expenses                                    £20,000
Profit                                           £20,000

If we follow our two most common profit improvement strategies mentioned above and change the figures by 10%, we’d get:

• An increase in sales of 10% would generate additional profits of £4,000
• A decrease in costs of 10% would generate an increase in profits of £2,000

Our two favourite strategies would add some bottom line benefit but involve a lot of hard work.  After all, how hard is it to increase your sales by 10%, or cut your costs by the same.

As a third option, why not consider putting your prices up by 10%?

Just by putting your existing prices up by 10%, you could generate an additional £10,000 in profits.  That’s 5 times the benefit of cutting costs and 2 ½ times the benefit of selling 10% more

I can hear the voices of dissent already saying “yes, all very well and good, but my customers would leave if I put the price up”.  Ok, so maybe a proportion will, you’ll always have a price sensitive section of your customer base.  BUT, if you increase prices by 10%, you can afford to lose 20% of your volume before you are back in the same profit position as you are today.

So, that’s 20% less work for the same money that you are earning now! That effectively frees up a whole day a week to do something else.  Of course, you could use that day to bring in more business and be even better off!

The extra twist

What’s quite frightening is that during a recession, many businesses are looking at cutting selling prices, rather than putting them up.  Did you realise that (using the example above) if you cut prices by 10%, you’d have to sell 33% more to make the same money as you do now.  That’s a massive extra volume!

So how can you put prices up and stop customers leaving?…..differentiate, be different in your market place and price almost becomes an irrelevance

What are your experiences of changing your prices in the last couple of years?

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Posted in General Business, Profit Improvement | 4 Comments »

The Power of Benchmarking – aim to be the best

Sunday, August 9th, 2009

Sitting in front of a potential new client this week, I was reminded how sometimes business owners can become very inward looking and focus just on their business, without really being aware of what their competitors are doing.

The lady in question ran a pub, which had a reasonable level of turnover for the size and location.  However, her net profits were very poor and always had been.  She just blamed it on “well that’s how things are in this business”.  When I probed a little further and asked how she knew that, she just shrugged and replied “well I just presumed as all the Landlords I know are always moaning about being skint”

So in effect, she didn’t know that net profits should be poor, she just presumed it.  Even worse was the fact that her existing accountants had not bothered to sit down and discuss this with her.

She had provided me with her last set of accounts and from that I analysed the figures, both against existing clients and against benchmarking data that I have access to from across the UK.  We could quickly see what was wrong with the business and where the main problems and financial sticking points were.

If the lady in question puts only half of the suggestions we made to her into action, then she’ll be able to sustain a much better lifestyle in the future.

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