Posts Tagged ‘business growth’

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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 »

Think Visibility – An Accountants View

Monday, September 6th, 2010

This Saturday I attended the Think Visibility conference in Leeds.  The conference covers subjects such as search engine optimisation, the use of social media and how to get great PR as well seminars on affiliate marketing and spamming!

The majority of the audience were from the digital industry and a couple of people asked me why I was attending, seeing as I run an accountancy practice.  Well, my attendance was down to three reasons:

  • I work with a lot of clients from the digital industry, from freelancers to agencies.  Attending these events helps me understand their industry that little bit more and helps me add value to their businesses.
  • Whilst the seminars did include some technical content, a lot of the content was delivered in plain english and my notepad is now full of great ideas that I can introduce into my own business.
  • I may be able to share some of the ideas with my non digital clients and help them find the expert help to implement them.

What about the day

I’m not going to go into lots of detail about what I learned as the experience will be differant for every attendee.  One particular point did stick in my mind though…..One of the speakers discussed ROI on social media, but called it Return On In action, i.e. the measuring of not doing anything…a term I really like.  We often measure the return we’ll get from investing in a project or new piece of software, but seldom do we consider the cost of doing nothing.   It’s funny that during these tough times many businesses have chosen to do exactly that…..nothing.  I often here “we know we should do XYZ, but it’s going to cost us and we don’t really want to spend that much”.  

How often do Digital Agencies talk to their clients about the cost of doing nothing, I wonder?

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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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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 »

Protect Your Business against fraud

Tuesday, September 1st, 2009

Most of us are aware of the US scandals regarding the “missing Madoff Millions” earlier in 2009.  The scandal particularly underlines the danger of thinking you know someone and, in consequence, perhaps not being as careful as you should be.

Of course, fraud isn’t just confined to large companies.  It can occur in the smallest of businesses, even where there are only two partners running and working within the business.  The risks escalate as you appoint staff, and for these reasons it’s important that you have sufficient procedures and controls within your business to prevent fraud happening.

Often, small business owners don’t find out about fraud and theft, until it’s too late.  Very few businesses are able to fully recover from an internal theft.  Having a good set of internal controls means that you can focus on what you do best, building your business.  With that in mind, we’ve listed below a checklist that you can use within your own business to ensure that your controls are up to scratch and to minimise the chances of fraud taking place.

Your 10 step checklist to reducing fraud and theft in your business

  1. Set an appropriate ethical example for employees to follow.  Treat them with respect and fairness
  2. Ask your employees to identify ways in which someone could commit fraud at your company and ways to avoid it
  3. Develop a code of conduct that prohibits employees from committing acts of conflict of interest etc.  Ensure all employees and suppliers are aware of it.  Consider having key employees provide annual confirmation of their compliance and have a clear company policy on time and expense reporting.
  4. Adopt a “trust but verify” code.  If you only need one bookkeeper, conduct careful background checks before hiring.  Take note of employees who appear to live substantially beyond their means.
  5. Verify the credentials of all new vendors, before they are authorised to supply the company.  periodically review vendors to identify improperties.
  6. Make sure all disbursements and expenses are properly approved
  7. Protect yourself against cheque alterations by adopting electronic transfers for large payments, use direct debits for payroll and place a financial limit on cheques.
  8. Review original bank statements before your bookkeeper does.  Keep an eye out for unexpected overdrafts or balance shifts
  9. Make sure bank statements are correctly reconciled every month.  Ask that your accountant undertakes a periodic review of the bookkeepers work.
  10. If something seems odd – it probably is!!  You need to consider the possibility of fraud.

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Posted in General Business, Risk Management | No 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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Choose your attitude

Tuesday, July 21st, 2009

I attended our institutes annual conference dinner at the end of June where the after dinner speaker was Debra Searle MBE.  Debras story of how she rowed the atlantic single handidly was really inspiring.

During her talk, Debra made reference to a message that she wrote on her boat, “choose your attitude”.  Her view was that even though there was lots going on around her that she couldn’t control (like the weather and even giving up), she could control her attitude to dealing with it all.

How true is this?  How often have we all thought about throwing the towel in when things get a bit tough in our business.  How often do we come into work in a morning feeling fed up and spending the rest of the day taking it out on our teams and our customers.

You can choose your attitude.  You can choose to be positive about things, you can choose to pick the phone up and contact that prospect list with a smile on your face and you can choose not to!

If Debra Searle can spend 3 1/2 months in a row boat by herself and get attacked by sharks, whales and even a giant turtle, and come out of the other side full of positivity about life, shouldn’t we all take some lessons from her.

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