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Are you practicing these 4 Steps to find your Ideal Customers?
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1. No Concept of the Ideal Customer
Many marketers have a completely product/service-centric view of the world. They know their product/service up, down and sideways, but have only a vague idea of who might actually want or need it, or how they’d actually use it. Worst case, the marketers don’t think that’s important because their product/service is so “state-of-the-art” that it’s obvious why it’s a good thing to buy.
2. No Time Spent Listening to That Type of Customer
Even when marketers DO have a concept of the ideal customer, they often spend little time actually listening to those customers. They do “market research” and run demographic numbers, but when it comes to just Continue reading »
But what else does it take to succeed as an entrepreneur, and how should an entrepreneur define success?
Here’s what I came up with, a Top 10 List:
10. You must be passionate about what you are trying to achieve.
That means you’re willing to sacrifice a large part of your waking hours to the idea you’ve come up with. Passion will ignite the same intensity in others who join you as you build a team to succeed in this endeavor. And with passion, both your team and your customers are more likely to truly believe in what you are trying to do. Continue reading »
Here are seven ways to recoup your company’s cash faster:
1. Offer a discount for early payment.
To incentivize your customers to pay you earlier, offer them a price discount if they do, and be sure to highlight it in the contract and invoice. Several of our customers take advantage of an early payment discount we offer, and sometimes even overnight a check to make sure they don’t miss our discount window.
2. Use online payment systems.
Several of our customers use online systems to submit invoices. If we participate in those systems, we find many of them will pay off their invoices within 15 to 18 days of receiving them. The best part is that the money is electronically deposited directly into our account. If your customers are not using an online system, consider setting one up for your company. An example is using a service called bill.com, which allows you to pay anyone or be paid by anyone electronically.
3. Require an upfront fee.
If you know that servicing a customer requires you to expend big dollars on its behalf, collect as much of that money as possible (if not all of it) right away. Submit an initial invoice, and insist it is paid on receipt, or outside of normal payment terms. Most companies understand the situation and are willing to accommodate.
4. Delay the work.
This is a hard one to do. But if you find yourself in the middle of a project and your customer delays payment, stop the process, and insist on having payment in-hand before you or your team finishes up the work. Often, this is the most valuable leverage a small business has in its arsenal.
5. Take credit cards.
This will cost you an origination fee, but the percentage might be worth it to help get you your money sooner–whether payment for your services, or coverage of upfront costs. Many accounting packages already have a built-in ability to take credit cards, too.
6. Invoice for lower sums, but more often.
When we invoice customers for large amounts of money, we find the invoices get stuck somewhere in the payment process. The dollar amount seems to have a lot to do with it. If we submit an invoice to a customer for more than $10,000, it can take 15 to 30 days longer to receive payment than a smaller amount of money. An invoice of less than $10,000 is more often than not paid very close to on-time. If you review the size of your customer base and dollar amounts you work with, you may also discover a breaking point between invoices that are paid quickly and those that languish on your customers’ desks.
7. Talk with your customers about accounts payable.
This might seem obvious but it’s often overlooked: Have a conversation with your customers about their accounts payable processes at the start of your relationship. You will find that knowing your customers’ processes will help you when you bid for new business.
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Here are my top seven ways to increase sales conversion:
1. Written Guarantee: This is where you write a guarantee addressing the customer’s key frustrations in buying from you. For example, a hairdresser that guarantees ‘you will like your haircut and so will 98 per cent of your friends’. For an attorney the guarantee could be a fixed price — You’ll get for patent filed for $5k.
2. Use Sales Scripts: These are absolutely essential whatever business you’re in. Once you find the right (or very close to right) way to sell something to someone, why change it? Write down exactly what you said, and then do that every time. And make sure your team does the same. Every customer is different, but the objective is always the same: match the product to the buyer. You should have scripts for everything – from answering the phone to saying good-bye.
3. Define Your Unique Value Proposition: If there’s nothing different about you, people will only buy from you because of convenience, or price, nothing more. Added to that, you’ll never be able to raise your prices; if there’s anyone doing it cheaper, people will buy from them. You need to work out what is special about you, and then make a big deal about it.
4. Print Benefits and Testimonials: This is a sheet (and a page on your website) that you can give to every person who meets with you. It contains the 4 most important things about your product, or the 7 reasons yours is a better choice for them. Also include testimonials on it – that is, direct quotes from your past customers about how good you are. A video testimonial is the most powerful way of communicating all that you do for your customers.
5. Build Trust and Rapport: There are some simple things that you can do to make sure this happens. First, always use their name, and make sure you introduce yourself using your full name. Ask them questions, and genuinely listen to the response – these are your clues. Do your best to help them with ideas and advice. If you believe in your product/service, then you know that one of the best ways to help them is to sell them your product/service.
6. Provide Something Extra: To seal the deal, throw in something they didn’t expect – something that gives them the perception that they are getting a great deal. Then place a time limit on it, which pressures them into making a decision. Make sure it’s something that they will value highly which doesn’t cost you very much — i.e.: high perceived value, low-cost to you.
7. Provide Quality Products: People will buy quality when it’s affordable. By providing the best, you put yourself a cut above everyone else.
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The most important number in business is your Net Profit, yet how many of us look at this number when it comes back from the accountant at the end of the financial year and wonder how we arrived at that figure. One of the keys to creating a successful business is to constantly focus on the profitability in your business, in particular understanding what the main profit drivers are.
Few businesses rarely analyze the net profitability they derive from each of the different products or services they sell (and let me be clear that I am referring to net profit and not gross product). The exercise can be very revealing. When I have done this exercise with my clients they have frequently Continue reading »
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So what does Bob Barker and the Price is Right have to do with your service business? The Price is Right in 2007 was named the greatest game show of all time by TV Guide. Bob Barker was the host of the show from 1972-2007, making it the longest-running daytime game show in North American television history.
If you are interested in building a great business you need to be in it for the long haul. You need to be willing to out-live your competition. You need to be interested in being the longest-running service business in your area. In order to successfully accomplish this, in order to become the “Price is Right” of your industry you need to be focused on the key factors that will get you there. The one factor that will help you accomplish this more than any other financial factor is Cash Flow.
Step 1. Understanding cash flow
Let’s begin with a definition: “Cash flow is the ebb and flow of cash in your business.”
Or, here is another one: “Cash flow is the flow of money (cash, checks, electronic debits and credits) in and out of your business.”
Cash flow is an overview of your check book, savings account, and investment account. However, knowledge of those accounts won’t:
Tell you where your cash is heading.
Help you to arrive at any meaningful decisions.
Cash is, “what you take home.” In the interest of emphasizing how important cash is (as opposed to profitability), let’s put that statement another way:
“If you don’t have any profitability you won’t have to pay your taxes. If you don’t have any cash, you can’t pay your taxes.”
“Profitability” is an accounting term of special interest to people who collect your taxes, while “cash” is the money that resides in your cash register and in your checking, savings and investment accounts. Cash flow measures the ebb and flow of that money, the successful measurement and forecasting of which allows the small business owner to make a myriad of important decisions.
Decisions such as:
Do I buy a new computer or software system?
Do I purchase or lease that delivery van?
Do I hire that new salesperson?
Do I bring in extra inventory?
Can I afford to give my special customer an extra 30 days to pay his bill?
3 Factors that affect your cash flow
The purchase of Inventory requires an outlay of cash, but that outlay does not appear on the P & L. This is because inventory is an asset, similar to cash, accounts receivable and FF&E, and only appears on your Balance Sheet. A build-up of inventory requires an expenditure of cash. If your inventory has increased in the past month (or whatever your financial statement cycle is), then your cash has decreased by a like amount. The opposite is also true: If your inventory decreases your cash will increase.
Accounts Receivable (AR) is basically cash you have loaned to your customers between the time they receive your products or services and the time they pay their bills. It takes cash to fund those receivables, which means that if the amount of your receivables has increased from one financial statement cycle to the next; your cash has decreased by a like amount.
Cash spent on FF&E amounts to expenditures for capital goods. Because capital goods have an extended life (as opposed to supplies, for instance, which are generally consumed within a year) they cannot be 100% expensed on your P & L. The amount that can be expensed is called “depreciation” and that amount is determined by various taxing agency regulations.
This means that if you were to purchase a capital item for $20,000 on the first day of your accounting cycle, this would have a negative effect on your cash of $20,000. However, it would only have a $5,000 negative effect on your profitability, assuming that it can be depreciated over four years. This $5,000 shows up as “Depreciation Expense” on your P & L, while $20,000 is deducted from your check book. This is a classic example of the difference between profitability and cash flow.
Below you will see a list of strategies that you can do today to help you prepare a plan of action for improving your cash flow situation. If Cash flow is CRITICAL than ACT NOW.
Calculate breakeven points for business and all sales people
Reduce non-income generating expenses by 10%
Increase prices
Review wages as a percentage of sales. If appropriate move people from salaries to performance based pay
Increase conversion rate by training the team in sales
Set a target for increasing your average $ sale and then put in place 5 strategies to help increase it
Ask for help
From suppliers- would they accept a payment arrangement for next 6 months
From team- explain the situation to them and ask for them to rally around and put in 110% effort. Ask for commitment from them to increase productivity and reduce expenses.
Put your tax bills on a payment plan. Much better to be paying a little bit off than nothing and getting a “please explain letter”
From bank manager -consolidate loans including credit cards to reduce interest payment
Reduce all debtors starting with any over 60 days
Reduce owners drawings to minimum amount.
Organize a sale to move slow-moving or outdated stock
Upsell or Cross Sell
Sell like crazy
Set short-term (90 day) sales goals and get by in from the whole team
Sell unwanted assets
Understand Cash Gap concept
Calculate gross profit margin on everything you sell and then focus on the items which are bringing in the most total profit (volume x margin)
Categorise customers into “ABCD”. Focus on the profitable A’s and B’s with your advertising.
Just remember that you are not the first person to experience tight cashflow in business and you definitely won’t be the last.
If you enjoyed this post, I would be grateful if you helped spread the word by emailing it to a friend or sharing it on LinkedIn, Twitter, or Facebook. Thank you!
Below you will see the 4 steps to your personal wheel of fortune. Let these 4 steps give you a clear vision on how your company is supposed to function and how your company will be the tool to help you reach your goals.
We often get distracted as business owners. Focusing on anything from our equipment, to our AP, to our AR, and back to our operations. Putting out fires and solving problems everywhere we go seems more like our role than making money. At the end of the day your head is just spinning from all the “Doing” that occurred in the day.
If you are wondering if after all this; Did I make any money today? Then I would ask you; Continue reading »
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