Can you believe that half of 2019 is gone already? That means it’s a great time to take stock of how your business has done for the first half of 2019 so that you can meet your financial goals for the entire year.
On Track for Sales
Are you on track to make your 2019 revenue number? The first step is to check your 2019 budget numbers for total revenue. (Don’t have a budget? – Check with us; we’d be delighted to discuss that service with you.)
Next, get your Income Statement for June 2019 Year-to-Date and check the revenue figure. Are you on track with your budget, or are you halfway there revenue-wise, accounting for seasonality? If so, pat yourself on the back! If not, what promotions will you put in place to boost your growth for the rest of 2019?
On Track for Profit
Looking at the same Income Statement, check your net income figure. Are you on track with what you planned? If so, great! If not, the reason is simple: it will be either lower sales than expected or higher expenses than expected.
If your expenses are too high, you’ll need to drill down into each of your expense accounts, including cost of goods sold, to see which ones are higher than expected. Were there some unanticipated costs? Does your pricing need adjusting? Do you need more volume to cover your costs? This is where we can help you with an analysis of where your opportunities are to increase profit.
On Track for Cash
One more place to look is your cash balance. It can be uncomfortable when you are running short of cash for your business. If your balance is lower than you’d like it to be, it could be because of some of the factors mentioned above. It could also be because you just purchased an asset like a truck. If you need help with improving your cash flow, that’s another thing we can help you with.
This mid-year review can help you head off any small problems before they grow into big ones throughout the rest of the year. And it can keep you on track so you can meet your 2019 business goals.
Having repeat customers is essential to many businesses, and the key to keep clients coming back is to provide them with great customer service. Here are five ideas to rate your business’s savvy when it comes to serving customers well.
- Make a great first impression.
When customers make a purchase from you, make them feel great about it by sending them a series of indoctrination emails. Congratulate them on the purchase, let them know how to get the most out of their new purchase, and encourage them to connect with you on social media and your mailing list.
- Measure response time.
How fast do you answer prospect and customer questions? Social media has changed the game. Customers that reach out via social media platforms, their phones, chat, or messaging apps expect an immediate answer. Facebook even gives a badge to businesses who respond quickly and consistently.
Not only do businesses need to monitor messages coming in from a record number of places – email, phone, web forms, chat, social media, and more – they need to respond faster than ever.
Without measuring your response time, it’s hard to know how you’re doing, so putting measures in place is the first step to improving this customer service metric.
- Publish clear policies.
Good customer service starts with setting clear expectations. Before a customer buys from you, they should be able to know what your return policy is in case something goes wrong. Some of the policies that should clearly be published online as well as at all customer-facing business locations include:
- Returns policy: If the product or service is not as expected, can the customer obtain a refund? Is there a re-stocking fee? What about shipping? Cash back vs. store credit?
- Shipping policy: Most people expect free shipping these days. They will want to know what it costs and how long will it take to get the item.
- Terms of service: Are there any limitations to the product? Or legal items that need to be communicated?
- Encourage feedback.
Your best ideas for new products and services can come from your customers. Ask for feedback by sending customer satisfaction surveys and requests for testimonials and reviews. Read what customers have to say about your service so that you can make improvements as needed.
- Check your ego at the door.
As small business owners, sometimes we need to be humble, especially when things go wrong. Be generous with apologies to customers; it will go a long way toward improving customer relations. If you’re at fault, admit it and make it right with the customer. Even if you’re “right,” find a way to explain to the customer so that they feel good about you and your business.
Delivering great customer service can be a huge competitive advantage for your business. How does your business stack up against these five ideas? Try them, and watch your revenue grow.
Every business has customers, and while all customers are important, most entrepreneurs will agree that some customers are more important than others. This may be due to the amount of revenue the customer brings in, their ability to refer new clients to you, the interesting challenges of the customer, or another factor. It makes sense to identify these clients so you can spend more time with them or at least acknowledge them in some way.
How do you find out which clients have generated the most revenue with you? If you store customer data in your accounting system, you can run a report to generate the data you need. In QuickBooks, the report is called the Income by Customer Summary Report. In Xero, it’s called Income by Contact. If you do not store customer data in your accounting system, you may be able to generate a report from your billing system, shopping cart, or point-of-sale system.
The reports look like this: each row holds the customer name and the Income column holds total revenue by the customer. If your system allows you to sort the revenue field, do this in descending order. If not, you can export the data to Excel and sort it in Excel.
Once you’ve sorted the data, the answer is right in front of you. Your top customers based on revenue will show in order. These are the customers you may want to consider spending more time with. Schedule periodic lunches with them, give them a call on a regular basis, and send them a gift or thank you note once in a while. The report helps you organize your connection points with your top clients so you don’t miss an opportunity or forget to reach out to an important customer.
Run this report on a regular basis so that you’re focused on nurturing the most important relationships in your business. You can also look at trends to see if you’re losing revenue over time or gaining revenue with new clients. You can reach out to clients that are spending less with you to try to save the relationship before it’s too late. And you can get to know new clients that are growing with you so that you can grab even more business.
Make this report a regular activity in your business to stay close to what your customers are doing with you.
Setting customer expectations in your business is essential to gain the trust of your customers, avoid conflicts, and maintain a high level of customer service. One way to set customer expectations is to clearly state policies that are customer-facing. Many of these are accounting policies that we can help you with. The following policies are ones that every business should clearly publish.
When customers purchase your products or service and don’t get what they expect, what is their recourse? Your refund policy should clearly state which products and services are refundable. Do customers need to physically return the product in-store or via shipping? What if it’s a service? Are they refunded in cash or credit card? Or is it a store credit? Is there a deadline for refunds?
All of these questions should clearly be outlined in your refund policy. Your website is a great place to publish it.
If your customer has a complaint, how should they submit it? Is there a hotline to call, a suggestion box, or a form to fill out? If your business and employees are licensed, is there a government agency to write? A notice should be posted on your website and in your physical location describing where to submit complaints.
Not all businesses need a shipping policy, but you do if you ship physical goods to a customer location. What is the cost of shipping? What is the expected delivery time? A shipping policy explains this as well as what can go wrong: If the item was never received, what should one do? Must you sign for a shipment? If you return a shipment, who pays the shipping? If an item is received damaged, how do you file a claim?
While not a policy this customer communication needs to be clearly posted. What forms of payment will you take? If you take a check, what ID does the customer need to show? Do you take some of the newer forms of payment such as Apple Pay or cryptocurrencies? How do gift cards work?
If a customer doesn’t pay their bills on time, they should know what to expect. Will interest be charged? Will the account be sent for collections? Will someone break the customers’ legs? Will future purchases be cancelled or require a C.O.D. (cash on delivery) payment?
You might not think of your accountant when it comes to writing these policies, but you should; we can help. A good accountant can help you craft these customer service policies so that your communications and expectations with customers are better than ever.
Hiring a new employee is a big accomplishment in any small business, and there are a lot of steps involved, too. Here’s a handy checklist to help you stay organized when you bring that new hire on board.
First things first, the legal and accounting items:
- Signed employment agreement, typically an offer letter. There may also be a supplemental agreement outlining employee policies.
- Payroll documents include:
- IRS form W-4
- Form I-9
- Copy of employee’s government-issued ID
- Most states require a new hire report to be filed; sometimes your payroll system vendor will automatically file this for you.
- Notify your workers comp insurance carrier.
Next, it’s time for employee benefits enrollment:
- Health insurance
- Any other benefits you provide
- Provide the employee with the holiday schedule
- Explain their PTO and vacation if not already explained in the offer letter
Set your new employee up for success with the right equipment:
- Desk, chair, lamp, other furniture
- Coffee mug, refrigerator shelf
- Truck, keys
- Computer, monitor, mouse, keyboard, power strip, floor mat
- Office keys, card entry, gate remote, parking assignment
- Filing cabinet, keys
- Office supplies
- Cooler, other supplies
Your new employee may need access to your computer software systems:
- Employee email address
- Any new user IDs and password for all the systems they will need to access
- Document access
How will your new employee learn the ropes?
- Set up training
- Assign a buddy
Hopefully, this list will give you a start toward making your employee onboarding process a little smoother.
One of the biggest challenges for small businesses is managing cash flow. There never seems to be enough cash to meet all of the obligations, so it makes sense to speed up cash flow when you can. Here are five tips you can use to get your cash faster or slow down the outflow.
1. Stay on top of cash account balances.
If you’re collecting money in more than one account, be sure to move your money on a regular basis when your balances get high. One example is your PayPal account. If money is coming in faster than you’re spending it, transfer the money to your main operating account so the money is not just sitting there.
2. Invoice faster or more frequently.
The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances.
Take a look at how long it takes you to invoice for your work after it’s been completed. If it’s longer than a few weeks, consider changing your invoicing process by shortening the time it takes to send out invoices. That way, you’ll get paid sooner.
3. Collect faster.
Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment.
Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced the bill. Be aggressive about following up when the bill is 45, 60, and 90 days past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid.
4. Pay off debt.
As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have.
Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense.
5. Reduce spending.
You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:
- What did you spend that was a really great investment for your business?
- What did you spend that was a colossal mistake?
- What do you take for granted that you can cut?
- Where could you re-negotiate contracts to save a little?
- Where could you tighten up if you need to?
Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier.
Do you remember the days when you got a report card from school? Now that you have a business, your business has grades as well. But it’s up to you to calculate them. Here are some grades you can compute for your business to give it a report card of its own.
How successful is your business from a financial standpoint? These financial ratios can help you give yourself a grade.
Return on equity
This ratio measures profitability as it relates to the investment or money you have tied up in your business. The formula is net income / average equity. An ROE of 15 percent or more is an “A” for your business report card.
Return on assets
This ratio measures profitability as it relates to your business assets. The formula is net income / total assets. An ROA of five percent or more is an “A” for your business report card.
This ratio measures efficient use of your business assets. The formula is sales / total assets. This number should be high for low margin businesses and low for high margin businesses.
How profitable is your business? You might know your bottom line number, but there’s more to it.
Gross profit margin
This ratio measures the financial health of a company as it relates to how much money is available to cover overhead. Calculate it as follows: (revenue – cost of goods sold) / revenue. The value will be different depending on what industry you’re in, but some say a range of 25 to 35 percent is normal for small business.
Net profit margin
Net profit margin measures how profitable your business is in relation to the amount of sales you have. As an example, a business that can make $50K in profits on $500,000 in revenue is more healthy than one that can make $50K profits on $3 million in revenue. The formula is net income / total sales, and although it depends on the industry, a net profit margin over 10 percent is considered an “A.”
Report cards were important in school, but they’re even more important in business. If you’d like us to set up one for your business, let us know.
The start of a new year also means that it’s the perfect time to revisit old business strategies from last year so that you can maximize your revenue for 2019. If your financial numbers were fantastic last year, that’s great! Keep the strategies that worked for you and cut the ones that didn’t.
If your financial numbers weren’t amazing last year, or maybe you’re just interested to see how you can increase your revenue, we have you covered. Here are 10 ways you can boost your revenue this year:
1. Revisit your current prices and make adjustments as necessary.
Many people will tell you that increasing your prices will increase your profits, but that’s not necessarily true. Increasing your prices by a small amount might increase your profits without turning away existing customers, but make sure you research your competitors’ prices and adjust based on what makes sense in your market.
2. Bundle your services or products together.
Make your products or services more attractive by bundling them together and pricing them at a better deal than purchasing the services or products separately. Customers that only want one particular product or service should still be able to purchase the product or service à la carte, but offering different packages of increasing value makes it much easier to upsell to clients and increase your business revenue.
3. Offer free gift with purchase.
Tacking on a complimentary or free service to your products or services could be the small push needed to close sales. Even better, you could add a complimentary or free service to your highest-quality bundle. As an example, the cosmetics industry has been doing this for decades.
4. Start a new product or service line.
If you’re limited to just a few products or services, it’s time to expand. If you mow lawns, offer a leaf collection or snow removal service. If you sell shoes, add socks. If you manage a restaurant, consider offering alcohol. Expanding the scope of what you’re selling will provide you with additional revenue.
5. Expand your geographic reach.
If you’re still only offering services and products locally, consider expanding your reach, especially because the internet is so readily available nowadays. Think about which services you can offer virtually; some may require you to invest in cloud-based delivery systems. If you only sell products at a physical location, ecommerce is a huge industry and you could definitely increase revenue by having a storefront online.
6. Learn to say “no” to bad clients.
This may seem counterintuitive, but learning to turn away bad clients is really important. When clients are ungrateful, unreasonable and just take up too many of your resources, you have to realize that they are unprofitable. By turning them away, you can devote more of your attention to building relationships with your best customers and creating new, profitable opportunities.
7. Make your online presence known.
Everyone uses search engines and social media to find the right business to serve their needs, so make sure you can be found online. Create a website for your business and make sure your have business pages on social media platforms like Facebook, LinkedIn and Twitter. You’ll have to develop some marketing strategies and optimize your site to rank high, but, when done right, these channels can drastically impact the amount of revenue you get.
8. Manage your online reputation.
When you have many good reviews, your credibility goes up and your business is more appealing to potential clients and customers. If your clients leave you an amazing testimonial, it’s a good idea to ask them to post it online as well—especially on Yelp, your Facebook Business Page, and Google Reviews. On the other hand, negative reviews will look bad to potential clients and can negatively impact your revenue, so make sure you respond appropriately to the review and show potential clients that you care about getting things right.
9. Encourage customers and clients to sign up for a continuity program.
Do you have loyal customers? Reward them by offering a membership or continuity program with VIP benefits. Retail, restaurants, and service businesses can set up privileges like faster service, discounted prices, and frequent purchase rewards that many consumers will pay a small monthly fee for.
10. Encourage customer referrals by building and nurturing customer relationships.
Connect with clients and build strong relationships through effective communication, providing exceptional service, getting feedback, addressing concerns, and showing appreciation. Doing so can increase repeat customers, customer referrals and your business revenue.
If you’re looking to boost your business revenue this year, definitely give these strategies a try.
Many people in their retirement years have regrets about not saving more during their earning years, but you don’t have to be one of them. All you need to do is be realistic and proactive about saving. It’s all about paying your future self.
Circumstances can arise that can erode savings you hoped would be there for retirement. Some of those events include not being able to work due to poor health or a bad job market, unanticipated hospital bills, a divorce, overestimating Social Security benefits, bad investments, procrastination, and simply not realizing how much you need to live on.
The good news is you can prevent future regrets by making a strong savings plan now. As a small business owner, you may not have a retirement plan, so it’s essential that you create one for yourself. You earn an income today. Put some of that income toward paying your future self, and pay that “bill” first each month or each paycheck.
To be proactive and build as much savings as possible, take these steps:
- Increase your financial skills by learning how to fund your retirement, including all that traveling you’d like to do.
- Take care to manage your investment risk and be realistic about investment returns. In good markets, purchase rather than rent or lease so you are building an asset.
- Put as much aside as you can, and try living just below your means.
- If you do have periods where you are out of work, try living frugally until your income is back to normal.
- Optimize your business profits and apply some of them to your savings plan.
- Minimize taxes where possible so you can keep more of what you make.
- Make everything work twice as hard for you:
- Get credit cards with loyalty programs.
- Sign up for frequent customer programs to earn points.
- Make sure your bank is giving you the best deal on interest.
- Sell unused belongings on eBay and put the money in savings.
- Cancel used subscriptions and memberships for both your personal and business needs and move the saved money to savings.
- Periodically reach out to vendors to get a better deal on the expenses you incur. This could be for phone plans, utilities, and any other routine expense. Put the difference saved in savings.
- Select cars and trucks with good gas mileage and also high resale value. Consider that using Lyft or Uber may be cheaper than maintaining a car, depending on how much you drive. Put the difference in savings.
There are hundreds more ways to save more, and these will get you started in the right direction for 2019.
Reputation management is a relatively new area within marketing. In a way, it’s similar to digital public relations; it’s the management of a company’s reputation online. There’s also a customer service component to reputation management.
Unlike public relations workers before the internet came along, today’s reputation managers must deal with what customers and other stakeholders publish publicly on social media, blogs, directories, and many other locations online.
A large part of the reputation management function is to monitor and reply to reviews. Company reviews are available on hundreds of sites. The most common places to look for reviews are Yelp, Google Business, Bing, Amazon, and shopping carts.
If a company receives a positive review, thanking the customer in a response is a nice gesture and recognizes their time spent writing the review. It also reassures others that the company is paying attention to customer feedback.
If the review is negative, swift action should be taken to respond, to apologize publicly, and to take the conversation to a private communications channel such as email or direct messaging. Customer service should get involved to resolve the issue quickly and satisfactorily. In some cases, posting a follow-up response to ask the client if the issue has been resolved is appropriate.
Companies should monitor more than just customer reviews. Sites like Glassdoor allow employees to post job satisfaction reviews for prospective workers. Companies in industries with chronic talent shortages will want to allocate resources to monitor these sites effectively.
Reputation management is not all about reviews; it’s also about mentions. Whenever your company name, CEO, or brand names are mentioned, a reputation manager should know about it.
There are now several apps that perform reputation management monitoring so that you’re alerted quickly to reviews or mentions. A very quick free option is to use Google Alerts to scour the web for company name mentions. Many of these apps also help a business garner more reviews and optimize them to improve their reputation.
Whether your business needs to worry about reputation management depends on many factors, but hopefully this overview will give you an idea of what’s possible in this space.