Can you apply Warren Buffet’s best advice to your small business?

Discipline and attention to details is more important than ever if you want to succeed in challenging economic times. Take a look around… competitors are closing their doors – which means more potential customers for the businesses that DO survive. And in times like these, it’s going to take more than “thinking outside the box” and goodwill with existing customers to secure the survival of your business.

You may have been lucky over the past few years – you may have found it possible to operate without a detailed, written plan and systems/processes. But the global economic crisis has changed all of that. If you want to thrive, there is only one thing that is for sure – uncertain times call for deliberate decisions and proven practices. So here are my top tactics to recession-proof your business.

1. Begin with the end in mind

If you don’t know exactly where you are going, how will you know when you get there? Now is the second best time to decide on your strategy, set your goals and document tactics and timelines. Keep it simple – write a 2-3 page summary of what you intend to accomplish in 3 months, 6 months and 12 months.

2. Focus on cash flow not profit

You cannot buy a house or a new car with “profit” from your business. Make it your mission this year to develop and maintain a weekly/monthly cash flow forecast for your business. This is not hard to do but it does require discipline and a simple excel spreadsheet. If you need help, I recommend that you consider signing up for Imagineering Profit. With just a few numbers from your Balance Sheet and Profit and Loss statement, Imagineering Profit can calculate your cashflow for you and give you the insight that you need to get your company operating in the black!

3. Collect your debt NOW!

How many days does it take to collect your debts on average? Whatever it is, make it your goals to reduce this by at least 10 days. You may be surprised to know that if your annual revenue is around $500,000, you could save yourself up to $2,500 in interest carrying charges simply by collecting your debts 10 days quicker on average. Pay attention to customers who are taking longer than usual to pay. Now is not the time to be extending too much credit if you are concerned about their ability to pay.

4. Rank your customers

Do you know who your best and worse customers are? Have you ever tried to calculate how much profit you are making from each customer or group of customers? If you don’t know the answers to these questions, today is the best time to start tracking and measuring this.

5. Fire your worst customers

Everyone knows that is cheaper and easier to garner incremental business from existing customers. Some even argue that it is 6 times cheaper and 75% easier to convert a sale from someone who already knows and trusts you. If you have unprofitable customers, get rid of them and focus your attention on your best customers.

6. Trim your product range

Contrary to popular belief, it is better to have money in your back pocket than tied up in stock sitting on your shelves for months on end. The longer it sits and does not turn over, the more it actually costs you in lost opportunities. Spend 2 hours today calculating which of your SKUs or stock lines are your worst performers; make it a priority to sell those quickly to release some much needed cash. Consider reducing your overall investment in stock. Compile a spreadsheet of all the SKUs you carry and then run two separate columns – one for how many units you sell on average of each per month and the other being the total units on hand. If your stock gets delivered quickly, you should never be carrying more than one month’s worth of sales at any given time.

7. Monitor your breakeven and key numbers

The most important day of the month is the day that you break even and start making a profit. If you don’t know which day of the month that is, you need to find out today. Knowing this number allows you to monitor your performance and take measures to correct issues right now. Waiting until the end of the year for your accountant to produce financial statements is not a good idea – if you are behind, you need to know now so that you can correct the situation.

How often do you shoot yourself in the foot in business?

As a business owner, I’ll bet you’re incredibly busy and find that there  never seems to be enough hours in the day to complete all your work.

Have you ever noticed that some of your everyday activities are just deeply  ingrained habits – driving your car, putting on your watch, brushing your teeth  or taking a shower? You wouldn’t dream of not doing them, they are part of your  routine and they just seem to happen automatically. In your business you also  have habits such as checking your website, opening the mail, reading emails,  grabbing a coffee and glancing at your diary. You do them without conscious  “thought” and they seem to fill up hours in your day…

But what about all the actions you need to take in order to build a more  profitable and efficient business? Like following up with your best customers,  asking for referrals, strategic planning and goal setting to grow your business?  When do you do these activities? Do they often get relegated to “tomorrow” or  “sometime soon”?

If you’ve ever spent your day stuck in back to back meetings, answering  routine questions from your team, responding to emails, helping other people,  doing paperwork or tidying your office – you already know that these are “make  busy” activities, and they will keep you trapped where you already are – just  simply maintaining, not growing your business. By filling your days with these  tasks, you are in effect avoiding the very activities that you know will really  move your business forward and produce tangible results.

Your “make busy” work or habits create the magnificent illusion that you are  hard at work, simply because you feel “flat out” and your day is full of tasks.  Let’s be honest, you would actually rather do anything than face the activities  you know would radically accelerate your business success NOW! In fact, you  often get to the end of the day and say to yourself “It’s OK, I was really busy,  I’ll just get to that marketing plan tomorrow.” Or “I just couldn’t find the  time today to make that seminar on leadership or customer loyalty.”

If you are waiting for the right or best time to do these critical activities  in your business, it will simply never come! There will always be other “busy  work” to fill all of your available time. You need to find a way to make your  business building activities an ingrained habit too, if you want to grow your  bottom line and live the lifestyle of your dreams.

Do you relate to or identify with any of these common sabotage habits?

1. Perfectionism – this tactic is insidious. It often immobilizes us from  making a decision, starting a project or activity and signing off on a piece of  important work. Most tasks don’t have to be 100% perfect, they just need to be  good enough. The other way that this can show up is when you deceive yourself  into believing that no-one else can do the job (even simple routine tasks) to  your exacting standard, so you must do it ALL yourself. Follow the 80/20 rule,  delegate what you do not have to do yourself and give yourself permission to be  human!

2. Refusing to Let Go of The Past – Have you ever heard yourself say “last  time I tried that, it didn’t work”? Or have you ever simply avoided doing  something that you know you should or need to do but were afraid to do because  “last time it didn’t work out the way you wanted it to”? Even though it’s a good  idea to stop doing what clearly doesn’t work, it’s important to remember that  the past does not necessarily equal the future. If you catch yourself finding  reasons from the past to justify why you are not moving ahead toward your  compelling future, stop NOW and take a good hard look at whether these are just  cleverly disguised forms of self-sabotage.

3. Lack of Accountability – who is holding you accountable to the decisions  you make and the actions you take in your own company? Isn’t that why you went  into business for yourself in the first place – so that you could be the boss  and do things your way? Find someone outside your business – a coach, mentor or  trusted advisor that can act as a sounding board and hold you accountable to  staying on track.

4. Lack of vision, planning and specificity – if you don’t know where you are  going, how will you know when you get there? Enough said. If you don’t have a 90  day, 1 year and 3 year business plan, you need to make this your number one  priority in your business. Set a weekend aside and find a place where you will  not be disturbed by anyone or anything. Set down your goals clearly and  succinctly – get clear about the specifics (who, what, where, when and why) and  set realistic deadlines for completion. Goals need to be written down in detail  to allow your mind – which is a goal seeking mechanism – to do its magic.

5. Lack of focus – stay focused on the important task you are currently  working on and only allow yourself to be diverted by real emergencies.

6. Fear of Financials – you cannot have a truly successful business if you  don’t know your numbers. Not knowing your numbers has already cost you time and  money. Find someone who can explain your financials to you in plain English –  learn the key drivers and indexes in your business (such as break even,  productivity ratios, inventory turns, gross profit margins etc.) and track them  daily.

7. No USP – the greatest product or service in the world will not sell if you  have not clearly defined why someone should buy from you instead of your  competitors. “Build it and they will come is a fallacy.” If you have not yet  figured out what is unique about your product or service and found a compelling  and cost effective way to communicate it in everything you do, you are literally  flushing your marketing budget down the toilette.

8. No Testing and Measuring – this is the most-often overlooked activity by  small business owners. The simple act of testing and measuring everything in  your business…and I mean everything…will save you thousands of dollars this  year. No matter what “it” is, if you haven’t tested and measured “it”, you don’t  really know if “it” works. And until you know if it works, you don’t have a  reliable, predictable business that will run without out.

Unfortunately, there are no quick fixes. As you already know or suspect, some  of the most common forms of self-sabotage are habits because they are deeply  ingrained behaviours that take time to establish or eliminate. In the 1960’s a  highly regarded plastic surgeon, Dr. Maxwell Maltz discovered that it took 21  days for amputees to cease feeling phantom sensations in their amputated limb.  From further observations and significant research he established that it takes  21 days to create a new habit.

Brain circuits take engrams (which are essentially “memory traces”) and  produce neuroconnections and neuropathways only if they are bombarded for 21  days in a row. This means that our brain does not accept new data or information  for a change of habit unless it is repeated each day (without fail) for at  least 21 days. Changing habits (whether positive or negative) can be done but it  takes time and consistent effort.

Do yourself a favour and identify today which form of self-sabotage is the  primary one that is holding you back from having the business and lifestyle of  your dreams. Make a plan on paper – specific decisions and actions that you can  take to move forward in this aspect every single day for the next month. It is  imperative to track your progress each day and I highly recommend finding an  objective person outside of your business to hold you accountable to your plan,  actions and results.

When did you last ask your customers what they want?

Is your business growth starting to plateau or stagnate?

It’s easy to sit back, take the foot off the accelerator and watch the sales  roll in, especially if you’ve been satisfied with your recent performance. But  keep in mind that if you slack off too much, your competitors will soon catch up  and eventually put you out of business.

Take a look around – businesses (and your competitors) are closing their  doors due to the drop in consumer spending – which means MORE potential  customers for businesses like YOU, that do survive. Today is the best time to  take steps to revamp your marketing efforts and respond to the needs and the  pain of your target market.

In these tough times, it’s going to take more than “thinking outside the box”  and goodwill with existing customers to secure the survival of your  business.

I want you to STOP right now and make a list of everything that you (and your  competitors) do NOT do to make it easy for your prospects to buy from you. If  you want to succeed over the long term, you will take a good hard look at both  of these lists and find a way to do whatever it takes, for as long as it takes,  to win your customers and keep them.

Granted, this is not an easy task. Most businesses will continue to do what  they have always done – guess or assume what they think their customers need.  However, no matter how challenging it is to ask the hard questions and  re-engineer your strategy, I guarantee it will be a whole lot less painful and  stressful than going under.

I had a married couple come to me once for advice and coaching – both the  business they were in and their relationship were at the breaking point. The  husband turned and said to me “I don’t understand it. I do everything humanly  possible for my wife and she doesn’t appreciate me and I don’t think I can  possibly do anything more to satisfy my customers – they are never happy and  always want more. What can I possibly do?”

My answer to this age old dilemma applies to him, his marriage, and to you in  your business right now. “Sounds like you are doing a lot. Too bad it’s  everything BUT the very thing that your partner and customers need most.”

While this may sound harsh, I think you will agree that it is absolutely  true. It does you no good to work harder doing everything…instead of focusing  on the 1 thing that you customers actually need. Wouldn’t it be easier for you  to work smarter, not harder, if you knew with absolute certainty what that 1  thing is?

How can you take the lesson from my client and apply it to your own business  right now?

How could you go about figuring out what that 1 thing is?

I want you to do something really radical today and start asking both your  prospects and existing customers what they need. You need to find out:

• What is the biggest challenge your prospects are facing in their business?
• When your customer thinks of the product or service you provide, what is  THE most painful or difficult issue associated with acquiring it?
• What is  the most important criteria to your purchaser when evaluating a company like  you?
• What are some things that he/she thinks about or considers from a  financial perspective when selecting that product/service or a vendor?
• What  is the key strategic driver for you customer’s decision?

It doesn’t really matter what you have done up to this point or how hard you  are working. There is no prize for volume or quantity. What counts is quality  and relevance.

Are you giving your customers what they want and are you willing to do  whatever it takes to help them cure the pain that they are in?

More of the “same old same old” is not going to differentiate you from the  pack, build trust, win customers and grow your business. Take some time today to  really think about what you offer and how it could be improved to meet the  primary need of your customers. If all of your customers were to leave today,  what would you need to change in order to win them back and survive?

At the end of the day, price is never the determining factor. Once you  uncover the true cost of the problem they are facing, price becomes irrelevant.  Your customers will always be willing to pay a fair price for a product/service  that cures their pain – not to mention the peace of mind that comes with  excellent service. Take stock of what the competition is NOT willing to do and what your customers wnat most from you.

Do something unique – listen and be willing to do whatever it takes to  deliver what they want (and need). Anything less, is simply a waste of your time and money  on everything that doesn’t really matter.

Article Source: http://EzineArticles.com/6586203

Could a good spring cleaning boost your business?

It doesn’t matter whether it is springtime or autumn where you live – the best thing that you can do to improve your business right now is a bit of spring cleaning.

By this of course, I mean reinvigorate some of the housekeeping issues that you may have  overlooked in recent times. Over the last few years you may have found it  possible to get away with a few loose ends and haphazard processes, but not any  more.  The tough economic times have changed all of that.  It’s time to get serious about tightening up your systems and securing your future.  Here are my Top 10 Tips to improve your results:

1. Have a plan
Position your business for the year ahead. Decide on your  strategy, set your goals and work on your tactics. Put these together in a one  or two page business plan. Uncertain times call for certain actions.

2. Forecast your cash flows
Maintain a cash flow forecast so you can use  it as an early warning system. The sooner you get an indication that your cash  is tightening the more time you will have up your sleeve to take action.

3. Collect your debtors more quickly
On average how long do your debtors  take to pay you? Aim to reduce this by at least 10 days – if your annual revenue  is $1 million you could save yourself $3,000

4. Reintroduce credit checks
Have you got a bit lazy about running credit  checks? Reintroduce them.

5. Monitor your customers debtor history
Are any of your customers  starting to take more credit than usual? Keep a close eye on them. They could be  feeling the squeeze so be careful about extending too much credit.

6. Evaluate your customers
Do you know who your best and worse customers  are? How much profit are you making from each customer? If you don’t know, now  is the right time to set up systems to track this and….

7. Cull your bottom customers
Harsh as it may sound, concentrate on your  best customers. Lavish them with attention. If you have unprofitable customers,  cull them. You have no room for passengers.

8. Trim your product range
If you are carrying a wide range of stock trim  it. Do this by calculating which of you stock lines are your worst performers;  sell those lines quickly to release some cash. Reduce your overall investment in  stock.

9. Look at your processes
Mistakes are costly so take a look at your  processes. What can you tighten up or do differently to lower the chance of  errors?

10. Have a budget
Having a budget isn’t about cutting costs, it is about  managing costs. So budget your expenditure for the year and track your actual  costs closely. If you see costs starting to climb take steps to reduce your non  essential expenditure.

So in the face of rising interest rates and a global economic downturn the  best thing that you can do to improve your business is to tighten up your belt and the system in your operation.

Article Source: http://EzineArticles.com/5442279

That’s The Good News, Now Do You Want To Hear The Bad News?

If you do a quick search on the internet, you will uncover hundreds of experts, coaches, accountants, journalists and government organizations that quote the statistic “8 out of 10 business fail in the first year”. However, the fact that the statistic is widely touted doesn’t necessarily mean that it’s true or backed up by empirical evidence.

So what is the truth? I searched the internet and couldn’t find confirmation of any study that was done to back-up this statistic (that 8 out of 10 businesses fail) by a reputable or well-known bureau. What I did in fact find was some evidence to the contrary. According to credit reference checking agency Veda Advantage, only a small percentage of new businesses close in their first 12-months of business.

What is the exact amount, you ask? Would you believe, less than two percent?

However, they assert another 32 percent close their doors between their second and fifth year of operations, while 21 percent wind up between the sixth and ninth.

So, that is the good news. However, as you can probably guess, it’s not ALL good news.
Just because a start-up doesn’t go under in the first 12 months, doesn’t mean that the owner is running a successful enterprise. I wonder if anyone has bothered to measure how many of the businesses who survived:

• Paid the owner a wage that was at least equivalent to what he/she could have earned elsewhere as an employee?
• Generated a profit and positive cash flow? and
• Had enough working capital to service their debt, pay taxes and suppliers etc. as they came due?

The first few years of business are incredibly risky. In working with hundreds of business owners, we have found that the large majority opt to forgo their salary or inject more equity to prevent them from going under prematurely. What this means is that, while they may not have “technically” gone under, these fledgling enterprises are far from commercially viable and successful.

Statistics can be both helpful and misleading at the same time. It is easy to assert figures but more difficult to substantiate their veracity or explain the implications thereof.

The author of an article or press release will often use statistics to capture your attention and motivate action. That’s why people use statistics – numbers are persuasive and have an aura of authority.  A statistic like – 8 out of 10 businesses fail – gets attention, doesn’t it?  Whether this data is accurate or not, is only half the story. As a business owner or manager, we must look deeper to find the insights that we can take away and use to improve our results.

Personally, I don’t care what percentage goes under. No matter how long you’ve been operating, if you’re not getting paid a salary, producing profit and generating positive cash flow, you’re not running a successful company. Closing your doors is only half the story. The doors may very well be wide open, but technically, no one is there.