Marketing Your Tax or Accounting Business

The main issue that all tax professionals face, is how to grow and promote their practice.  In talking with many professionals over the years, their questions always seem to be the same:

  • How do I build up my clientele?
  • What is the best way to market my services?
  • How do I encourage more client referrals?
  • How much should I charge for services?

Recently, a question was posed in a forum we participate in regarding affordable ways to market a tax and accounting business.  With that being said, we figured that we’d offer up our two cents on what we and others have had success with.

The first thing to keep in mind is that tax and accounting services typically have to be marketed in a manner different than consumable goods.  We often tell people that if they were unexpectedly dropped off in a foreign country, they probably wouldn’t go to the phone book to look for their doctor, dentist or barber/hairstylist.  Why?  Because each of these services involves a “relationship component” so to speak.  To find these providers, you will more than likely turn to a colleague and ask them for a recommendation or referral.  This tends to be the same for a majority of consumers when they are searching for a new tax or accounting professional.  With that being said, marketing for tax and accounting services needs to address two areas: relationship management and search optimization.

Relationship Management  Unless you are starting from scratch, a good place to begin your marketing efforts is with your existing client base (no matter how large or small).  Here are some ideas on how you can leverage your relationship with these individuals and hopefully yield an instant sales force.

  • Have a referral program.  Everyone likes to be able to tell their friends that they have a “guy/girl” who can take care of them. If you do a good job, your clients will be more than willing to tell others about the wonderful service you offer.  So make it easy for them.  Develop a one page sell sheet, similar to this one, that gives them all of the information they need to refer you properly. Having a written description of who makes an ideal prospect and how your referral system works is a powerful way to get more qualified leads.
  • Reward those who make referrals.  Mother always reminded you to say please and thank you.  It’s good advice to follow this mantra when dealing with your referrals.  Your reward doesn’t have to be expensive; it can be as simple as a thank you card or a $20 gift card.  The key is to acknowledge that you appreciate the trust your referrer placed in you by giving someone their recommendation.
  • Routinely “touch” your clients and network.  Many marketers will tell you that it often takes 7-9 “touches” before a prospective client will engage you for services.  It’s also recommended that you communicate with your existing clients this frequently or even more so.  Many of the “touches” used in our practice are not sales oriented at all.  For instance, we send birthday/holiday cards to our clients and their spouses just to show we value our relationship.  Additionally, we use a monthly newsletter to interact with our clients and remind them that we are there to serve them and their friends should the need arise.  All in all, you just want to make sure that you are top of mind when someone asks anyone in your network for a tax/accounting service provider.

Search Optimization  In this day and age, the web (not the yellow pages) is where people often turn if they don’t have a person who can offer them a recommendation (think a person who just moved to a new town).  With that being said, you need to make sure that your marketing is “search optimized” to help drive traffic to a place where they can locate or interact with you.  If you think of the web as a barrel where people bob for apples (and you/your competition are the apples) you want to make sure that you have as many apples in play as you can.  Listed below are some ways that you can increase your apples so to speak.

  • Web page.   With more people conducting web searches on the fly while they are out and about, make sure you web page works well with mobile devices such as smart phones and tablets.  We’ve found that our site looks fine on a computer, but when it’s on a mobile device there are some issues (yeah, we’re working on it).    Like they say, first impressions count and you want to make sure you are putting your best foot forward.
  • Google/Bing.  These two sites offer services that will visibly highlight the location of your office on their page if you take the effort to set it up.  Google Places  and Bing Local will allow you to create a free listing complete with description, services, hours and a map of where you are located.  True, you do need to wait for them to verify that you are the owner of the business (either by mail or phone) but it’s well worth the time to make it easier for prospects and clients to find you.
  • Blog.  This is just another way for people to “stumble” across your existence.  Mr. Rogers likes to write so it’s not too hard for him to come up with ideas or content for us to post on our blog.  Plus, because the blog is search engine optimized, it often drives traffic to us and our website when people search for key words that are in some of our post.  Do a Google search for “2013 tax season delay” and for some reason one of our posts is the first item you will see.  Free publicity? We’ll take it any day.
  • Service provider sites.  In addition to Google/Bing, there are some accounting specific sites that will let you set up a profile free of charge.  One of our favorites is Teaspiller.  There are also sites where you can pay for a listing; our favorite in this category is Bookkeepinghelp.  Even if you only get one new client from each site, it’s pretty much 100% profit as you didn’t have to pay for the ad (outside of a little time to set it up) or very little in the case where you did have to pay.
  • Free media press.  If you like to write articles or do interviews, you could get some free web and physical traffic by reaching out to your local media contacts.  If you make yourself available as the “local expert” in taxes (particularly during tax season) you might get some news coverage.  Media professionals always need someone whom that can turn to when there is a particular tax topic they need a comment or perspective on.  Why not make that person yourself or your practice?

While each of the above individually will not send droves of clients to your door, when implemented as a comprehensive strategy, they will yield a constant stream of prospects.  We’ve often said to other professionals, we don’t know ONE way to generate a hundred clients, but we do know HUNDREDS of ways to get one client.  Hopefully the above has gotten your own marketing juices flowing.  Until next time!

Retirement Options For The Self Employed

One of the biggest mistakes entrepreneurs make is not planning adequately for their retirement. This isn’t all that surprising. If you’re self-employed, it’s a squeeze to set the money aside, even if it is tax-deferred. There’s a fear that you may need those funds to keep things rolling if the business doesn’t grow the way you expect, or clients are lax on paying your invoices.

The good news is that Uncle Sam does offer help in a variety of relatively painless plans to help self-employed small-business owners save for retirement in tax-favorable accounts. Here’s a round-up of the three main options:

SEP-IRA If you’re a one-man/woman band, this account is a good bet. A simplified employee pension, or SEP IRA, is a basic way to set aside pretax savings. You can contribute as much as 25 percent of your net self-employment income, up to a maximum of $50,000.

Best features: Flexibility. There’s no need to fund the account until you file your tax return (i.e. there is no requirement that you fund it each year). So if your net income turns out to be higher than expected, you can make a larger contribution and trim your tax bill. If you have a bad year, you can reduce your contribution.  Furthermore, if you’re building your new business on the side while still working for an employer who’s sponsored 401(k) plan you contribute to; your contributions to a SEP don’t interfere with your current workplace plan.

Considerations: This plan may be costly eventually if you have employees, as opposed to contract workers.  The plan requires that you must make the same percentage contributions for all “covered,” workers, or those who are 21 and older who have been employed by you for at least three of the last five years and are expected to earn $550 in the current year. Generally, you can deduct the contributions you make each year to each employee’s SEP-IRA. If you are self-employed, you can deduct the contributions you make each year to your own SEP-IRA.

Tax Filer Tip:   You have until the due date for your tax returns, including any extensions (meaning as late at October 15th), to both set up and fund the plan. You can open SEP-IRA at practically any financial service company including banks, mutual fund companies or brokerage firms. Firms such a Fidelity, Schwab, T. Rowe Price or Vanguard will set up an account gratis and account fees are low or nil.

Solo 401(k) This is a good choice for business owners and their spouses who are able to set aside a significant portion of their earnings. With a solo 401(k), as an employee, you can stash away as much as $17,000. As the employer, you can contribute another 25% of compensation, up to a ceiling of $50,000 including your employee contribution. If you’re 50 or older, you can toss in another $5,500 extra. Total savings: a whopping $55,500.

Best features: Generous contribution limits. If there’s a set-up or annual fee, it will be low. You might pay a small set-up fee, $100 or less, plus an annual fee of $10 to $250. There are no set-up fees, for example, at Fidelity or Vanguard.

And these contribution amounts are optional, so you can save the top figure in flush years and zilch in leaner times. If you already have an individual retirement account funded by money rolled from a previous employer’s 401(k), you can roll those retirement savings into your new solo 401(k).

It’s also possible to take out a loan against a solo 401(k). That can be useful if you need funds in a pinch. You can borrow half the account’s balance, up to $50,000, and normally can take up to five years to pay it back (provider rules differ).  We don’t recommend borrowing from your plan unless it’s a serious situation. But having the option can make it easier to get over the psychological hurdle of opening a retirement account.

Considerations: No extra employees can participate – only self-employed business owners and a spouse. This is not the best option if you’re still working a day job. If you contribute to an employee 401(k) at your day job, you might already be saving the max. You get only one combined $17,000 employee contribution limit to a 401 (k) plan, no matter how many jobs you’re working.

Tax Filer Tip: The deadline to open a new plan is typically December 31st (or fiscal year end) and must be funded by your tax return due date, plus extension. This is a traditional “qualified” pension. That means you must file an annual Form 5500 report once you have $250,000 of assets in it.  So you may have some paperwork here. Fidelity and Vanguard, for example, provide the information you need for the form, but do not complete or file it for you.

SIMPLE IRA. A SIMPLE IRA is designed specifically for small businesses and self-employed individuals. If you have a few employees, say, less than 10, who make more than $5,000, but far from six figures, and want to offer a plan for them as a perk, this is probably the one for you. It was designed for firms with no more than 100 employees.

For 2012, you can make an employee contribution of up to $11,500 pretax, or $14,000 if you’re 50 or older. There isn’t any percentage of income restrictions. Your contributions are tax deductible, and your investments grow tax deferred until you are ready to make withdrawals in retirement.

A SIMPLE IRA is a little burdensome if you’re a fledgling firm. You’re generally required to make a contribution to match each employee’s salary reduction contributions on a dollar-for-dollar basis up to 3% of the employee’s salary or a flat 2% of pay – no matter what the employee contributes to the account.

Best features: Easy paper work. It should take about 15 minutes or less to fill out the forms.

Considerations: This one isn’t for moonlighters – you can’t contribute if you’ve already maxed out employee contributions to a 401(k) at your day job. Also, if you need to make a withdrawal from a SIMPLE IRA plan within two years of its inception, the 25% penalty is significantly higher than the 10% fee you’d be charged for early withdrawal from a SEP IRA.

Tax Filer Tip: SIMPLE IRAS must be set up by October 1st to make contributions for that year, and all employee contributions must be made by December 31st.

For additional guidance on retirement plans for the self-employed, see IRS Publication 560.

By |2012-10-22T14:57:42-06:00October 22, 2012|Categories: Business Talk|Tags: , , , , , |Comments Off on Retirement Options For The Self Employed

Trials of Finding Good Employees

Q:  I’m a one man band and have recently decided to hire someone to lend me a hand.  What do I need to keep in mind as I take my first steps towards being an employer?

A:  At some point, many small business owners consider bringing in some outside help in order to ease their workload.  However, hiring your first employee is not a process that should be done hastily.  If done incorrectly, firing your first employee can be even more problematic then bringing them on board.  Thus, below we’ll examine some of the challenges you’ll run into as well as other important items you’ll want to keep in mind so that employee No. 1 is a good fit.

Do Your Math. Many owners are sometimes taken aback at how much it actually costs to have an employee.  The actual cost of the employee will be more than you think because of payroll tax obligations, benefits, etc.  It’s not uncommon for a $10 per hour employee to cost the employer $12.50 – $14 per hour “fully burdened.”   In a post later this month we’ll talk about the payroll tax obligations and how to make sure you cover yourself.

The Job Post.  Whether you are hanging a help wanted sign in your shop window or posting to a job board, this is the first step in attracting applicants.  Make sure the post is clear, concise, specific and informative.  You don’t want to waste your time dealing with candidates that aren’t what you’re looking for.  So be upfront about who you want to join your team and what you consider a good candidate (i.e. skill set).

Location, Location, Location.  Where you post your job impacts the quality of candidates you get.  The job pool who browses Craigslist (e.g. independent freelancers) vs. that of Indeed can vary significantly.  Likewise, using an employment agency or staffing firm will land another caliber of employee.  Thus keep in mind that if you want to find a highly skilled worker, you will typically need to pay more to post your role.

It Takes Time.  Be prepared for a lengthy process.  Many first time employers think that they’ll slap together a job post, tons of candidates will come flocking and they’ll simply pick the best one.  Right?  Unfortunately, most employers have to be patient as it often takes some time to find interested, qualified AND responsive candidates.  It’s not uncommon for you to encounter candidates who initially appear interested but then disappear into the wild-blue-yonder without so much as an email.  Likewise, commission only roles often take longer to fill.  And when you do find that perfect match, you’ll still need time to do reference, background and criminal checks.  Thus, make sure you allow enough lead time in your process, especially if you need someone to start by a certain time.

Don’t Settle. No matter how frustrating the process gets, don’t settle on a candidate just to fill the role. If they aren’t what you are looking for keep plugging on until you find your match.  If this means rewriting your job post, paying more to have it posted in a different media or partnering with an outside firm, do it.  Nothing beats hiring a person who at best isn’t a fit and worst is either detrimental to your company or causes financial issues (e.g. fraud or embezzlement).

By |2012-10-16T12:28:13-06:00October 16, 2012|Categories: Business Talk|Tags: , , |Comments Off on Trials of Finding Good Employees

5 Ways To Grow Your Business

Market Share, or how much of the pie is coming through your door, is one thing that all businesses try to track.  If you listen to the big guys, they’re always tracking if share is up, if it’s down and just how they can go and get more of it.  Yet when the economy is down, many business folks and entrepreneurs alike will throw their hands up and say that “oh well, there’s nothing we can do to grow right now.”

Down markets present a host of opportunities for the savvy and innovative business person to grow their business.  Listed below are five ways that you can increase your share of the pie when times are tough.

Examine/Exploit Your Competitors Weaknesses.    When times are hard, companies will look to ease the bleeding so to speak.  This might mean reduced advertising, hiring and marketing.  If you look at where your competitors are failing and step in with better services or products, you might just see an increase in customers.  For example, when Restaurant A had to stop offering free fries with their meals, Restaurant B took it as an opportunity to market that their combos “still” had free fries.  The result? A few new customers during the lunch hour that use to frequent their competitor.

Get The Word Out.  While marketing/sales professionals tend to live the good life when the economy is up, their budgets are often the first to be slashed when times head south.  However, nothing happens in an organization until a sale is made and sales don’t happen without marketing.  Thus when times are down, if you still have adequate cash flow, don’t cut your marketing but instead continue spending on “smart” marketing.  What this means is that if you can highlight something you do that your competitors don’t – go for it!  What you don’t want to do is spend money where it won’t make a difference.  So, if for example you’re a landscaping company in Chicago, it probably doesn’t make sense to do a major ad campaign in December when it won’t lift your sales all that much (unless you offer snow removal of course).

Expand Product Offerings.  Expanding by leaps and bounds is never advisable when the market is tough.  However, businesses should be encouraged to look for add on, tuck in and complimentary products to help them grow.  We’re not talking about adding on a major product line, but something that enhances what you already do.  For example, a hot dog stand already attracts people who are looking for an inexpensive yet fast meal.  Why not keep a case or two of “veggie” or vegan brats in stock?  Many vegetarians don’t frequent this type of establishment alone but may wind up there when a friend or coworker does.  If they can make a purchase from you, why not make the sale?  It doesn’t cost you a ton to add the product, and you don’t even have to keep loads of inventory as the demand is probably pretty low.

Purchase A Failing Business. If you have deep pockets, a down economy is a good time to look for struggling competitors and help put them out of their misery.  The only word of caution is make sure you do a thorough analysis of their business (i.e. due diligence) before you do the deal.  Remember, there is a reason the business is struggling – just make sure that it’s something that you can fix or you will simply purchase a headache instead of increased profits.

Increase Volume.  Playing the price card (i.e. reducing prices) is one of the last things recommend when times get tough.  Not only do you lose money on the top end (e.g. sales) but you tend to lose it on the bottom line as well because of the inflexibility of certain fixed cost.  However, if you have a streamlined operation that has solid margins (think > 50%) then you could go for a volume play.  For example, if you can slightly reduce prices and keep yourself profitable, you may see an uptick in customers (volume).  If the profit generated by the volume increase outweighs the money you lost when you reduced prices, then it’s a smart move.  The goal would be to do this long enough where you increase your customer base and then gradually increase prices once the economy improves.  The end result would then be a bigger market share and increased revenue/profits when compared to your competitors.

By |2012-09-25T12:30:19-06:00September 25, 2012|Categories: Business Talk|Tags: , , |Comments Off on 5 Ways To Grow Your Business

Top 5 Reasons Businesses Fail

When an entrepreneur embarks on their journey to build the next big thing, they will undoubtedly come across the “statistics” that we’ve heard a thousand times.  You know the ones where 50% of businesses fail within a year and 95% are gone within five years.  But just what is it that causes these new establishments to go belly up?  Here is a list of the top five drivers based on our experience helping new companies navigate those early startup waters:

5. You start your business for the wrong reasons.  The thought of being your own boss is cool until the first major issue comes up.  Is the sole reason you’re starting your business because you want to make a lot of money? Do you think if you had your own business that you’d have more time with your family? If so, you’d better think again.  Running a business is hard work – often much harder than what you have previously been doing to earn a living (especially if you’re coming from an office job).  With that said, when times get tough (mentally, financially, spiritually, etc.) you need to have a firm resolve as to why you’re in this game.  If your reason is planted on a weak foundation, don’t be surprised if you find yourself quitting before success has had a chance to begin.

4. Lack of Planning.  Anyone who has ever been in charge of an event knows that that were it not for their careful, methodical, strategic planning (and hard work) success would not have followed. The same should be said of most business successes.  Many small businesses fail because something which was very fundamental to their success (such as marketing or customer seasonality) was not thoroughly understood and addressed.   If for no other reason than to flush out these potential sticking points, we always recommend that a new entrepreneur take the time to prepare a business plan.  Besides, most lenders will request one if you’re seeking to secure capital for your company so you might as well go through the exercise.

3. Over-expansion.  A leading cause of business failure, expanding too quickly, often happens when owners confuse success with how fast they can grow.   Thus, a focus on slow and steadily planned growth is far more ideal. Many a bankruptcy has been caused by rapidly expanding companies.

At the same time, you do not want to repress growth. Once you have an established solid customer base and good cash flow, let your success help you set the right measured pace. Some indications that expansion may be warranted include the inability to fill customer orders/requests in a timely manner and employees having difficulty keeping up with production demands.  If expansion is what you need to succeed,  identify what and who you need to add in order for your business to grow.

2. Poor Management.  Many a new business owner often find themselves admitting that they know how to make the product or deliver the service , but lack management expertise in areas such as finance, purchasing, selling, production and hiring/managing employees. Unless they recognize what they don’t do well and seek help quickly, many owners may soon face disaster.

Neglect of a business can also be its downfall. Care must be taken to regularly study, organize, plan and control all activities of its operations. This includes continually staying in touch with market research, customer data and of course the financials.  The moment that that you take your eyes of the game so to speak is when your competitors will take the opportunity to make their move.  Thus, new owners must always be aware of what’s going on or risk sinking their ship!

1. Insufficient Capital.  The most common yet fatal mistake for many failed businesses is having insufficient operating funds. Many owners often underestimate how much money is needed to weather the start up phase and are forced to close before they even have had a fair chance to succeed.  Some also may have an unrealistic expectation of incoming revenues from sales, which can exacerbate the situation.

Before you begin your venture it is imperative to ascertain how much money your business will require.  We’re not talking about only the costs of starting your endeavor, but the cost of staying in business.  It is not uncommon for a business to take a year or two to get going. This means you will need enough funds to cover all your expenses until sales can eventually pay for these costs.  To start, we’d recommend using a business start up cost calculator such as this one or setting up a consultation with a local accounting firm or CPA.  Many will be happy to talk with you as no one wants to see a business fail.

Budgeting Basics for Small Business

When it comes to business financials, most entrepreneurs would rather focus on building their business than looking at pages of numbers.  The truth be told, it’s not essentially for a small business to have a budget.  Hey, how many people do you know who don’t balance their bank accounts?

However, the reality is that every small business owner can benefit from preparing an annual budget.  Firstly, there may come a day when you need to apply for a bank loan, buy a new piece of machinery or expand your locations.  It’s good to have a budget in place now than to have to pull one together when one of these events occurs.  Secondly, a budget isn’t about predicting your future but instead crafting it.  When you put your goals to paper a funny thing often happens; you achieve them!

What Is A Budget?

Simply put, a budget is a financial road map for your organizations performance.  While the process can be quite complicated large organizations, smaller companies tend to focus on two basic budgets: operations and cash.  While the budgets focus on two slightly different things, they will both typically cover a one year time frame.

Operating Budget

How much revenue will you generate next year?  How much will you spend on marketing?  Will you make a profit during the Summer months?  These are questions that are usually answered once the operating budget is complete.  The goal of this budget is to provide the blueprint for how the business is going to operate in the coming year. As a result, it typically relies on information from functional areas such as sales, marketing, distribution and customer service.  At the end of the process one should have an income statement that shows how much profit the business expects to make at the end of the year.

Cash Budget

Unlike the operating budget, the cash budget is a little more of a financial exercise as its purpose is strictly financial. What we mean by that is that it’s designed to ensure that the business has enough cash to fund its activities throughout the year.  Emerging and growing companies often find themselves strapped for cash even though sales are increasing and they are profitable. The goal of the cash budget is to ensure that you don’t run out of cash, especially at an inopportune time (like when you need to load up inventories for the next quarter).

How To Budget

Budgeting doesn’t have to require a trip to your accountant or the use of fancy software.  With a little time, commitment and thought any small business owner can prepare a useful budget.  As the operating budget is probably the most used and easily understood of the two budgets, here are 6 tips on how to go about preparing it:

1) Review prior period data.

If you’ve been in business for a while, take a look back at your past performance.   If possible, review your results for the past two or three years. Unless you are starting a new business or developing a new product, this will be the best indication of what’s going to happen in the next year.

2) Develop reasonable assumptions.

After reviewing the data, develop some assumptions about the future.   What will sales growth be? Is the market for your products or services expanding? How effective will your marketing program be? What will your competitors do? Most business owners have strong sense of intuition about these things so listen to it and then incorporate it into your plan.

3) Determine expected revenues.

Use your historical data and assumptions to make sales projections. Some companies establish a target that is realistic and attainable while others prefer a “stretch” budget that will be difficult, but not impossible, to achieve.  Expected revenues should include not only the number of products you expect to sell, but also at what price you will sell.  If you plan to increase the price, do you expect customers to continue to buy at the higher price, or will sales decrease by some degree?

4) Calculate the expected cost of goods sold.

When calculating the cost of goods sold, be sure to include all direct and indirect costs: material, labor, packaging, storage, etc.

5) Calculate expected operating expenses.

This includes fixed costs such as rent, salaries, utilities, office supplies, etc.  Your bank and credit card statements will have most of these items in it, which should make your job easier.  Just don’t forget to include things like price escalations and increases (e.g. rent, property taxes, etc) otherwise you’ll make your profit look better than it really will be.

6) Calculate expected operating income.

Subtract your expenses from your revenue and presto, there’s your operating budget! 

Once your budget is complete, take some time to look it over and see if everything appears reasonable.  If it doesn’t look right, go back and make adjustments where necessary.  Periodically throughout the year you should revisit your numbers to see if you are on track to hit them.  In bigger companies they revise their number periodically via a forecast.  This isn’t necessary for the small business owner, but if you feel that things need adjusting to hit your target, feel free to take the appropriate corrective action.  Remember, your budget is just a guideline for your financial operations, not a set of concrete numbers that have to be adhered to.

By |2012-07-09T14:35:39-06:00July 9, 2012|Categories: Business Talk|Tags: , , |Comments Off on Budgeting Basics for Small Business

Small Business Marketing 101

While we are a financial services firm, we often times run across business topics that we feel are noteworthy.  So while we are not marketing experts, we’ve seen many companies make similar mistakes when it comes to their marketing.  Now we’re not talking about logo design, twitter handles or even ill timed marketing campaigns.  We’re talking about the fundamentals – the basics that often get overlooked or simply reprioritized to the bottom of the list.  Well, this post will look at a few things that every new or would-be business owner should contemplate before they take that leap.

Nothing happens without sales.  If this is the first rule of business then the second is this – if you want to go out of business, stop marketing.    For those who’ve worked in Corporate America, it may now resonate with you why the Sales and Marketing functions typically have the biggest budgets.   We know that it’s not the aim of a new business owner to shutter its doors, but unintentionally this is the result of the marketing approach new owners take.  You see, marketing is an essential and integral part of business success.  Unfortunately, most owners don’t adequately fund or plan their marketing and as a result, it is done as an afterthought.  Therefore, set your enterprise up for success and make marketing a priority.

Quality, Honesty and Integrity.  These three items are the cornerstones of all marketing.  Firstly, you must sell a quality product or service that will inspire customers to not only purchase it again, but spread the word to their friends.  Concurrently, the business must ensure that its marketing is built on honesty and integrity.  Companies built to last have a strong ethical foundation and honest marketing practices.  Thus, if you market in this manner and sell a quality product, you’ve laid the ground work to capture the Holy Grail – an impeccable reputation!

Marketing is a philosophy.  Unfortunately, too many individuals view marketing as slick campaigns, buzzwords, advertising and the like.  The reality is marketing is a philosophy and the above items are only components to execute that philosophy.  Marketing is everything a company is and does.  A company’s ethics, culture, work environment, hiring practices, attention to quality and customer service all affect and are affected by marketing.  Some companies spend tons of money on and attention to logos and advertising, ignoring the damage done by unethical behavior.  The point?  It’s important to realize just how integrated marketing really is or you’ll find yourself wasting marketing dollars while other things derail your efforts.

Build it and they will come. The simple step of moving out of your home will not solely result in increased sales.  The only thing you’ve done is made it easier for those selling their products and services to find you!  In order to generate “street traffic” you have to initiate some form of marketing so customers know why they should stop and visit YOU vs. your competition.  “But my signage tells what I offer so I’ll be fine.”  Really?  Try this exercise the next time you’re out.  Pick an obscure product (bike tubes, hammer, flyer printing, bug spray) and then visit an area you think will have a store that will offer it.  Don’t look up the store on the internet, we want you to drive/bike/walk around looking at signage and see how easy it is to find.  The point is this; even with a highly visible location it’s EXTREMELY hard for potential customers to “see” you.  The only way to ensure that the do, is to market to them.

Relationships matter.  Most people don’t think of this when they do their marketing.  However, the reality is this; marketing intersects in many different ways with relationships.  People do business with those that they know, like and trust.  Do you go back to the store with the clerk with the nasty demeanor?  Or how about that restaurant with the hostess who was indifferent when you arrived?  Your ability to strengthen human relationships through marketing will determine the success of your business.  However, befriending every person within 10 miles of your business is not the answer.  What you have to do is figure a way to infuse paying attention to your customers and what matters to them with the marketing tactics your organization employs.  If you can do that, you’ll create a following of customers who’ll want to do business with you time and time again.  And that my friend is what we all want!

By |2012-06-09T20:33:04-06:00June 9, 2012|Categories: Business Talk|Tags: , |Comments Off on Small Business Marketing 101

Terms Everyone In Business Should Know

Q:  I’m a little new to the business realm and just recently hired an accountant.  When we talked about how my company made money, I was a little stumped by some of the terms he used.  What’s the best way to brush up my “business acumen” so to speak?

 A:   At the core of every successful business, from a global giant to a corner store, are the same fundamentals of moneymaking: cash flow, margin, velocity, return and growth.  Additionally, at the core of every successful business leader is an intuitive understanding of the relationships among them.

When you have business acumen, you realize the importance of every job within the company. A mailroom clerk with business acumen knows that getting checks to the accounts receivable department more quickly will ease the company’s cash flow. Likewise, a sales rep with business acumen knows that higher-margin products will increase the company’s return.

However, when you are starting a business or the complexity of your job increases, it’s easy to lose sight of the fundamentals. So the following are the most basic financial terms/concepts that anyone in the business world should be familiar with:

Cash Flow.  No business survives long without it. You should know how much cash your business generates and how much cash it consumes.  What are the sources of it? What drains it? What’s the timing of the inflows and outflows and how is it changing? More revenues (sales) often means more cash. But growing a business consumes cash. How fast can the company expand without straining its cash flow?

Margin.  When people talk about the bottom line, they generally mean net profit margin  – the money the company earns after paying all its expenses, interest, and taxes. But gross margin is important, too.  Gross margin is the difference between a product’s selling price and what it costs to make the product (the “costs of goods”), expressed as a percent of the selling price.  Changes in it can signal important shifts in a business. When PC makers saw their 32 percent gross margins decline to 20, they knew (or should have known) the competitive landscape had changed.

You have to know how changes inside or outside the business affect gross margin. Are there new entrants in the market who are winning customers? A competitor who’s found a clever way to reduce costs and prices? A change in the pricing power of suppliers?

Velocity. Velocity refers to speed, turnover, or movement.  How much revenue do you turn over, or generate, for each dollar of inventory?  If you have $1 million in inventory for the year and revenues of $10 million, your inventory velocity is 10. This tells you how fast you’re moving raw materials through the factory, turning them into finished products, and moving those products off the shelf to customer – the faster, the better.

Service businesses can track velocity, too. For banks, velocity of equity – how much revenue is generated per dollar of equity – is a useful measure. The concept applies to every business.

Return.  Return is the ratio of money gained or lost on an investment relative to the amount of money invested. The amount of money gained or lost may be referred to as interest, profit/loss, gain/loss, or net income/loss. The money invested may be referred to as the asset, capital, principal, or the cost basis of the investment.  Return is important because it’s one of the “true” indicators of how your business’ assets are performing – which is imperative when comparing one year to the next.

Growth.  Growth is just a measure of the increase/decline from one time period to the next.  Every business needs to grow revenue, cash and assets to stay in business. How do you grow in a way that keeps the other aspects of money making in balance? There’s no formula – people with business acumen figure it out.  Street vendors in villages around the world use business acumen every day. They have to – their next meal often depends on it.

Hopefully the above gets you started in your quest to increase your financial understanding of business.  Yet, the best way for you to improve this is to just get out there, study and read as much financial literature possible, learn from what occurs in your business and read the case studies from other businesses.

By |2012-05-24T22:42:14-06:00May 24, 2012|Categories: Business Talk|Tags: , |Comments Off on Terms Everyone In Business Should Know

The Importance of Networking or Self Investment

Q:  In Corporate America, one often hears that they should network.  I do a good job and always receive good marks on my performance reviews.  Why should I have to network on top of this, especially when I have limited free time?

 A:  Unfortunately, we as employees tend to think that “doing a good job” is the key to getting ahead.  The startling reality in today’s economy is that doing a good job is just the base line to be considered for a position.  I mean, as a manager you wouldn’t try to hire someone who couldn’t do a good job would you?  Likewise, things such as past work experience, professional credentials and educational experience (e.g. bachelors, masters, PhD) are only keys that open the door so that you aren’t excluded from the party.

If you’re doing it right, networking isn’t something that takes lots of extra time in your life.  If you see everyone as a potential associate or friend, you can network during any mundane daily activity, from waiting in line at the cafeteria to peddling at the gym to commuting on the train. “People think of networking as going to a function,” says Karen Susman, a Denver-based coach and speaker on networking. “You need to realize you are building your network everywhere all the time.” 

 Some conversations will be fleeting while others will lead to the people you meet becoming a part of your circle. The key is being open to – and staying in touch with – those who cross your path.  This is the essential ingredient in creating your own luck.  At some point, you may learn about something that can benefit you professionally before the rest of the world finds out.  For Mr. Rogers, it was a work colleague that led to him filling their position when they took another role within the company.  Had they not had a relationship, he would not have had the opportunity to put his name and face in front of the hiring manager before others were even aware the position would be opening up. 

 While it is true that some networking tactics do take time, many don’t actually take too much. Busy executives who excel at career management say they set aside only a few extra minutes a day to touch base with professional contacts.  Tim Ayers, Director of Global Services Marketing for Tellabs, a communications company in Naperville, devotes about five minutes daily to call or email some of the approximately 900 people in his computerized database. They include colleagues, vendors and others he’s worked with in the past. 

Mr. Ayers notes the benefits: When he lost his job in Chicago during the telecommunications meltdown, he found a new position through a networking contact. Talking with others regularly also helps him do his job better because it keeps him informed about trends and potential candidates for Tellabs openings, he says.

Here are five simple tips to make networking an easy, time effective and potentially career enhancing part of your typical workday: 

Show interest in others. When working with fellow colleagues, ask questions and get them to talk about themselves and their business experience.  The more you know about someone, the more you’ll know about how they may be able to help you in the future.

Build relationships. Strangers won’t put their reputations on the line for you. Consider dropping an email or going out to lunch with any new person you meet.  The stronger the relationship becomes, the better your chances of creating an ally in your career development.

Don’t be selfish. Remember, networking is a two-way street. You have to be willing to give to the other person in order to receive.  If you become aware of some helpful information, make sure your network contacts are aware of it.

Prepare an “elevator speech.” Write a summary of what you want people to know about you that can be delivered in less than 30 seconds. You never know when that VP may bump into you in the hall and ask you “so what do you do?”

 Maintain your network. Keep in touch with those in your network.  Remember, the majority of jobs go unpublished or the candidate is “identified” by the time it is.  Your next exciting opportunity may come from a network contact that thinks it would be perfect for you!

By |2012-05-20T22:42:02-06:00May 20, 2012|Categories: Business Talk|Tags: , , |Comments Off on The Importance of Networking or Self Investment

The Importance of “Follow Through” in Business

So there you are, sitting at your desk when the phone rings.  You pick it up and guess who it is?  Your next “potential” customer!  They’re interested in doing business and want you to send them a quote.  Sounds simple enough right?  So like any customer service oriented individual does, you send them the quote and go about your day.

For most small business owners and employees there is never a shortage of tasks to handle.  For every customer who is simply prospecting, you have one who wants to purchase your product or service right now.  What typically winds up happening is that you shift your focus to the paying customer and the one who was prospecting?  Unfortunately, they usually wind up lost in the shuffle.

Now, what separates the stellar businesses from those that are merely successful is a little thing called follow through.  It’s not all that hard to implement and in the end, it can yield substantial results.  Here are some important things those in charge of your company’s sales or marketing function should keep in mind.

Single exposures don’t seal deals.  Most potential customers won’t make a decision based on one sales or marketing exposure.  Thus, follow-up contact is essential to success.  Sales companies have found that a customer needs, on average, seven exposures to a product or service before responding.

Implement a system.  The buzzword being thrown around these days is customer relationship management or CRM.  Stated simply, CRM typically involves technology to organize, automate, and synchronize business processes – principally sales activities, but also those for marketing, customer service, and technical support.  The goal is to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service.  While you don’t have to fork over loads of money for a fancy CRM system, you should at least have a way to 1) track who contacted you, 2) capture what was said during each contact and 3) remind you to initiate follow up contact.

Customers get busy too.  Often times business owners don’t want to follow up for fear of coming across as badgering or being a pest.  Yet, sometimes a customers lack of response is simply because they’re busy.  A friendly reminder or two, is sometimes all that is needed to prompt them to contact you and move forward.

Ask for the sale.  Too many small business people lose thousands of dollars in sales every month because of one simple mistake; they don’t ask the customer to buy!  The easiest way to do this is to ask them an involvement question that doesn’t allow them to answer “no.”  For example, you could say “Okay (name), based on what you were looking for, how do our services fit with what you had in mind?”  If they say “it fits perfectly!” you can go straight to “Okay, we just need a deposit of XX dollars.  Which credit card would you like to use…”

Don’t forget your existing customers.  Marketing expert Dan Kennedy recommends a 10-12 step MINIMUM “touch” with your clients and selected prospects every year.  During these interactions, you’re NOT selling them something … but rather giving them useful information to further your relationship.  The competition is always trying to seduce and woo them away from you.  If you fail to remind them why you’re important and valuable, you could unintentionally send the message that you aren’t, which is not what you want.  So make sure you regularly engage your current customers; it shows you value the relationship and who doesn’t like to be appreciated?

By |2012-03-10T23:19:43-06:00March 10, 2012|Categories: Business Talk|Tags: , |Comments Off on The Importance of “Follow Through” in Business
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