business growth

Growing Your Profitable Small Business - A Story in 5 Parts

5. Bring It All Together sml.jpg

This past week, clients and small businesses alike, joined us online for a daily series on ways to grow your small business and meet increased profit goals. So I wanted to share it here with you all.

1. Focus on Customer Satisfaction

Loyal, satisfied customers are much easier to keep, manage and expand the services and products you can sell. Good customer service should always be a priority. Have you ever worked out the lifetime value of your clients? i.e. you client spends $1000 with you per month, and most of your clients stay with you for 5 years; their lifetime value is $60,000. These simple things can help clarify why your customer’s satisfaction is paramount!

A customer who is happy with your service will always come back. And what additional services can you offer them on their return as you get to know their likes, dislikes and needs?

Make all customer interactions a pleasurable experience. If any problems arise address them head-on and turn this into a positive result. The best advocate of your services is someone who has had a problem, even if it was your mistake, and you proactively fixed it. Nothing says you care like being the one to notice an issue, solve it and bring it to their attention, before they bring it to yours.

Listen. Listen to better understand your customers and their needs. Then ensure you get sign off on works to confirm they are satisfied with your job and record any changes for the future.

Solicit ‘negative’ feedback. Yep. Asking what you could do better is the most powerful information you can receive. Anyone will politely tell you what’s great, few will share the little niggling issues. Asking what you can do better helps you improve your business not just for that customer, but all future customers. Don’t be afraid to ask. The answers are gold if you act on them.

Obtain referrals and photos to add to your marketing activities and remind customers just how great you are to work with. As the quote goes “A picture speaks a thousand words”.

2. Cash is King

Running a very close second to customer satisfaction, is cashflow. The more cyclical your business activity the more cashflow can affect your ability to perform your services with the same quality year-round. A few quick tips:

Manage your cashflow

A.      Get your invoicing right first time. Where possible invoice immediately, or on a daily basis.

Ensure invoices contain the correct customer information including address, email and phone number. This can also assist with your marketing efforts later.

 B.      Make your payment terms work for you. Invoicing and receiving payment for your work in the shortest time possible (immediately or within 7 days is ideal), and many software applications allow you to take payments directly through the app and on site. Paying your suppliers on the longest terms possible, ensures that you are not out of pocket for your stock and supplies before you receive customer payments. Keep your cashflow positive.

C.      Keep accurate records. Enlist the help of a certified bookkeeper to maintain accurate and up to date records. It is important that you can see the financial position of your business at a glance in realtime.

D.      Use quality accounting software. In business it is important to know where you stand in real-time. You may have been travelling along on paper or in excel for years and then finding out what your accounts look like at the end of the quarter when you hand it all over to your bookkeeper or accountant. Using your current position to inform forecasts and predictions is true management of a small business. There are excellent software packages available, like Xero, that can link to your bank and be updated in real-time. A reliable accounting system will help you track key business measures, such as receivables, payables, operating margins, inventory etc. This will help you to know and understand your cash position.

E.       Always keep your personal and business finances separate. This is essential if you want to understand your business cashflow and forecast how it may change over time. How will you know whether the business is financially supporting you, or you are financially supporting the business, if everything is intertwined? You won’t. Separation makes business decisions and understanding to cycles of your business so much easier.

F.       Build a cash reserve. Remember the GFC or the recurring floods on eastern seaboard? More than a 3rd of small businesses are negatively impacted in a downturn because they lack the cash reserves to see them through an extended period of economic downturn or an insurance event (such as a flood, fire or damage). A cash reserve will strengthen your business and importantly help you sleep at night. It also provides great advantages when it comes to being able to purchase stocks when they’re discounted, or in bulk, or servicing a new larger client that requires additional capital to take on.

Cashflow is all about giving you business options.

Next Step? You want to grow your business. Marketing seems simple; advertise, have a presence and find customers. Let’s take a step back first, we will tackle marketing in a moment, first find out what you’re marketing and who too?!

3. Brand

So; what do you do? It’s a good question. When is the last time your thought about it? It’s not about whether you provide financial advice, mow lawns, install lighting or plumb toilets. It about how you do what you do, as much as what you do. You show up on-time when people are stressed in an emergency, you take pressure off busy parents trying to do everything themselves, you take care of someone’s grandma because she wants to be able to stay in her own home,  and ensure when someone is worried that they are relaxed when you leave.

So what is your all important brand? How do you convey this brand in everything you already do, and how would you convey it if you extended your marketing into new areas like social media, a website or direct marketing.

Are your current customers really your target audience or did it all go astray at some point? Refocusing on your brand and how you want to share it with your current and future customers is the starting point of any marketing.

A.      Pull out all your marketing materials; flyers, magnets, website, social media…

B.      Do all these materials reflect the quality and tone of your message? Is it clear both what you do and how you intend to do it? Are the pictures and designs consistent with your brand?

If the answer is a resounding ‘YES’ then pat yourself on the back. If it’s a ‘NO’ or ‘Not Sure’ then now is the time to do something about it. Get started on the solution.

4. Marketing

Now that you know ‘who’ you are, metaphorically, and your brand, it’s time to let your target audience know. Let’s be clear, great marketing doesn’t mean telling the world about your business; you just want every person or business in your target market contacting you – they are your audience.

Identify who they are; age, gender, location, lifestyle, product use, their attitudes…. Then decide how you will get in front of them. For most businesses it a combination of consistent messages across multiple platforms:

A.      In person. Literally visiting your business’ neighbourhood can be a great opportunity depending on your type of business. Your target market will help you decide if this is appropriate for you. And don’t visit empty handed; a flyer or business card so people can find you later is key.

B.      Build a presence online, a website is the start for many. A website is literally the business card of today, available 24/7 to people trying to purchase your services and products. For many businesses a simple website will suffice with a few minimum details:

a.       Business name;

b.       Recognisable logo;

c.       What you do;

d.       How to contact you; and

e.       an Enquiry form.

C.      Build a following on Social Media. Social Media, such as Facebook, Instagram, LinkedIn, provide Business to Business (B2B) and Business to Consumer (B2C) links for people with like interests. It’s the digital word of mouth in the current day and your target audience would again determine which services would be most beneficial for your product or service.

D.      Provide industry education. If you are in a field that allows you to share valuable knowledge at industry or association events with potential future clients, think about putting up your hand as a speaker, presenter or adviser. You are not only building your business, but also the professionalism and reputation of your industry.

E.       Ask your clients for referrals, testimonials and where appropriate photos. As discussed earlier in the week, a satisfied and loyal customer is your best marketing, both by word of mouth and independent referral. Depending on your products and services, photos of your finished work help convey this story to prospective clients.

Now dust off that old marketing plan and get to work!

5. Bring it all together

So here we are, having discussed your customers, cashflow and what you do for who! A new week has begun so we urge you to spend some time on the business rather than in the business.

Really sitting down and reviewing your business helps clarify your goals and plan for the next stage of growth. Many clients come to their bookkeeper, who is often also their business coach, without having first decided who they want to provide their services to, which can make assisting them with the next phase of profitability (margins, processes, efficiencies and staff training…) more challenging. You however, having answered these questions, are ready! You want to get to that next phase and so now it’s time to bring it all together an act on it.

If you need help analysing cashflow, finding your top 20% clients, identifying the target to suit your brand, putting a list together, getting online or setting up your accounting software from scratch… Now is the time. Contact us, contact your finance team, whatever you do it is time to make an appointment and make 2020 the year to break all your goals.

Nothing is better for business than the challenge of having to set new goals because you’ve smashed the previous goals ahead of schedule!

May FY2020 be amazing.

-Steph

We encourage you to share this article with your colleagues in small business, however we request you seek permission of the author, stephaniec@b2bbookkeeping.com.au prior.