Posts Tagged ‘business’

9 Tips to Improve Yourself and Your Business

May 2, 2011

by Doug Smith, President, The Woodhaven Group, LLC.

As an owner or key person in management you must grow your business and increase the cash flow needed to achieve the goals of the company.

I have found most owners do a good job of addressing both the short and long-term needs of the company.

However, there is one area that usually does not get addressed. That is the failure of the key person to take care of himself.  If the top person does not take care of himself then the success of the company is in jeopardy. I know.  I have been there and learned a few tips I want to share:

  1. Maintain good mental health:  It is too easy to get fixated on day-to-day crisis management.  At some point this can affect your ability to focus and solve problems.  The best solution I have found is to have friends outside the business that you can use to unwind with.  It might be a weekly golf outing or attending a ballgame.
  2. Maintain good physical health:  This means exercise.  Not only will exercise help keep the blood pressure in line, it will also help alleviate stress.  The best way to exercise is to treat it like a meeting.  Schedule it into your day at least 3 times per week.  Also, don’t forget that annual checkup.
  3. Educate yourself:  This can be on business or nonbusiness topics.  If nothing else, we all can spend time staying current on how the latest developments in internet marketing affect our sales!
  4. Pay yourself first:  You deserve to make a fair return on your time, effort and risk that you are taking.  Pay yourself enough dollars that you have money left over to spend on something frivolous for you or your family.
  5. Set aside dollars for the long-term:  Make sure you are allocating money for the long-term needs of your family such as retirement or that vacation home.  Your company has long-term goals that need funded.  You should also have personal long-term goals that get addressed.
  6. Stop beating yourself up:  There has not been a CEO or owner yet that is right all the time.  Stop stressing over that past decision that did not work out.  Keep looking to the future.  You will more than make up for old mistakes with the wise decisions you will make going forward.
  7. Hire the best, pay them, and get out of their way:  Do I need to repeat that?  Make your job easy by hiring people better than you are.  That means you will have to pay those key people good money and then do not micro-manage them.  Some of the most fun I have had as a CEO is watching managers develop and being there to help them when they stumble.
  8. Don’t procrastinate! Make the decision:  Failure to make a key decision such as closing a branch or letting someone go can hurt the company, sap cash flow that is needed for projects to grow the company and destroy morale.  For the good of the company, don’t put off doing what has to be done. It goes with the job title.
  9. Ask for help if you need it:  Many owners and CEOs let their pride get in the way.  If you are not getting the results you need ask someone from outside the company to help.  It might be another CEO, a consultant in your industry, or a retired business owner.  They can take a fresh unbiased look at your problem.

Remember, your business can not grow if you are not on top of your game.

Take care of yourself while taking care of your company.

 These tips have worked for me. I would be interested to hear from others who may have tips to add to this list.

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A Business Must Pry Loose Consumer Savings

August 4, 2010

by Doug Smith, President, The Woodhaven Group

It has been widely reported that businesses of all sizes have accumulated cash over the last year to reduce debt and have a cash flow cushion going forward.

Someone else is doing the same thing.

The consumer has decided that saving money is a good and needed strategy for themselves and their families.

The US government reported that consumers saved 6.4% of after tax income for the month of July.  This trend in increased savings has been happening now for a few months.  Compare this savings rate to 1%+ prior to the economic chaos that started in 2008.

Why is the consumer deciding to save more at this point in time?  Here are a few reasons as I see them:

  • It is no secret that consumers are trying to reduce any and all debt they have.
  • Uncertainty plays a major role in consumer psychology.  The consumer is telling themselves that caution is the best strategy and that means saving dollars until they can get a better “feel” on the future of the economy.
  • The consumer is becoming wiser.  Part of what got the consumer and the country into economic trouble was spending on unnecessary products and services as well as houses bigger than were needed.  You can add to that a few vacation homes.  Now the consumer is still spending, but it is on more necessities and less on “feel good” items with no lasting value. Some of the remaining dollars is going into savings.

In spite of this new pragmatic approach by the consumer, businesses still have to generate sales.  The consumer has not stopped buying. They are just buying less and being more cautious.  A company needs to capitalize on that mindset.  Here is how to do it:

  1. Know who your target customer is and channel your available marketing dollars at that customer.  As  a business, you do not have the luxury of using a shotgun approach.  That only wastes cash flow.
  2. Know which of your services or products is most desired at this time by your target customer.  Don’t make the mistake of emphasizing secondary products, styles, colors, sizes, or categories in your offering.  Lead with your strength.  Do research to find out what that is if necessary.
  3. The consumer right now appears to only be buying bargains.  So give them a bargain.  Find a way to promote your most wanted items to the target customer at a price point they cannot refuse. Then cross market and up sell to increase the average sale and bump up margin.
  4. Offer the best guarantee or warranty that you possibly can.  The consumer is not very trusting right now.  Let them know that once they finally decide to buy that they can have peace of mind that their purchase will not be a mistake.  Trust and credibility in the seller is currently an important part of the buyers decision-making strategy. 

The consumer has money to spend.  And they will spend it given a good reason to do so.

It is up to the owner or CEO to give the consumer a valid reason to dip into the increase in savings and spend it with your company.

4 Unusual Economic Indicators For The Small Business Owner

July 27, 2010

by Doug Smith, President, The Woodhaven Group

Oh, if we could only predict the future!

Every business owner or CEO has certain indicators they use to get a “read” on how their company is performing.  Based upon what those indicators tell the owner, he will adjust strategy going forward.  Business cash flow, profit and net worth depend on the owner making the correct decisions.  I have found most owners do a good job of reacting and making the necessary adjustments.

Unfortunately, all businesses are impacted by changes in the economy over which there is no control.

Should an owner invest in a new product line, open a new branch or cut back overhead in anticipation of rocky economic headwinds?  Those are tough decisions to make.

There are plenty of economic indicators released by the government such as housing starts, consumer price index, unemployment rates, consumer confidence index, and on and on.

They are all important to consider but, sometimes, there is information overload.  Compounding the confusion is when the government “restates” an economic indicator after it is released.

I have tended to include a few indicators of my own that I layer into my decision-making.  I will be the first to say they are not perfect and I do not look at them only in making a final decision, but these indicators do represent dollars spent that are impacting the economy one way or the other.

Here they are:

  1. Freight volumes for truckload carriers.  About 2/3 of the freight in the US economy moves by trucks.  This can be an indicator of inventory levels, consumer spending, manufacturing activity, and overall condition of the economy.  Lots of trucks on the highways is a good thing!
  2. UPS and FedEx shipments.  If the economy is tanking then  overnight shipments of almost anything will drop.  A month to month upward trend from these 2 companies is an indicator things are improving.
  3. Airline travel.  If overall airline travel is increasing that means business people are travelling to sell and close deals.  Even in the era of video conferencing, there is still no substitute for face to face meetings.
  4. Hotel vacancies.  Similar to air travel, hotels operating near capacity can be an indicator of more business occurring, more families vacationing and a bump up in conventions and conferences being attended. 

In my opinion, these 4 indicators are a reflection of how the economy is doing.  A downward trend for a number of months in each would probably cause me to think twice before charging ahead with expansion plans.

I would be interested to hear if you have your own unusual economic indicators that you follow.

Use Google TV Ads To Build Brand And Increase Cash Flow

July 16, 2010

by Doug Smith, President, The Woodhaven Group

As a small business owner or CEO you do not have the luxury of wasting the cash flow of your business while trying to build your company’s brand and increase sales.

One of the quickest ways to blow cash and profit is to invest too many dollars in the wrong marketing channels.

Most business owners have been turned off by TV because of the big ongoing expense and long lead time to produce and schedule a spot.  However, the biggest complaint I have always heard is the inability to truly measure the results of a specific TV spot.

Most small businesses that have included the Internet as part of a well executed  integrated marketing strategy  know about Google’s successful AdWords program.  What you may not realize is that for about the last 2 years Google has been incorporating the mechanics of the AdWords program into purchasing TV spots.

As a small business owner you can find programs on Cable TV and bid on specific spots on those shows.  By using keywords similar to those used in AdWords Campaigns, your company can target programs and times that work best for your marketing strategy.  Best of all, you can measure the results afterwards.

To find out more go to Google TV Ads here.

Successful marketing is all about testing concepts, measuring results, making adjustments and testing again.

Whether you want to build brand or develop a top-notch direct response program, I suggest your company test Google TV ads.

Leverage your knowledge and experience with Google AdWords to become more productive with your TV budget.

A Fool Proof Way To Generate Business Cash Flow Now!

July 11, 2010

by Doug Smith, President, The Woodhaven Group

Do you have customers who purchase from you daily, weekly or monthly?

Would you like to have those customers help you with your business cash flow?

No problem.

Here is what you can do.

Let’s say you are a chiropractor who charges $50 per visit and your average customer comes to you for 2 visits per month.  Offer your customer a discounted package of 12 visits, 30 visits or 52 visits if they pay upfront.

Impossible to do, you say.  It is happening everyday across America.  Currently, the average person earns maybe  1-3% at most on their cash if they invest in Treasurys or CDs.  The chiropractor might offer a discount of 10-15% for a package of visits.  It is a great deal for his customer (patient) and he gets use of the cash immediately.

Here is a sampling of businesses that could benefit from this pricing strategy:

  • Hair salons or barber shops
  • Massage therapists
  • Yard maintenance companies
  • Physical Therapists
  • Oil change companies
  • Car Washes
  • Commercial window washers
  • Residential cleaning services

An added advantage to using this approach is that it takes your customer out of the market.  If your customer has “prepurchased” from you, then chances are they will not be going to your competitor.  The only caveat to remember is that you have received your cash upfront.  It may be smart not to spend all this cash at once as this future cash flow will not be coming in as it has in the past.  A good cash flow forecast would be in order to assure there will be  no short falls.

Discounted packages are a core pricing and sales strategy for many small business owners.  You may want to test this program to see if it is right for your company.

Consult This Advisory Board To Improve Business Cash Flow

July 6, 2010

by Doug Smith, President, The Woodhaven Group

It can be lonely as the owner of a growing small to medium sized business.  Often a problem or opportunity may come up and as an owner you wished there was someone to bounce ideas off of that really understands your business.

Owners never have enough trusted advisors to turn to that really know what they are talking about and will shoot straight with them.

Oh yes, there are bankers, attorneys, and accountants and most of them mean well but have not run a business and had to meet cash flow deadlines.  The extent of their knowledge of your business and industry is what you have shown them. 

Here is who I have used over the years as an informal advisory board when I needed a second opinion or felt like I needed a fresh idea:  the CEO or National Sales Manager of my top supplier.

If your #1 supplier has done business with you for years then they probably know your company as well as you do.  They may know your industry even better than you.  You need to tap into that knowledge.

Make no mistake, top management at your #1 supplier has a vested interest in you doing well and your company growing it’s marketshare.  They want to help.  They want your business to be successful.

Unlike an attorney or banker, your supplier is in a unique position to observe and understand the trends taking place in your industry.  After all, the CEO and National Sales Manager are meeting with owners like you everyday across the country.  They know the difference between the superstar managers and the B-team.  They see changes happening in real-time. The existence of their own company depends upon the everyday business decisions being made by their clients. They cannot afford for those decisions to be wrong.

I have often used input from these individuals in my decision-making.  A few of the benefits I have gotten from my best suppliers have been:

  • A unique successful promotion I implemented that had worked for another company in a non-competing market in the country.  I did not have to resort to trial and error advertising.
  • Identified which benefits of the supplier’s product got the best results when featured in advertising spots.
  • Personal introduction to owners in other parts of the country similar to my company.  I then successfully developed a mutually beneficial relationship that has lasted over the years.
  • Suggestions for reputable suppliers in other product lines that other owners had used that did not compete with his company.
  • Cost savings ideas he had seen work in other companies that ended up increasing my business cash flow.
  • Marketing channels that were working or not working and why. 

Developing a close relationship with the CEO and top management of your supplier can also work in reverse.  You may find your opinion carrying more  weight when your supplier gets ready to redesign or upgrade the product you purchase.

The next time you have a problem that seems unsolvable, pickup the phone and run it by your #1 supplier.

It can be a win-win situation for both companies.

Slow Economic Recovery Makes Business Cash Flow A Priority

June 30, 2010

by Doug Smith, President, The Woodhaven Group

The economy is not bouncing back as quickly as some expected.  There is confusion and doubt about the path of the economic recovery.  Even the economists that projected a choppy recovery are seeing that the resumption of growth is slower than anticipated.

This means more than ever, it is important for every business of any size to maintain a strong cash flow position.

In my opinion, the facts supporting a continued slow recovery are obvious:

  • Consumer confidence remains mixed at best.  Two different reliable reporting groups  reported May consumer confidence moving in opposite directions.  For many reasons, I believe consumers do not feel good about things now and I don’t see that changing for a while.  The future of the economy is tied directly and indirectly to the feelings of the everyday consumer.  If they are not confident then the consumer will not spend and cash flow of businesses will be impacted.  This important indicator will have to be closely monitored going forward to determine what the real truth is.
  • Housing sales are not showing any upward momentum.  With the government tax credits going  away there are fewer homes being sold.  This decline reverberates throughout the economy.  There will have to be a further drop in prices to trigger an increase in demand.
  • Commercial real estate problems still exist.  Increased vacancies in retail and office space is a reflection of a soft economy.  If businesses do not expand or even reduce in size then they don’t need space.  The landlords holding this space still have mortgages to pay. This problem will still be a front burner issue in 2011.
  • There will be no more government stimulus prior to November 2010 elections. The prior stimulus methods temporarily helped boost the economy.  The political mindset now is to reduce debt.  Going forward,  the private sector has to carry the weight of the recovery by themselves. 
  • The Federal Reserve will not reduce interest rates further.  When it comes to lowering interest the Federal Reserve has done all that it can.  Don’t look for lower rates to further stimulate the economy.
  • The unemployment is still high and will be for the forseeable future.  Government census workers helped boost employment for awhile.  Additional workers will only be hired as business confidence suggests a reason to expect improved revenue over the longer term.  That confidence currently is not there.

So, what should a business be doing?

Here are 7 action steps your company should be doing right now:

  1. Have realistic revenue goals going into the second half of 2010.  Do not gear up for a sales increase that won’t be there.  Your original sales projections for the year may now be outdated.   All other expense areas take their direction from the sales plan so get it as accurate as you can.
  2. Know your business’s breakeven point.  Make sure you operate at or below it.  Failure to do this will consume precious cash flow.
  3. Maintain good relations with key suppliers.  Don’t create surprises for your partners and you will find most of them will be there to help if you need assistance like extending terms.  Do this by communicating how things are going.  It helps your suppliers plan for the future too.
  4. Do not lose existing customers while attempting to generate new business.  New customers cost more to add than keeping old customers. If you have a zero sum game with the number of customers in  your database this too will eat up cash flow. A tip to keep customers happy is to deliver some type of  added value (ie: free shipping, etc) that may not be expensive to do but is attractive to your customer.
  5. Now is not the time to start new projects.  Keep a cash reserve and add to it if possible.  New opportunities will still exist in the future.  Make sure you are there to capitalize on them.
  6. Keep marketing costs in line with revised sales projections.  Do not assume that by increasing the marketing budget that more sales will automatically follow.  Don’t stop marketing but invest dollars in marketing channels that are proven.
  7. Keep gross margin in line.  Do this by making sure you are priced to make a profit.  That does not prevent you from running a short-term promotion that might temporarily decrease gross margin percentage but increase gross margin dollars.

A positive:   Banks appear to be adding fewer reserves for bad loans than before.  This will increase earnings and should start freeing up money to lend to consumers and businesses. This will be one source of cash flow that well run businesses will need in order to grow going forward.

Make sure your business model and financials are in good shape to access this cash from your bank as it becomes available.

Cash flow is the lifeblood of any business, especially in uncertain times.  Make sure you are protecting it.

Will Telecommuting Increase Business Cash Flow ?

June 24, 2010

by Doug Smith, President, The Woodhaven Group

It seems like business owners and CEOs wake up everyday trying to find a new way to increase business cash flow, productivity and sales.

A tool being used more frequently these days to achieve those goals is telecommuting. 

Telecommuting is the process of an employee working somewhere other than at the office.  Usually this means the employee is working from home.  The increased utilization of the Internet has allowed this alternative workplace to become much more popular.  For many businesses it has turned out to be a win-win situation for both the employer and employee.  The telecommuting employee is typically referred to as a teleworker.

Is it something your company should be doing?

Most researchers and business consultants will advise you that it is the right thing for your company to do.

My answer to that question is that yes, teleworkers are going to become a larger percent of the workforce in the future and your company needs to include them as a part of your employee mix.  However, for the program to be successful, your management team must do their homework first or the concept could fail.  There are benefits and concerns that must be addressed.  Here are just a few of them:

Benefits:

  1. Improved Productivity:  There are university, corporate and government studies that show the teleworker operating out of their home is a more productive employee than the employee in the office.  Reasons often given are fewer interruptions, less stress, and a fresher employee ready to work due to not needing to deal with the issues of commuting  to the office. This may be true but, frankly, I am not sure how much more productive the employee working from home really is. There are distractions at home also.  Laureen Miles Brunelli had interesting comments on this subject in a 2009 blog post on About.com  You can read Laureen’s blog post here.
  2. Less Office  Space Needed:  This can be a real cash flow savings for the company.  Less space needs to be leased, no utility or phone cost, and office and workstations can be eliminated.  Those are all real measurable savings.
  3. Flex Time For the Employee:  A real benefit for the teleworker is the opportunity to utilize flextime in their day.  The day can be broken up allowing the teleworker to take time to address home and family issues and still get the job done.
  4. Can Reach High Quality Candidates:  I have seen individuals with advanced degrees who, due to family commitments, have to stay at home.  Yet they still want to realize their professional ambitions.  If they were required to come to an office this high quality candidate would be lost to the company.
  5. Can Utilize More Part Time Employees:  Depending upon the scope of work, the teleworker may not need to be a full-time employee.  For instance, two 20 hour part-time data entry workers might be the best solution for both the company and the stay at home employee.
  6. Opportunity To Employ Handicapped and Retired Workers:  There are some excellent handicapped workers and retirees who choose not to work in an office environment.  They become a real asset to the company working out of their home office.
  7. Improved Morale:  Studies have shown that teleworkers have  higher morale  than those in the office environment resulting in less turnover.  Not having to commute to and from work would be a morale booster by itself to many workers.
  8. Bad Weather Is a Nonissue:  No problem with snowstorms.  While the regular office may be closed for the day, the telecommuting employee carries on as if nothing happened.
  9. Geographic Location Is Not a Problem:  Working remotely allows the company to hire the best candidate regardless of where they reside.  I once hired a telecommuting employee from 600 miles away because she was the best candidate available.  Also, if the spouse is relocated to another city, your company’s teleworker can follow the spouse and continue on as if no move occurred.  

Concerns:

  1. Lack of Social Interaction:  This might be the biggest concern.  The teleworker operating from home does not participate in the “water cooler” conversations or have the opportunity to have a lively discussion at break time with others about the ball game on TV last night.  There must be a process in place to engage the work at home employee if they are the type that requires a lot of social interaction.  A behavioral analyses of the telecommuting candidate might be a good idea to use during the hiring process.
  2. Can the Worker Stay Focused:  Is the  teleworker self disciplined, organized and have the ability to manage their day?  If not, the productivity issue becomes a concern not a benefit.
  3. Is There Buyin From the Manager:  A work at home employee has to be managed differently than the one down the hall from the manager.  Goal setting with specific measurable results and deadlines is critical.  Managing to results is the way to make the teleworker accountable.
  4. Could There Be a Culture Problem:  Not all jobs are a good fit for the telecommuting program.  If there are employees in the office that perceive the teleworker as a slacker that does not pull their weight, then the productivity concern might shift to those employed in the office.
  5. Promotion May Not Be An Option:  If the employee wants to move quickly up in the organization, then working from home may not give them the opportunity to develop and show off their people management skills.  A manager career path training program might necessitate the employee only being in an office environment.
  6. Security Can Be a Problem:  If the teleworker has access to the company database and confidential documents, it is imperative that steps are in place to protect these valuable assets of the company.  A disgruntled employee working remotely can do serious damage.
  7. Are There Savings In Office Equipment:  If the company reimburses the teleworker for a computer, fax, printer and other office needs then how much savings were actually realized?  In some companies the teleworker uses their own home computer with no reimbursement.
  8. Overtime Can Be An Issue:  A happy productive at home employee can easily surpass 40 hours per week.  While managing to results is good, the company still must be in compliance with all labor laws.  This includes not only overtime but also making sure workmens compensation is paid. 

Incorporating telecommuting into your employee strategy can be a real source of additional business cash flow.

It is just important to do your due diligence to assure yourself that the program will be the success that you expect it to be.

The Personal Value System Of A Salesperson Can Quickly Kill Your Business Cash Flow

June 20, 2010

by Doug Smith, President, The Woodhaven Group

One mistake many sales people make when selling to a consumer is to project their own personal value system into the selling process.

That is a major mistake that can be the difference between closing the sale or being disappointed with the outcome.  The result is no sale and no addition to your business cash flow.  The prospect ends up buying  from the competition and your company needlessly lost revenue.

I have seen many salespersons not want to build the sale because they personally believed the total price would be too much.  In other cases where financing the transaction is an important option, I have seen salespersons not quote monthly payments because they never personally finance any purchases and do not believe anyone else should either.  Others don’t offer the product in a certain color because they personally do not like that color.  One retail salesperson I knew did not present one line of clothing to customers because she personally did not like the designer.

This happens in sales forces of all kinds and can be a cancer that will kill sales and valuable cash flow.

Sales managers need to train their sales forces to ask questions and gather plenty of information from the prospect about what the prospect wants and needs.  Then tailor the product or service offering based upon that information only.

The next time you see the sales volume of a sales person drop consider that one option may be that they are projecting their own personal value system into their selling process. Correct it and  both your sales and cash flow will increase.

Increase Sales And Business Cash Flow by Simply Asking For The Sale

June 19, 2010

by Doug Smith, President, The Woodhaven Group

As CEOs, owners, and senior managers we often spend countless hours analyzing why a sale did not occur. 

Was the price too high?  Is it poor advertising?  Was our product the wrong design? Are we marketing to the wrong customer?

Many times I have found the reason is very simple. 

No one asked for the sale.  You may be thinking that no way does that happen in my company.  You have a selling methodology in place and your sales manager  reviews it weekly in sales meetings.  Well, it happens.  And it can occur in retail stores,  with in home sales persons and in business to business selling situations.

In a business to consumer company I was involved with, we would follow-up the sales visit with a “quality control” phone call to the prospect that did not buy.  Our conversation asked if our sales person was on time, explained the benefits of our product and answered all their questions.  Invariably the feedback was extremely positive on our sales person and many times when we questioned why the prospect did not buy, the feedback would be that they were not asked to buy.  The call would conclude by asking if they were ready to purchase, the prospect often said yes and we would schedule a manager to go write the sale.

Why do sales people fail to ask for the sale?  I have found many sales people do not ask because they are afraid the answer will be “no.”  It is easier to report back that the prospect wanted to “think it over.”

When asking for the sale everyone wants to hear a “yes.”  However, a “no” answer is not bad because now the sales person can identify the objection and overcome it.  If no one asks for the sale then there is no chance to overcome an objection and close the deal.

How can an owner or CEO prevent this problem  from happening?  The best way to identify which sales persons have this problem is for the sales manager to observe the interaction with the prospect at the point of sale.  By doing this the manager can then coach the sales person on what to say the next time he or she is on a sales call.

Failure to ask for the sale is a problem that is never discussed enough with sales forces.

In my opinion, if you don’t ask for the sale then all that took place was a nice conversation. 

That won’t help revenue, cash flow, or profit.