Where Has the Money Gone?

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(photo courtesy of www.all-free-download.com)
It’s that time of year again – you have met with your accountant, you have officially closed your books on last year, you have paid your taxes, you are well into the second quarter and now you are asking yourself….where has all the money gone?  This is a commonly asked question in business. As a business owner, you may have even had this experience every year.  Your accountant gave you a hearty congratulations for having a profitable year.  But you are puzzled.  If it was such a profitable year then why isn’t there more money in the bank? There are several reasons why you can have a profitable business but still have no cash.  It would take more than a few minutes to explain it however generally cash will get tied up in your debtors and inventory and can easily be eroded through poor cash management in expenditures – including your drawings from the business. A great way to ensure that you have profit “in the bank” at the end of the month (or year) is to actually open a separate business bank account for PROFIT.  Calculate how much you need to break even in the business and how much profit you would like to make every week or month.  Your task now is to start depositing that amount of profit into the account each week or month. If this seems unreasonable or difficult, you are not alone in your thinking.  Most business owners are not in the habit of banking profit from their business.  They will work all hours of the day and go to extraordinary lengths to attend to their customer’s needs but are not looking after themselves or their financial needs.  By using a profit account it sets up the discipline of banking profit.  After the profit is banked for the week then it is time to pay the bills.  And most people will work much harder to pay their bills than they will to pay themselves profit. Initially, you should only bank a proportion of your profit and gradually build it up.  The main thing is to pay yourself first. And the best part will be, at your next meeting with your accountant you can confidently know where your profit has gone. PJ's New Pic (smaller)  ActionCoach-logo
YOUR CHALLENGE THIS WEEK:  Calculate the break-even for your business, plan the profit you want to make, and set up an account to bank your profit.
If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079.
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The Price is Right

The fastest way to improve your margins is to increase your prices. That’s right – increase price. There are a lot of reasons and excuses I hear from business owners why this may work in OTHER business but this will not work in THEIR business. All of the businesses that I work with evaluate their prices.  The reason this works is because we build a Unique Selling Proposition that communicates the unique value thus compelling the prospect to shift their focus away from price and towards value in the buying decision. YOUR CHALLENGE:  Look at your pricing model and evaluate how you are selling. If you are competing on price – start changing the conversation with your prospects.   If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for our complimentary workshop, 6 Steps to a Great Business, and let’s work together to help your business grow.

Managing Margins

If you are like many business owners you have defined your products and services based on the opportunities presented over the years. I recently worked with two clients evaluating their respective business margins.  We looked at material, labor and total cost to serve across each of their offerings. If you haven’t evaluated your true margins by product or service in your business you are likely leaving money on the table or worse yet, you are devaluing your brand in the marketplace. YOUR CHALLENGE:  Take the time in your business to review the margins.  Are you priced to make money.  Be sure to measure the true margin on each of your products and the effort required to service your clients. If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for our complimentary workshop, 6 Steps to a Great Business, and let’s work together to help your business grow.

Measuring Profitability

I started working with a client that has been in business for several years.  As with all new clients we reviewed their margins.  What I found wasn’t unusual.  The pricing and quoting process were appropriate.  However, once the sale was complete the margins were often very tight. In this case we educated the sales team to calculate profitability and shifted their incentives to reward profitability. The result was improved gross margin of 6% over a six month period. Sales incentives are a powerful tool for improved profitability. YOUR CHALLENGE:  Take a look at your pricing tools and quoting process.  If it is limited to one person, prone to errors or time consuming, look for options to simplify and build quality into the process.   If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for our complimentary workshop, 6 Steps to a Great Business, and let’s work together to help your business grow.  

Cash Cash Cash

If your company has a long sales cycle, long lead times or pays employees before client payment – you’re likely focused on cashflow. Having worked with many clients under these conditions, here are some tips to increase your cashflow and relieve cashflow stress.
  • Create pricing structures that incent early payments.
  • Require deposits and payments based on milestones.
  • Increase the frequency of invoicing and shift the timing of payroll.
  • Or add products and services that create immediate cashflow.
YOUR CHALLENGE:  Start by understanding your cash position.  Layout the timing of your expenses, invoicing,m receivables, and payroll.  Then look for the opportunities. If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for our complimentary workshop, 6 Steps to a Great Business, and let’s work together to help your business grow.  

Time, Energy and Money

I have never met a business owner that didn’t want to save themselves: Time, Energy and Money. If you are looking for the fastest way to become more efficient in your business, then you need to implement systems and processes.  As I tell my clients systematize the routine, humanize the exceptions. By implementing checklists, improved forms, defining roles and responsibilities, and mistake proofing the process – you will increase your capacity without adding headcount. YOUR CHALLENGE:  Start looking at the most common activities that you and your team are involved in – then build a checklist of those activities required to exceed customer expectations along with timelines and responsibility.   If you would like further information or you have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for our complimentary workshop, 6 Steps to a Great Business, and let’s work together to help your business grow.

Counting Medals and Keeping Score

What is it about Americans, The Olympics and the Medal Count? The world is currently focusing its attention on Russia where we will watch as the winter Olympics unfold. We will watch athletes compete at the highest level for Gold, Silver and Bronze medals. Every time a match is won, a race is finished, an event is completed – the announcer will provide a tally of medals by country. The tally, or keeping score, is not just for the Olympics. In our businesses, we need to look for ways to track and measure and look to the numbers to provide us valuable insight into our progress. Forward thinking business owners are skilled at measuring the key indicators in their business. They understand the power of keeping score. We Americans will watch closely as we battle with Norway, Canada and Germany for the top spot in the medal count. Our pride is at stake. In each of our businesses, we should also be measuring daily and focus on leading indicators – those numbers that allow us to look forward and ultimately drive customers, revenues and profits. There are five key numbers that every business needs to measure: number of leads, conversion rate, number of transactions, transaction value and margin. Whether it is a medal count or key performance indicators in our business, they tell a story and allow us to track progress and ultimately measure our progress forward. YOUR CHALLENGE THIS WEEK: Look at the numbers you are tracking in your business and how you are using them to propel your business forward.   If you would like further information or have any questions about this blog, you can email me at pjweiland@actioncoach.com or call 847-739-3079. Please visit www.workingonthebusiness.com to register for an upcoming workshop and let’s work together to help your business grow.

Hunting or Farming

As salespeople, as business owners we decide how we will source our prospective customers.  We look to others in our industry for clues on what works, we try a variety of approaches, sometimes we just do as much activity as possible and cross our fingers.  Sometimes that works and sometimes it doesn’t, in good times our strategy and marketing plan matters less, in tough times it matters even more. Regardless of where you are in your business consider what you are doing from two perspectives…. hunting and farming. As caveman can attest to, hunting is hard work – it is a daily activity where you are personally engaged in finding your next potential customer, and walking with them through the sales process.  You are actively hunting each and every day making one on one contact.  Things like cold calling, bold calling, most networking and direct mail are examples of hunting.  The upside to hunting is that there is very little mystery between the person you meet and the sale. The flip side to hunting is farming.  Farming is more about leverage, about planting the seeds in the most productive of places and then nurturing them along the way.  Farming often has a longer lead-time and can be more difficult but not impossible to link the activity to the specific sale. Things like speaking engagements, advertising, strategic alliances, or newsletters are a few examples. There is no magic formula. It’s about employing multiple marketing strategies that work for your business, some long term, some short term, some highly leveraged and others less so. Your challenge:  Look at the lead generation activities in your business, are your lead generation activities hunting or farming, is the mix working for you or is it time to adjust the mix.

Time Flies

How many times do we hear from those around us that “they don’t have enough time”? There are 52 weeks in a year, 7 days in a week, 24 hours in day, 60 minutes in an hour. Everyone gets the same amount of time. It’s less about managing time – and more about managing ourselves better. There is a misconception that activity equals productivity.  There are many very busy unproductive business owners.  It is not uncommon to hear from business owners that they are too busy to plan, to put systems in place, to organize, or to train – as they are too busy running an inefficient business. Here are some simple ways to take a look at how you manage yourself and make sure that you are doing the right activity in the right way and check that what you are doing is leading you to your goals 1. Create Worthwhile Goals The first step to managing yourself better is to have clearly written goals that are true priorities in your life.  If they are not priorities you will find yourself attracted the newest “shiny thing” that appears in your life. 2. Conduct a Time Study There’s a saying that says, “If you can’t measure it, you can’t improve it”. Most of us have no clue on how we really spend our time.  For one week record everything you do in 15 minute segments.  At the end of the week categorize each task to see where you are spending most of your time.  Look carefully at where you are spending your time and the value of your time.  First determine, what activities you can eliminate, what activities you can delegate, then determine what activities you can begin that will move you closer to your goals. 3. Schedule the Big Rocks In order to be really productive we have to focus on the “big rocks” in our lives and do them first and all the little stuff will fall into place.  By determining our worthwhile goals we are picking our big rocks.  Be sure to schedule these into your calendar first – creating blocks of time to do the things that will move you forward.  By scheduling the big rocks your calendar is less likely to fill up with the next “shiny thing” that comes your way. When you learn how to invest your time and not spend it, you will be more productive. Remember, time is your most valuable asset.  Once you’ve spent it, it’s gone forever. YOUR CHALLENGE:  Pick one thing to do, set goals, conduct a time study or schedule the big rocks.  This will be one step forward in managing yourself better and making the most of your time.

Know Your Numbers

In business, and in your personal life for that matter, you must be familiar with your numbers, you must “know” and be comfortable with your bottom-line. Don’t let your discomfort with accounting or your inabilities to “analyze” your business keep you from growing and prospering. Even though the mindset that many of us grew up with was “numbers are no fun”, “numbers are hard to understand”, “boring”, “not creative” … whatever the misconception you were given about numbers when you were young. But quite the opposite is true. Numbers tell a story of not only your past, but how you can move forward in the future. Numbers help you forecast (your own personal crystal ball), numbers are creative, and when you get right down to it, numbers make up the universe – think music, chemistry, cooking, dance, architecture, and on and on and on. And another simple truth about numbers – if you don’t watch them, test and measure, and track what they’re telling you, then numbers won’t do squat to help you succeed. Embrace numbers, they are your ally. With just a few basic KPI’s (Key Productivity Indicator’s) or metrics, you can keep your finger on the pulse of your business and build accountability into your Team. As an Owner, don’t leave the maintenance, analyzing, evaluating and monitoring of numbers solely up to someone ELSE in your organization. As the Owner, it is your responsibility to KNOW and be a good steward of your business too! YOUR CHALLENGE:  Look at the numbers in your business.  Determine what are the drivers and what you need to know to make your business grow.