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We hope you find this arcthve useful. A subscription to The Small Business Advisor Newsletter is free. Subscribe now - it's easy! The Small Business Advisor Newsletter for September, 1997 CORRECTION. In last month's newsletter (August), I gave an incorrect URL for downloading a file for checking your computer for Year 2000 compliance. The CORRECT address is: http://www.nstl.com/html/ymark_2000.html Please forgive any inconvenience this may have caused. - The Advisor.++++++++++++++++++++++++ CONTENTS ++++++++++++++++++++++++ NOTES/TIPS/etc
Our recommendation for an
account is ECHO (Electronic Clearing House). Contact them at 1 (800) 233
0406, x3041 for sales. Tell 'em we sent you! Currently their discount
rate is slightly over 2% for non-swiped transactions. Although they recently
instituted two fees (a monthly statement fee and a monthly fee if sales
are less than $1,000), most other providers have numerous additional fees.
1. Contact your suppliers to ensure they will be able to ship your orders even in the event their computers fail due to Y2K problems. 2. Call your payroll processing service to ensure they are Y2K compliant. 3. Ask your security system supplier if your installation is Y2K compliant. 4. Determine if your cash register (and other point of sale equipment) will operate properly after 12/31/99. 5. Check to ensure that your
business liability insurance policy will cover any losses due to Y2K-related
problems. Don't take this lightly, there are going to be a lot of law
suits over Y2K-related problems. 7. Check with your merchant card account provider to ensure Y2K compliance. -----------------
++++++++++++++++++++++++ CUT COSTS TO INCREASE PROFIT!
What do you think is easier to do … reduce your expenses by 5% or double your sales? I think most would agree that reducing expenses might be easier. Why, then, do most business owners spend little time on attempting to reduce expenses? Consider this: Your current profit margin is 5% - if you reduce costs by 5% your profits double! Of course, you can do the same thing by merely DOUBLING your sales! It is amazingly simple to reduce operating costs by a few percent by being diligent. This article will provide you with a listing of some of the specific ways in which operating costs may be reduced. You may find that you can reduce spending considerably by observing only a few of the suggestions. And remember, the small stuff adds up! Think about saving each time you spend and you will discover your own ways to save. GENERAL GUIDELINES 1. Comparison-shop for everything. 2. Negotiate whenever possible. Ask! You will be surprised at how frequently a vendor will negotiate a price. Attempt to negotiate EVERY purchase. 3. Utilize mail order. It's quick and frequently the best prices are available via catalog sales. 4. Use the Internet to research a purchase. Nearly every vendor has a website containing product, pricing, and ordering information. This can be a tremendous time saver. Also, your research may lead you to a less expensive alternate. TRAVEL 1. Save and monitor your frequent flyer miles. Use them whenever possible. Also require your employees to return miles earned on company business back to the company. 2. Consider a travel club. Many provide discounts that you cannot obtain as an individual. 3. Try to combine travel, hotel, and automobile rental into a single package. This can frequently save you money. LEGAL 1. Before you decide to pursue a legal course of action, consider the chances of being sued in return! This might result in greater costs than you would receive from your initial action. 2. Consider arbitration or mediation as an alternate course of action to resolve a legal problem. This can produce quicker results at less cost. 3. Get your attorney involved early in any possible crisis. UTILITIES 1. Monitor energy usage. Utilize auto-setback thermostats and auto-off light switches. 2. Have an energy audit performed by your local utility company. Their suggestions can save you considerable expense over time. 3. Ensure all employees are "energy aware." Start a contest and give a prize to the employee who provides the best suggestion for saving energy. 4. Monitor your telephone bills. Long-distance carriers can change your rates with NO notice! Periodically shop around for the best rates. SHIPPING, MAILING 1. Educate yourself about the various postal rates. Visit the USPS website at http://www.usps.gov for complete descriptions of mailing options and rates. 2. If you use a postage meter, ensure authorized personnel lock it when not in use. Note that the Post Office will refund any machine imprints that were not used. 3. Plan your shipping or mailings to avoid overnight or second day delivery that is MUCH more expensive than alternate methods. If you must ship overnight check the various carriers as well as the post office for the best rates. 4. When providing customers with literature (sales, technical, other printed information), use e-mail or FAX if possible. INSURANCE 1. Ensure your company (or personal) vehicles are classified properly for maximum savings. 2. Review your various coverage's to ensure you are not "double insuring." 3. Do an annual insurance
review to make certain you have coverage you need but are not carrying
something unnecessary. 4. Have an effective safety program! Just ONE workplace accident can send your insurance rates skyrocketing. 5. Make certain that all employees are classified properly for workers' compensation insurance. Rates vary widely. 6. Shop for all your insurance needs and periodically ask for competitive bids. GENERAL 1. Monitor office supplies. My guess is that at any moment you have twice what you need! 2. Purchase office supplies from discount suppliers. Shop by mail. There are numerous discount mail order suppliers. Get on their mailing lists (Viking 1 800 421 1222; Consolidated 1 800 362 1000; Quill 1 800 789 8965; Penny-Wise 1 800 622 4411; National Bag 1 800 247 6000; BrownCor 1 800 327 2278; etc) so that you are aware of their sale items. Time your purchases to take advantage of these discounts. 3. In general, extended equipment warranties are not worth the cost. 4. Save by purchasing checks from a printing service and not your bank. For example, Designer Checks (1 800 239 9222) or Current Checks (1 800 533 3973) charge only $4.95/100 checks whereas most banks charge $10-$20. 5. Call your credit card company and request they delete your yearly fee. 99% of the time they will do it to keep you as a customer. Quick way to save $15-25! (Robert Sullivan is the author of "The Small Business Start-Up Guide" and "United States Government - New Customer!" both of which may be ordered toll-free at 1 800 375 8439) ++++++++++++++++++++++++ Don't Forget #1 … !
Every small business owner
and entrepreneur assumes their venture will succeed. This is a healthy,
and necessary, attitude to mimic for those of you contemplating starting
a new business. But the fact is most successful entrepreneurs have failed
twice previously. The successful entrepreneur views these failures as
learning experiences and an opportunity to succeed next time. But will
there be a next time for you? Consider this true story;
Like so many entrepreneurs, Richard's first business started with a single customer. He had a regular job but had been contacted by a company that wanted to purchase a few hours of his time to assist in solving a problem for which he had expertise. Richard took on the work. One "little" job lead to another and soon Richard was spending a significant portion of his spare time working as a consultant. The extra money was great. Eventually it became possible to quit his job and start his own company. Initially all his work came from the company that had originally hired him. Richard's business grew to accommodate increasing demands from his single customer. This growth was made possible by returning all profit back into his new company - Richard only kept the bare minimum needed to meet his current expenses. Unfortunately, after a couple of very successful years, Richard lost this major and first customer. The loss was devastating and eventually the company was forced into bankruptcy. Richard lost his company and had very little to show for his previous hard work! I guess we could say Richard was a victim of his own success. Unfortunately, because of the very traits that can make an entrepreneur successful, he or she will sometimes forget to plan for possible failure. One of the biggest and potentially most damaging errors is failing to pay yourself. Many small business owners figure that later, when the business is making a profit, they can take a salary. This can be a grave mistake in the event of a business failure - you may just end up with nothing for your efforts and, worse, be left in a position where it is not possible to try again! It is difficult to find a book in the small business genre that even mentions paying yourself, let along give some advice about it. Could it be that all those authors assume it's not worth mentioning since a business owner does not need to be told to pay himself? As our little story above shows, it does happen-and frequently. Don't you do it! Do NOT make the mistake of putting every dollar of profit back into your business. You may prosper for a number of years and then be suddenly plunged into bankruptcy through no fault of your own. If this happens, and you have not planned for the eventuality, you may find yourself in a very difficult financial position. Remember that you deserve to be appropriately paid for your efforts. Pay yourself first. Most small businesses are not initially profitable and this must be taken into account in your planning activities. If your business will be financed by others, ensure that you have added an appropriate salary for yourself in the business plan. If you are financing the business yourself, the situation is a little different. You probably have assumed you will take no salary until the business is profitable. But when profit is available, it's important to immediately start paying yourself on a regular basis - just as if you were an employee. How much should you pay yourself? There is no easy answer or magic formula and it is difficult to give specific advice but some general guidelines are worth noting. ? If your business is equity
financed, your salary should be formally determined based on a formula
agreed to by the equity lenders. As an example, in a recent startup for
which I assisted, the equity investment was $200,000. The two owners agreed
to a starting salary of $3000/month until the business became profitable
at which time their salaries increased based on a percentage of gross
profits. The initial salary was based on the current monthly needs of
the two partners and was agreed to by the equity investors.
We all plan for success but in the world of small business, failure is all too possible, and for reasons beyond your control. So plan for both success and failure-don't return every dollar to the business-keep some for #1, yourself! ++++++++++++++++++++++++ Don't Make These Business
Mistakes It's time to eat the proverbial humble pie. Under the heading of, "He who forgets his past is doomed to repeat it", I'm going to share the mistakes I've made over a twenty year corporate career. Although these "mistakes" were made in the corporate world, they are all directly applicable to small businesses. I've always felt that I learned more from my failures then from my successes. I'm therefore sharing the following with you in the spirit of supporting your business ventures, and in the hope that you will avoid making the same mistakes. Underestimating the competition. Clearly we were better than our competition. We had so much more to offer. And we had been offering it for so long. And clearly the customer recognized this. Wrong! I was so busy resting on our laurels, I didn't put forth the aggressive effort I needed to put forth to win the business. Lesson learned: No matter how many times you've done business with a particular customer, do not assume that the contract has already been won, and not put forth your best effort to woo and pursue the customer. Not understanding whom I had to please. I forgot to ask or figure out who the "real boss" was. I worked very hard to please the wrong person. And yes, he was very pleased. But, he was not the one we had to please. And we didn't find out until after the fact, that the "real boss" was not happy with our solution. Lesson learned: Establish up-front who is going to evaluate your work. Don't assume you know who this person is. And when you do find out, check-in frequently for feedback on your work. Giving up control. There was the time I listened to an "expert" regarding what I should charge for a project. My gut instincts told me that his calculation were wrong. But then again, he was the expert, and I turned the costing decision over to him. When we lost the business, our "expert" shrugged and admitted that he pretty much pulled the numbers out of the air. Lesson learned: Be in charge. Stay in control. After all, who knows more about your business than you do? Utilize the experts, but don't be intimated by them if their advice doesn't "feel right". Ignoring problems. The old adage that problems get worse with age really is true. I was desperate to bring someone on-board to support a project. His credentials looked great on paper. He didn't interview well, but I felt "stuck" due to time constraints. And so I added him to the team. Well, his work was weak and continued to grow worse with the passage of time. Aside from a few mild warnings, I basically looked the other way, and hoped that his work would improve. Finally, my customer told me that my "problem child" had to go, or else she would go. I finally worked up the guts to dismiss him. But, at the price of losing creditability with our customer. Lesson learned: handle problems in a timely manner. They will not go away, nor will they get better on their own. Not giving the customer what he wants. Not only did I not listen to the customer, I didn't bother validating his requirements. After all, I had done this very same work dozens of times over the past dozen years. I thought I knew even better than the customer what he really needed. Well, the customer found someone who would give him specifically what he wanted, not what I had decided he needed. Lesson learned; listen to your customer's requirements carefully. If you disagree with his solution, advise him so. If he still disagrees with your proposal, decide whether you can keep your integrity and his business by doing it his way. But, do not ignore the customer's wants and needs. Counting chickens before they're hatched. And then there was the time that I announced we had won a piece of business, before the official announcement. The word on the street was that we had won. All signs pointed to our winning. And it was the perfect time to share the good news with my boss. Does it get any more humiliating than to have to tell your business colleagues that you didn't really win? And while my boss was actually very nice about it, I never want to go through that experience again. Lesson learned; wait for "the fat lady to sing' before you make any announcements whether it's about the launching of a new product, or winning a new piece of business. There, I've gotten my mistakes off my chest. Luckily I made each of this business mistakes just once, and the things I did right helped to ensure a very successful career. I hope that you can learn from my mistakes. I know that I did. And finally, in the words of Winston Churchill, "Eating words have never given me indigestion." (Phyllis Sheerin Ross is a writer and consultant. She has over 20 years experience in project management, training and business development for Federal government and commercial organizations. Contact Phyllis at bronx1@erols.com) ++++++++++++++++++++++++ How To Generate All The Leads
You Need -Without Spending A Fortune There is a common misconception among business owners involved in marketing. They seem to be under the impression that in order to get fresh, responsive leads, you have to spend a fortune either cold-calling or cold-prospecting via direct mail to potential prospects. While these may be proven methods of getting new leads, they are both costly and ineffective, at best. How would you like to have, at your disposal, a cost-effective way of generating a constant stream of qualified prospects interested in your products and services, for only a small investment in advertising? Sounds too good to be true, right? Well, not really. Since the beginning of my career, I have been a total non-believer in the cold-calling, cold-prospecting methods of marketing. I've always found them to be wasteful and intrusive to the prospect. Certainly not a good way to make your first impression on a potential client! So how do you generate a steady stream of fresh leads? I use a combination of vehicles. My favorite, by far, is classified advertising. I use this media because it is very cheap and it reaches the markets I'm most interested in reaching. I use simple, 10 to 20 word ads that don't actually sell anything, but simply peak interest and get the prospect to respond, typically, for free information. An investment of about $100 can bring back about 150 to 200 fresh, qualified leads. Compare that to the cost of cold-calling or cold prospecting via direct mail and you can already see what I mean by having a better way to produce those all-important leads for your business. The next vehicle I like use is simple display advertising, again in selected publications that I know my target audience is reading. These ads have the advantage of getting even more fresh leads to respond, but at a slightly higher initial cost. The increased number of leads generated by a larger, more visible ad will almost always justify the additional cost. Although, I'm not totally convinced that the Internet is a powerful marketing vehicle just yet, I have used it successfully in generating leads for only pennies per lead. This is a medium I am still testing, but I'd recommend it, if you are familiar with it and can set up a web site without spending thousands of dollars. I learned as much as I could and did most of the work myself, which saved me a lot of money. So, let's assume that you have placed some classified ads and you begin to get qualified leads. What next? Simple, prepare a sales letter and send it to them IMMEDIATELY! A qualified lead is only qualified as long as they are interested in your product, so it's very important to get your marketing materials into their hands as quickly as possible. If they supply you with a telephone number, have your sales people call them the day they get the lead, not days, weeks or even months later. I've found that waiting just one week costs you about half of your sales potential of your new leads. Often, I have found that my prospect responded to my ads because they were ready to buy and when I waited, then called, they had already bought… from my competitor! So, head this advice; answer your leads promptly. These are people, who are ready to buy, and that is why they will answer your classified or display ads! Unlike cold prospecting, you are "selecting" only those people who have a current need or strong interest in what it is you have to sell. These are the strongest, most cost-effective ways that I have found to generate all the leads you'll ever need to grow your business without having to spend a fortune to do it! I encourage you to take advantage of both classified advertising and small display advertising and to cut back or even completely eliminate wasteful cold calling and cold prospecting. Just remember these quick things. Use classified ads first. Test your headlines and your offer where it is cheap to test. When you have found a winning formula, don't change it! Use the same formula in your display advertising. Try different publications at different times of the year. If you want a steady stream of leads, keep your ads running in multiple publications and keep up with placing your ads before they expire. It is entirely possible to generate more sales using this method than by any other marketing method I have ever found! (Mr. Imbriale is a nationally recognized business coach specializing in business development. Reach him at 516 754 9144 or via e-mail at roberti@ix.netcom.com) ++++++++++++++++++++++++ Take One Boxes
You've seen them in stores.
Take-one boxes. It's a little open box with a stack of cards or fliers
inside. And it's an excellent (although often over-looked) way to market
a business of any size. (Ask for a free list of Kevin's special reports on marketing at (801)253-4536 or on-line at DrNunley@aol.com. See all his articles on his Marketing Info Supersite: http://members.tripod.com/~DrNunley) ++++++++++++++++++++++++ Writing Effective e-mail
E-mail is a world-wide phenomenon and is rapidly becoming THE way to communicate everything from personal greetings to marketing product and services and sending news releases. It is a very important tool for the entrepreneur. But, like any communication medium, it must be used carefully to be effective. Poorly written e-mail will be viewed as spam and discarded. E-mail that is poorly constructed will cause more damage than a poor print advertisement because e-mail is viewed as being more intrusive. The message should be clear - write good, effective e-mail. Here are some important "golden rules" to keep in mind … 1. COMPOSE THE MESSAGE CAREFULLY. Think through what you want to say and write it as succinctly as possible. Make sure the "message" appears in the first paragraph. If your e-mail software does not spell check, compose the message in a word processor and spell check there. 2. THE SUBJECT SHOULD SAY SOMETHING. This is your headline. Make it count. I immediately discard messages with no subject or with messages like "make a million." The subject should make the reader want to take a look at your message. Would you read this message? "Internet e-mail accounts for $5/month" 3. KEEP IT SHORT. Present your message in as few words as possible. Keep paragraphs short for easy reading. Don't use an excessive amount of capitalized words or other attention getting tricks like a line of asterisks. 4. TARGET WITH CARE. Don't broadcast your message to the world (unfortunately this is very easy to do with e-mail). Send only to a targeted audience - doing more is wasting bandwidth on the internet and will be viewed in a negative light by recipients that have no interest in your message. If possible, address each e-mail individually rather than using a mailing list. 5. USE ATTACHMENTS. If you are sending considerable supporting information, do it with an attachment. In general, use txt format which can be read by just about everyone. DON"T send an attachment larger than about 50Kb unless your audience is expecting it since download times can become excessive. 6. ASK FOR ACTION. Tell the reader what to do, if they are interested in your message. 7. CHECK. Reread your message one last time. Check to ensure the proper attachments are in fact attached. Check the TO: address carefully. Return to top of page - Back to Home Page - Back to Archive Index |