Empower Your Business

Accounting is Just the Beginning

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Where is your Business Now?

In order to get your business to where you want it to be you must first determine where it is now, as otherwise, you won’t know how much work you have to do to improve and nor can you set goals or action strategies, because firstly, the goals have to be realistically  achievable, (in other words, there is no point in setting a goal that is a bridge too far), and secondly the action strategies you adopt should address the specific problems in your business that need resolving.

There is a huge range of techniques available, ranging from very simple, yet vitally important, things like break-even analysis to much more complex techniques. Here are 12 of my favourite useful, low-cost and practical analysis tools:

  1. Benchmarking. Comparing your performance with your peers is simple, cheap and very effective. Any good accountant or business mentor should have access to benchmarking data but if they don’t, I can help you, so just ask.

  2. Break-Even Analysis. Again, quick and simplebut I’m always surprised by how few businesses know their break-even point taking into account drawings, tax & loan repayments etc. You can extend this, once calculated, to work out what turnover you need to reach to achieve your desired level of profitability.

  3. Monthly or bi-monthly interim financials. If you invest a measly$500 in accounting software and some time and effort, you can produce the information any good bookkeeper or accountant needs to report on your ongoing profitability. OK, the figures will not be to the standard of the your annual financials but it’s quick and easy to journal in depreciation and adjust for loan or HP repayments and if you get your bank, AR and AP right you’re just about there!

  4. Gross Profit Margin Analysis. Before you put any strategies in place to improve your business it is essential to be aware of individual gross margins or margins across different product or service groupings, customer types or suppliers, as otherwise how will you will know whether any changes you intend to make will be effective? In addition, just by completing this exercise you will be far ahead of the competition as very few businesses know how they are performing in this area. Even if you made no dramatic changes, you would probably find that your business would improve just by you being aware of this information.

  5. SWOT Analysis. An oldie but goodie, looking at your strengths, weaknesses, opportunities and threats gets you thinking about a whole range of issues so you can plan accordingly.

  6. Key Performance Indicators. Hereyou can drill down into your business to see how you’re performing in those areas of the business which are critical to your success. For example, if you’re a retailer you should be looking at the number of active customers, transaction frequency i.e. how often a customer buys from you, sales per selling hour, store conversion ratio i.e. the percentage of customers who visit who buy, or profit per customer visit. What I do for my clients who use me as a mentor is to design a simple one-page monthly report showing the performance for the month and year to date compared to the previous year and target figures.

  1. Competitor Analysis. Why re-invent the wheel, make the same mistakes others have made before or not take advantage of the ideas and strategies successful entrepreneurs have used to get ahead? There is a huge amount of information available these days plus its reasonably easy to find out what your competitors are doing well and where you can do better. Contact me for my useful Competitor Analysis worksheet.

  2. Marketing Analysis. How effective is your marketing? Do you do any marketing or just splash out on the Yellow Pages once a year? I have a 50 question marketing effectiveness analysis I‘d love to help you complete to see where you stand and if you’re under-performing your capability to deliver more income, certainty and profits?

  3. Customer Care Analysis. How happy are your customers? How many of your customers are you losing? Ask me for my 30-point customer care commitment test – you might be surprised by the answers!

  4. Prospect Conversion Rate. You’ve invested all that money and effort to get your business to where it is today and get the customer in the door so why not do the best you can to convert them to a customer? Just measure the percentage of prospects that become customers across the different sources of leads and overall. For example, for referrals your conversion rate should be 90% or more!

  5. Leads Analysis. Work out where your new prospect leads come frome.g. how many come from your website, walk-ins, advertising or referrals? Having done that, then work out the average cost of a lead from each source category. This enables you to concentrate on the most fertile leads sources as well work out the best use of your marketing $ in comparison to the lifetime value of a typical customer.

  6. Customer Profitability Analysis. The 80/20 principle holds true every time. If you find which customers are making you the most profit you can focus on the them plus encourage them to refer their friends – guess what type of businesses their friends will have? The other 80% can, on the whole, be left to themselves.

If you need help to plan for your business to succeed contact Nick on 0800 ASK NICK or email nick@abac.co.nz.

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6 ways to Collect Customers Contact Details

Possessing and leveraging off a database of customer names and addresses, whatever your line of business, is of key importance in running a successful business and as well as selling it when the time is right – without loyal, identified customers what will your business be worth?

Why then are so many business owners reluctant or unwilling to collect these? Are they frightened the customers will say no, too lazy or just don’t appreciate the value of an up-to-date database? If you ask customers the right way they won’t mind, and even if the odd one does say no, so what?

Here are six easy ways to collect customer names and addresses:

1- “Self-billing”. What many businesses do is toget the customers to complete their own name, address, telephone number and e-mail address on their invoice. This is OK but they don’t necessarily check that you’ve filled in all details. For example, I went to Tony’s Tyre Service last week and when presented with the duplicate invoice book, I filled in my name, address, and telephone number but not my e-mail address and they didn’t notice or care!

-> Effectiveness rating – 6 out of 10.

2- Make it Part of the Paying Procedure. Here, rather than asking for the customers details separately just make it part of the sales process so it just naturally “fits in” so that the customer doesn’t even realise what’s happening. This is what happens in Harvey Norman and Dzine Furniture in Hastings. Harvey Norman though doesn’t actually use the information (apart from making you feel important by finding your details on their till) but Dzine do, sending you a great letter welcoming you as a customer, giving you some useful information on furniture after-care and asking you to complete a survey to provide them with even more information about you!

-> Effectiveness rating – 8 out of 10.

3- Offer Something Free. Here it’s just a matter of choosing something of high perceived value but of low cost to you as an inducement, maybe from one of your suppliers at their cost. This could be anything that suits your business but some good examples are things that nearly always lead on to business for you. For an optometrist, a free eye test, or a free safety check for an auto- mechanic, a free coffee in a café and so on. This can be very effective as you can openly check you have all their details (including their e-mail) before they get their free, whatever it is.

-> Effectiveness rating – 9 out of 10.

4- Competition or Draws. A tried and tested method but a bit old hat now and often the prizes are cheap and awful e.g. a firm of accountants who offer a 30 minute consultation with their business expert! By stipulating 30 minutes it’s obviously being given to you grudgingly and everyone knows that you can get your first meeting free anyway. Or equally boring, a $500 voucher for radio advertising when everyone gets a “discount” of $500 anyway!

-> Effectiveness rating – 5 out of 10.

5- Loyalty Club. Again a tried and tested method and effective when what you’re offering is of reasonable value. Coffee cards and 10th one-free cards used by hairdressers are no good as then they don’t capture your details. If you’re receiving something in return why would you mind giving out your contact details? Get an impressive looking card organised and spell out the benefits for them if they fill in your Loyalty Club application form e.g. discounts for buying two not one, prior notification of new product lines or a monthly draw. Make them feel important when they come into your business and give them special treatment if they refer a friend.

-> Effectiveness rating – 8 out of 10.

6- Just Ask! Why be wimps, as Gordon Gekko would say! Have a think and get a script together and practice this with your staff until you are comfortable saying it. For example “Can you please fill in your contact details here please?” If they say no say “Oh what a shame. It’s just that we offer customers on our VIP list first choice on our new fashion lines and every month we hold a VIP club meeting where only VIP members get wine and cheese and first pick etc etc”. Is that difficult – I think not, providing it’s built into your systems.

-> Effectiveness rating – 6 out of 10 (as often the system is by-passed!)

What To Avoid

Don’t just leave a pile of forms on the counter in a prominent position and glance towards these when the customer is paying as these will just be ignored – I do, don’t you?

Our Advice

If you need help collecting your customer’s names and addresses call 0800 ASK NICK or e-mail nick@abac.co.nz.

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Why Is CRM an Indispensable Business Tool?

So what exactly is CRM? One of the best definitions is “a method of selling products and services by recognising the value in building a relationship with prospects and customers”.

Building an effective relationship requires trust, consistency, honesty, a willingness to give, doing what you say you are going to do and in particular, frequent contact and communication.

In these tough economic times CRM matters more than ever, so what can you do to ensure your prospects turn into customers and your customers keep coming back?

  • Send personally addressed and signed thank you letters to new customers so that they will feel good about you and will remember you the next time you contact them
  • Send customers information relevant to their needs
  • Send only personalised emails or letters individually addressed
  • Collect customer information at the time of sale
  • Contact all customers who have not bought from you in the last so many months or years depending upon your business
  • Advise your best customers of special offers or new products before the rest or non-customers
  • Use just one database to collect information about your prospects and customers which allows effective communication on one-to-one basis
  • Send special, personalised greetings on special occasions

None of the above measures are difficult to do, you just need time, enthusiasm and to be organised. If you need help to build relationships with your customers or prospects call us on 0800 ASK NICK or write nick@abac.co.nz.