Weekly Edge

Developing your niche

Heather Frame - Thursday, October 17, 2013

Do you have a “best-seller”?  Do you know what it is?  What is the margin on that product? Don’t know?

Find out!   And, when you do, raise the price on that product by at least 10 per cent.

Then, ask yourself if you could simply focus on that product (and perhaps the accessories for that product or service) to create a more narrow, yet more highly profitable business.

Say you own a full service restaurant, but the morning breakfast crowd is the bulk of your volume... Can you become a breakfast-only cafe?

Can you focus on great coffee and freshly-squeezed juices?  Can you become a “premium” priced café versus a “discount” full service restaurant?

Take a look at your business.  Learn your numbers and know what it is you are selling.  You just might discover the “gold” you are looking for outside of your business actually exists within it.

How do you get new leads and customers... and how much do you spend to “buy” your customers?

Do your marketing efforts pay for themselves?  More importantly, do they make you money?

Do you know how much it costs to get a potential customer to your door?  Through your door?  Or how much it costs to convert that lead into a sale?

If your advertising budget for last year was $100,000 and you can’t tell if it brought in new customers or added new dollars to your bottom-line, you have a serious business issue you need to resolve right away.

Learn as much as you can about how to turn your business into a marketing machine.  Get comfortable with the idea of marketing and of “buying” new customers through advertising.  If buying a new customer costs you $30, but the lifetime value of that customer is $5000, you have a great business and marketing program.  But if those numbers are reversed, you won’t be in business long.  As the late management guru Peter Drucker wrote, “the purpose of business is to create and keep a customer.”

Just remember simple is not always easy. But it can be very, very profitable.

Are you living a dream or a nightmare?

Heather Frame - Thursday, October 17, 2013

We love quotes.  Their concise wisdom is very compelling.  One of our favorites comes from the famed primatologist, Jane Goodall, when she stated, ‘Most people go to bed to dream, but I woke up into a dream.’

What a great thought.  That you don’t have to settle for daydreams, but rather you can manifest your dreams and live them.

So, here’s the big question for you.  Are you waking up into a dream or a nightmare?

Our experience is that for most people, operating their business is far from the dream they imagined it would be.

The question then is why?

While most business owners begin with zest and passion, they often end up fatigued, frustrated and disillusioned.

The reason someone opens a hairdressing salon, accounting practice, speaking business, plumbing service, or remedial massage centre is because that’s what they love to do – and they’re usually really good at it.

But you also want to create a business that serves you and produces the riches you desire.  Instead, you soon learn that you need to be more than good at what you do; you need to be great at communicating what you do.

The fact is, if you’re struggling to market what you do, then NO MATTER how good you are at it, chances are your passion will become a stress filled energy draining and headache producing nightmare.

The difference between the business owner who wakes up with a sick feeling in their stomach wondering if they’ll be able to cover the bills this week, and the one who bounces out of bed filled with anticipation of what is possible, is a difference in philosophy.

One has chosen to be a doer.  They are time poor because they’re so busy trying to make ends meet that they feel forced to do everything themselves.  Plus they tell themselves no-one can do it as well as them, so they sacrifice their time just on doing what they’ve been doing, in the hope that eventually the customers will recognize their talent and come flooding in.

The other type of business owner has recognized they need to constantly work on developing their skills at communicating what they do.  They focus on being more entrepreneurial; on seeking to out source low level tasks to others so that they can keep their focus on creating a remarkable customer experience.  They recognize that time is their most precious resource and so they seek to make the most of every minute.

Here’s another quote for you to consider ‘Poor people spend their time to save money.  Rich people spend their money to save time’.

Don’t waste your life day-dreaming.  Instead, get focused on developing the areas of your business that can truly set you free to live your dreams.

Most businesses don’t work, that’s why the business owner has to.  The key to unlocking the riches in your business isn’t an issue of time; it’s a case of priorities.  When you decide to make marketing a priority in your business is when the dream can begin.


The two equally important parts of all businesses

Heather Frame - Thursday, October 17, 2013

This tip is a reminder that business has two major parts.  And both of them are equally as important as the other.

You’ve got to put half your time, efforts, and investment into distribution – getting your products and services to the marketplace.  The other half of your time should be spent on sales and marketing – getting the marketplace to come to your products and services.

The challenge is that most business owners, and therefore their entire business, put about 90 percent of their time into distribution and only about 10 percent into marketing. 

You’ve got to market if you’re ever going to make real money.  And by marketing we don’t just mean to new prospects, it’s what you do to keep your current customers buying from you time after time.  Typically it’s so much easier to sell again to an existing customer than it is to find a new customer.

So here’s a few questions to keep you focused on marketing to your existing customers this month

  1. Do your customers know about your full range of products/services?
  2. Do they know what the potential benefits of your products/services are to them? 
  3. When was the last time you graded your customers and made an offer back to your best customers?
  4. What do you do (or can you do) to make their experience with your business exceptional for all the right reasons?

Here’s to keeping a close eye on the marketing and sales side of your business…

Are you a business or a bank?

Heather Frame - Thursday, October 17, 2013

Have you ever experienced cash flow difficulties? If you have then you should read on.

Chances are that at some point, one or more of your customers have used you as a bank without even asking, or having to fill out any paperwork or put up surety for the credit. Would a real bank allow this to happen?

The sad truth is that your customers are using you as a bank every time they pay late. This is the number one cause of cash flow difficulties in business today.

Here is why this is so important,

Business statistics collected by Dun and Bradstreet show that the average debtor days (the number of days from invoice to payment) for small to medium Australian Business is a whopping 56.5 days.

Many businesses run at a net profit of 10% or less. BUT, and here’s the kicker, many only achieve 3-4% in real terms.

Here is what this means to you.

Let’s use Bob’s Emporium (and reluctant bank) as an example and assume he’s operating at a net profit of 10%.  If Bob’s Emporium has just one debtor with $10,000 in unpaid invoices who defaults on the debt it would take the sale of $100,000 of products or services to recoup the loss of the original $10,000.

And it gets even worse.

If a business has any outstanding debt a good profitable sale quickly becomes non profitable as the debtor days increase.

For example, if Bob’s Emporium uses an overdraft at 12% interest to fund the Australian average of 56.5 debtor days on a $10,000 debt; it would cost Bob $188.00 per month just because the debtor is using Bob as a bank.  If Bob held the debt for five months he would have lost all profit on the original sale, and then starts loosing money. And remember a net profit of 10% is quite high in many businesses.  If Bob had a net profit of 5% he would start loosing money after 3 months from a profitable sale.

It’s time to act now.

Make sure that your credit policies are watertight and enforced with a personal phone call to your customer the day their payment is overdue.

If you strike resistance, make sure you have a clear, well-thought-out system that you or your staff can follow that has been carefully designed to preserve your customer's buying relationship with you, while getting your money in on time!

Eat That Frog!

Heather Frame - Thursday, October 17, 2013

So, you've started your day, and there's so much to do.   Ever ask yourself, "Where do I start?"  Many business owners we talk to do.  They've got so much on their plate: sales, marketing, finances, hiring, cleaning the bathroom (just checking to see if you are still awake), and let's not forget actually providing your product or service.  Many people, faced with so many balls to juggle just shut down.  Or, take avoidance action like "let me start with email." 

Have you ever found yourself doing that?  And then the phone rings.  And then an employee comes in asking for guidance.  And then a customer calls.  And before you know it, it is 5 p.m. and everyone is leaving the office except you, and you're thinking "Jeez, I haven't got anything done that I needed to get done today."

There's a way to stop the madness, and it's in the book "Eat That Frog!"   It’s a short read, written by Brian Tracy.  If you are struggling to fit in everything in your day then this is well worth a read

The key to stop procrastinating, (and yes, we realize you thought all of that other stuff you did was important) is to start each day identifying the number one goal you have for the day.  And then "Eat That Frog!"  This means continually asking yourself "Which one project or activity, if I did it in an excellent and timely fashion, would have the greatest positive impact on my life?" 

And then, as Nike would tell us, "just do it".  Give yourself time at the beginning of each day to focus (and we mean really focus) and get the biggest, ugliest thing on your plate done.  You'll be surprised how the rest of the day turns out.

Here’s to decreasing the chaos in your life by increasing your productivity……