So many
business owners work hard - really hard - just to break even or keep afloat.
Each one of us deserves reward for our efforts, whether that be financial or
personal. The question to ask yourself is whether you are directing your effort
in the right places to get the reward you want?
Of the businesses
I've seen and worked in, there are plenty of ways to mis-spend effort - that
is, to work hard, but on the wrong things. Here are ten of the most common
areas where the return on your efforts can really be ramped up.
1. Marketing
Inconsistently
Once you have
committed to owning and running a business you must be equally committed to
marketing and selling the products and services of that business. It is
difficult, if not impossible, to stay and remain profitable without a
commitment to ongoing concerted marketing.
To get more out
of your marketing, create a simple marketing plan that includes marketing
activity every day, every week and every month. Marketing plans combine formal
activities (such as advertising, promotions and writing) with informal activities
(such as making new contacts). Don't underestimate the power of talking to
people about what you do. Use every opportunity, every time.
2. Fear of
Asking for the Sale
Isn't it true
that we think asking directly for someone's business means coming across as
pushy or obnoxious. But if we have this attitude, we are letting
profit-producing opportunities pass us by. Worrying more about what someone
thinks of you than bringing more money into the business is an all too common
mistake. If you find it difficult to "ask for the sale", you can be
sure that you're not bringing in as much money as you could be.
The most
effective way to address this issue it to practice asking for the sale in
language that you are comfortable with (not too wishy-washy please). Write down
what you want to say first, then practice it over and over. There is also
plenty of stuff out there on handling objections. Prepare your responses to the
most common objections so you are well armed before you speak with your
prospective customers.
3. Getting Help
Most business
owners possess strengths in one or two specific areas, but whether by necessity
or design, they often end up working in areas they aren't strong in. This
builds inefficiencies and potential for mistakes into the business. To compound
the problem, we don't ask for help straight away, but struggle on doing the
stuff we are not suited to (saves money right?) But each day that goes by with
your business running at less than maximum efficiency, means dollars lost from
your pocket.
Work out where
you add the most and least value in your business. Pay someone to help you out
with these low value add activities. Your time is best spent where you add the
most value. If you can do more of this kind of activity, your business will
benefit.
4. Use your
Existing Customer Base
All the
research tells us that it is easier and cheaper to keep working with customers
you already have, than to get new customers into your business. If you are not
following up with past customers on a regular basis you are reducing your
profitability potential.
Develop
strategies to keep your customers with you, such as loyalty plans, regular
communications and special offers. Implement a regular process for following up
your customers after they buy from you.
5. Managing
Expenses
Savvy business
owners regularly appraise their business expenses and find ways to reduce costs
without sacrificing quality. If you haven't completed a cost analysis lately,
you might be paying more than you need to be, which will reduce your
profitability.
At least once
per quarter you should review your expenses and negotiate for adjustments as
appropriate. Categorize everything you spend under 3 headings: Essential, Nice
to Have and Non-Essential. Everything in the last two categories is up for
grabs - be ruthless!
6. Spending large
amounts on glossy, slick marketing materials and expecting business to pour in
without any additional effort.
Glossy
brochures and slick marketing materials are a nice addition to more active
forms of marketing such as meeting people, calling people and speaking to
people. However, brochures and business cards, no matter how beautiful, do not
replace direct contact. If you are spending money on flashy marketing materials
in the place of marketing directly, your profitability will suffer. The most effective
form of marketing comes from you talking about your business to others.
Marketing
materials are an expense, and to be sure they are working, you need to get some
handle on the return on your investment. At the very least you should be
tracking where new business is coming from so you can get an idea of whether
your marketing materials are contributing to any new business you get.
7. Spending a
significant amount of time in low-return activities
Don't we all
know about this one! If you are spending the majority of your day completing
tasks which are administrative in nature and/or which can be easily completed
by other people then you are not putting yourself to best use. For most of us,
the best value-adding activity we can be involved with is in bringing business
in the door by building relationships, talking to prospective customers and
promoting our business.
What value do
you put on your time? Assign yourself a competitive hourly rate for the market
and industry you work in - it might be anywhere from $100 per hour or upwards.
Then ask yourself whether you would pay anyone that hourly rate to process
accounts or do administrative work. If the answer is no, find a way of getting
these low-return activities done for a lower hourly rate. Hire a bookkeeper or
assistant for a few hours a week, and spend your time doing the valuable work.
8. Not charging
enough for what you do.
This challenge
seems to arise especially for people who sell services. Either we feel
embarrassed to ask for the amount we want, or we simply accept less money than
we need - so we get "some money" rather than "no money".
But beware, after a while, working for too little can leave you exhausted and
resentful, not to mention the impact it has on your profitability.
You do not need
to defend an increase in your fees either. It is normal business strategy to
review fee structures, make changes and advise customers. And contrary to our
fears, it is often the case that business levels improve after fees are
increased. It seems that we attract a whole different class of customer when
our fees reflect the value we provide.
9. Not making
enough use of technology which could save time and effort.
As a business
owner, you have a fixed amount of time and energy within which you must
maximize your profits. Technology can help you do this in the form of
autoresponders, voicemail, wireless internet connections, speech recognition
software, SMS from your computer and so on. All of these tools are widely
available to us, and are designed to save time and effort. Each of us needs to
continually look for ways to make business processes more efficient by using
inexpensive technology.
Often the
problem is that we don't know what we don't know. Some wonderful tool might be
available but we don't know it exists. You need to stay on top of the latest
products by regularly checking in with business and telecommunications sites.
10. Sticking
with outdated business models or plans.
You've all
heard it before - doing things the way they have always been done means that
you will get the results that you always got. If you are not satisfied with
your results then you need to re-look at what and how you are doing things. An
astute entrepreneur has a mindset that is always challenging the way things are
done in the business.
Another great
way of coming across new ideas is to attend seminars and conferences on various
topics. If you get a single idea to put into practice in your business, then
that seminar has been worthwhile.
If you are
serious about improving your business' profitability (and aren't we all?), then
taking action on these areas will help you make more money and have more fun in
your business. And that's what it's all about really.
By Megan Tough
Photography by Vojtech Vlk
Megan Tough - published writer, coach, facilitator and speaker - works with people to create outstandingly satisfying and truly successful professional lives. Make more money - have more fun! To learn more and to sign up for more FREE tips and articles like these, visit http://www.megantough.com
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