Our good friend Sandra Kozusko of CFO Professional Services, PC spoke at the Chesterfield County Chamber luncheon last week.  She spoke about a topic near and dear to the small business owner's heart, keeping a competitive edge in a sluggish economy,  Not that I am saying we have a sluggish economy or anything!

We at The Growth Coach heartily concur with Sandra's perspective, that it is important to know your numbers in order to remain competitive.  She equipped the audience with "4 Knows" that each business owner should know about his or her business.  Here goes:

1. Know where you are making the most money then perfect it.
2. Know what marketing avenues have given you the greatest ROI and keep doing it! (Don't cut marketing expense to zero!!)
3. Know where you can cut expenses and cut now.
4. Know where you stand on your year-end taxes today.  Don't wait and be surprised with a big tax bill or miss opportunities for deductions.

This is great advice.  I would all one more "know" that is:

1. Know your receivables and manage them aggressively.

I find that my most successful clients know their numbers and manage to their numbers.  Determine the key metrics for your business and keep a close eye on them - especially during sluggish economy.  Your Thoughts?

Please visit CFO Professionals at http://www.cfoserv.net/   They provide accounting solutions for small businesses.

WOW!  My head is just spinning with the all of the news about the challenges facing our financial markets this past week.  I have found it to be very difficult to shift through the TV broadcasts, newspaper articles and internet sites to decipher what has happened and how we should move forward. 

We conducted one of our Growth Coach coaching orientation seminars yesterday.  We had a great group of about 18 business owners attend and we discussed the challenges and opportunities they are facing in their businesses.  While many of them may be beginning to feel the pinch in this economy, our discussion converged around specific challenges, like attracting and retaining qualified employees, and generating ideas for moving forward.  It was a true reflection of how, I believe, local business owners are remaining positive and action-oriented during difficult times.  Yeah Richmond!

One of the items I keep hearing about on the national news is how the credit markets are at a virtual stand-still across the country yet the folks that I speak with here in the Richmond area remark on the availability of capital for good projects and qualified applicants.  What are you experiencing in the credit markets here in the Richmond area?  If you are a banker, do you have money to lend?  What types of deals are you looking for?  If you are a business owner, have you been able to obtain credit?  What is happening with your LOC?  We are blessed to be living and working in such a great metro area.  Eventhough we are currently experiencing a downturn, I believe the outlook for future growth is strong.  Your Thoughts? 

As many of my clients begin to feel the pinch of reduced or flat revenues and higher costs, they are beginning to look for ways to improve their bottom lines.  Understandably, many are taking a hard look at their marketing expenditures, specifically the dollars spent on advertising. 

While I whole-heartedly agree that our marketing expenses should be reviewed regularly and assessed for effectiveness, I place a word of caution out that we should not haphazardly reduce and eliminate marketing efforts and spending while chasing profitability.  Assuming we are in business for the long haul, this is exactly the time to continue with marketing plans and advertising programs that keep us in the forefront of our customers' minds.

So, what can we do to ensure that our marketing dollars are being spent wisely during the crunch times?  Well, perhaps this is not the best time to reconfigure your entire brand, requiring new marketing collateral and programs to develop an entirely new brand.  That might be money better spent at another time.  We should, however, keep spending in the more tactical areas of our marketing plans such as targeted direct mail campaigns, coupons, use of e-newsletters, staying in touch with current and previous customers and referral networking.  Look for niches in your product line, services or customer base that can grow during these tighter times and go after those specifically.  And, finally, use the Internet.  The Internet is a great, cost-effective way to get clients to your door via your website.  Use Google ads and SEO techniques to get your name in front of potential customers.  Make sure your landing page has a call to action and effectively communicates your message.

There's lots we can do to ensure that we are effectively marketing and advertising during these difficult times.  Don't be afraid to try something new.  This is your opportunity to gain market share as your competitors act from fear and pull their advertising and reduce their marketing efforts.  Your Thoughts? 

Many of my small business owner clients are finding their accounts receivables to be increasing this year.  Their customers and clients are experiencing some cash flow crunches and delaying their payments, in turn causing some cash flow crunches for my clients.

While most small business owners are not surprised by their increasing receivables balances, I am concerned that many of them are not reacting quickly enough to the situation.  In addition, to communicating with current clients with overdue invoices, it's important for business owners to be sure that policies, procedures, systems and measurements are in place to ensure that future credit sales are more profitable. 

Policies and procedures -  Prior to even making the sale, we must be sure to have credit policies in place - who do we extend credit to and how do we assess credit worthiness.  Also, we must have established payment terms in place.

A System to manage receivables - Once, credit has been extended, the business needs a system to track outstanding receivables with established steps to handle overdue accounts based upon age.

Measurement tools -  Take the guess work out of knowing how well you are doing with your receivables.  Use financial ratios and statistics to track your progress versus historical performance.  One simple financial ratio is the Accounts Receivable Collection Rate (in days) which is the accounts receivable balance times 365 divided by total credit sales.  Many other statistics are available as well, some being industry related.  Be sure to view your receivables in terms of your credit sales revenue since a higher receivables balance in and of itself may not be all bad - if your sales are increasing as well!

Your accounts receivables are costing you real money.  That's uncollected cash that could be used to grow your business, pay off debt or make payroll.  It's an opportunity cost that we want to minimize in order to maximize our cash flow.  Your Thoughts?  

From talking with many of my clients, I am happy to report that they tend to think that the difficulties in the economy are overly exaggerated.  Many of the business owners that I know are continuing to grow their top line or, at worst, holding steady.  However, they are getting squeezed on the expense side with the rising cost of raw materials and utilities.

One way to offset this squeeze on margins is to increase prices.  But before you run off and increase your prices to offset your increased costs, I suggest you pause and reflect strategically:

1)  First, how do you wish to position your products or services?  Are you competing in the lower end of the market where volume is king or at the higher end where service is.  Your pricing should reflect where you wish to participate in the market.

2)  Were your prices positioned correctly before your costs began to skyrocket?  Do you have some backpedaling just to get where you should have been all along?

3)  What role does branding and marketing play in your strategy?  Maintaining marketing and advertising during turbulent times is often vital to success.

4)  And, finally, consider the entire picture.  Look at the margins both gross margins and profit margins on all of your products and services.  Don't just arbitrarily raise prices to cover costs.  Think about repositioning some products, adding services, increasing advertising, changing marketing tactics and, then finally, how does all of that affect the pricing of each product and service individually and as a whole?

As a final note, think about the long term - where do you want your business to be positioned once we are past this blip in the economy?  I'll bet you want to be financial sound and well positioned with your customers.  Keep that long term perspective in mind and think strategically about pricing.  Your Thoughts?

I was driving through Washington DC the other day and listening to talk radio when I heard an ad for the Ready.gov website.  I think you should check this out:

 http://www.ready.gov/

This website outlines programs, plans and actions both families and businesses can take to prepare for a potential disaster whether it be natural or man-made.  Disaster planning takes on additional importance as we come into full hurricane season.  We also must consider our need for preparedness and constant vigilance as a nation to protect ourselves from terrorist attacks.  Visit the Ready America section which outlines the items needed for a Basic Emergency Supply Kit.

Then visit the Ready Business section especially if you work in an office, away from home and you have employees.  What would you do if you and your employees were trapped in your office for some period of time?  Do you have a store of non-perishable food and water to hold you for even a day?

http://www.ready.gov/business/_downloads/readybusiness-brochure.pdf

This is a thought-provoking and action-oriented website about a serious topic.  I recommend it highly.  Your Thoughts? 

A deer in the headlights!  Does that describe you as you enter a networking event? 

Many of our clients say that they just don't enjoy networking.  It's overwhelming to walk into a room full of people that we don't know.  "Where should I stand?  Who should I talk to?  I just remembered an important appointment that I'm late for - better head out..."

May I suggest a slight change in mindset.  Before attending your next networking event, decide on one or two types of people that you would like to meet - folks who can help to move your business forward or potentially become a good referral source - for example, a realtor.  Enter the room and seek out someone you know.  Ask them "Do you know anyone here who is a realtor?"  If so, ask them for an introduction to that person.  And then just talk to that person, make conversation, get to know them.  Finish the conversation by asking to get together sometime for a cup of coffee and Voilà!  You've networked!  You've expanded your circle.

Now, all you have to do is follow-up.

Don't feel as though you need to meet a few dozen people every time you head out.  One or two targeted relationships can be much more valuable than many superficial ones.  Now, take those antlers off and introduce yourself!  Your Thoughts? 

Sending out special thanks to my clients in my workshop this week for this great blog idea.

We spent a good amount of time in this session talking about employees - motivating them,  improving performance and making sure that they have the right seat on the bus.

As I've mentioned in a previous blog, I've often heard from many successful business owners, "I have great employees!"  Do these businesses truly have inherently "great' employees or do the owners perceive them to be great and therefore they are.  Does employee performance rise to the level of expectations?  If we expect less, well what will we get?  And, if we expect more, if we expect excellent, what will we get?

Many of us remember that one really great boss that we had somewhere during our career.  Perhaps, he or she was our manager during our early years as an employee and helped to shape our work ethic or self-confidence.  Or, perhaps, it was a boss later in our careers who became a true mentor and friend.  In either case,  we will most likely hold this special person in high regard for the rest of our lives.

Would you like to be one of those really great bosses?  Would you like to be 'The One' your employees remember as helping to shape their careers?  Perhaps, expecting the best and expecting excellence from each employee everyday can produce just those results.  Say a heart-felt "I have great employees" today and see what happens.  Your Thoughts?

"Work Less, Give Your Customers Less... and Succeed ..."

What?  You know this article caught my eye - anything with "work less" in the title catches my eye!  But, give your customers less?

Check out this great article on the Harvard Business school online publishing site about a company, 37Signals, that produces software products with fewer features, employs fewer employees who work fewer hours and is led by owners who reject growth for growth’s sake:

http://discussionleader.hbsp.com/taylor/2008/06/why_37signals_works_to_one_dow.html

37Signals' key performance metric is profit per employee which is a metric I think all business owners should track. 

Another bit of great advice:  “Don't hire people,” they implore in Getting Real, their Web-based book that is chock-a-block with great advice. “Look for another way. Is the work that's burdening you really necessary? What if you just don't do it? Can you solve the problem with a slice of software or a change of practice instead?”

I haven't downloaded their book yet but if anyone does, please let us know what you think of it.

Remember, we are not in pursuit of perfection.  We are in pursuit of excellence.  Your Thoughts?

The very first thing a new business owner should do, after putting together their business plan, is to develop an exit strategy.  Ask yourself 3 important questions:

• When do you plan to exit your business?
• How do you plan to exit your business?
• What value do you want your business to have at time of exit?

Even if you don't know the answers to these questions right now, it's important to begin to ask yourself these types of questions and begin to sort out your answers. 

I found a great article on Entrepreneur.com that details 5 potential exit strategies for a business owner to consider.  Take a look:

 http://www.entrepreneur.com/management/operations/article78512.html

So, what are Your Thoughts?  Is your exit strategy in place?