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In our business experience,
we have discovered three (3)
principles that can help you
channel your efforts to boost your
profits:
1. It can be Very tough to
find new customers;
2. Your Existing customers
are your Best prospects for new/more
business; and
3. There are only so many
hours in a day, so you have to organize
your time and focus your
energy to be most productive and capture
the best/highest potential
opportunities.
Implement these 14 Action
Steps in Your Business to Boost your
Profits:
1. Raise Your Rates/Prices
Price often implies a
certain image and quality level. Don't you
offer quality? Excellent
value for the dollar? As the price of
necessities such as food and
clothing are rising, when was the
last time you raised your
prices? Presumably the value of your
products and services has
increased over the time period, so...
When you raise your rates,
you will earn more for your
efforts--more money, same
time, same effort and same investment.
Some of your customers will
complain. Be sure you present the
value you provide. And,
those customers who leave, well good luck
to them.
2. Dismiss Your Worst—Least
Productive—Employees
As corny as this may sound,
happy people are more productive. And
those employees who don't
mesh well with your culture, your
mission or your team are
probably reducing the overall
effectiveness of your
organization.
Give them a severance
package, or write them up and give them
three (3) or six (6) months
notice to turn around or find a new
[more suitable] position. Be
alert for negative reaction and a
lame duck situation (for
example, people who you put on probation
and who wait for their
termination notice and negatively impact
productivity and employee
morale).
Offer the empty seat to a go-getter
Immediately. You are likely
to find several volunteers
within your organization. We have
found that when
non-performers, dissenters, and complainers exit,
the remaining team members
will feel much better and become much
more productive.
3. Terminate Your Worst Customers, Clients,
etc.
Analyze all of your accounts
for profitability. ‘Worst’ could
mean least profitable or
those who complain the most, demand the
most and delay payment.
Contact those who you want to increase
their business with you.
Give them a timeframe and an opportunity
to increase their business
volume with you, and follow up. If
they give you more business,
great; if not, Exit.
We recently helped one of
our clients do this. Our team analyzed
all their accounts and their
business (cost structure). We
determined that the company
spends approximately $45,000 per
client every year to
administer, maintain, and service each
account. We set the minimum
annual revenue for each account at a
dollar value that's
approximately two times (2x) cost.
Then we organized the sales
force to call on 48 low volume and
dormant accounts. They grew
some accounts, decided to reassess
some accounts six (6) months
later and terminated nine accounts.
These steps increased their
profitability and productivity,
immediately.
4. Charge and Collect Work Fees and Retainers
Work fees and retainers are
up-front (advances) deposits for work
to be performed. These fees
are useful to cover your overhead.
Equally important an advance
gains a buy-in and a commitment from
the client. In
some industries these fees
are customary. Retainer agreements
should be in writing signed
by the customer or client to avoid
confusion and a possible
attempt to get a refund. Make your Work
Fees and Retainers
non-refundable.
>> The key is when a customer pays the work
fee, he/she signals
a serious commitment to
undertake and complete the project.
In our experience, those
customers who refuse to pay work fees
are often the people who are
cost likely to walk away from a deal
or project in the middle and
leave you holding the bag...
5. Charge Work Fees for
Customization
By the way, we now collect
deposits for customization work. For
example, when we customize
our best selling premium '157 Ways to
Cut Your Grocery Bill.'
Unfortunately, some years back, we
customized the publication
for a new customer, obtained customer
sign off on the proof, and
printed the copies. They changed their
mind or had financial
difficulties, and we got stuck paying the
balance of the print bill.
No More. As a caveat, it is better to
reject a
job and than take the job,
not get paid, waste your time and lose
money.
6. Request Referrals
Ask your most satisfied
(best) customers to recommend you to
their colleagues, vendors,
suppliers, customers, etc. Request
names and contact points.
Follow up.
>> For example, "Joe at XYZ Services
encouraged me to call you
because he thought you might
benefit from our services. He has
been working with us for
over five years."
7. Run a Special Promotion or Two
If you are a Small Business
Advisor [newsletter] subscriber or a
Publishing Gold e-zine
member, you know that we make offers and
run promotions on our
products and services in the news-letter.
Every time we do this, we
generate new business. Why not give
these techniques a try in
your business?
—Study the publications
[trade mags, newsletters, etc.] in your
field over several months.
Which advertisers run ads and promos
again and again? This means
their ads must be working (unless the
publication requires
advertisers to purchase a series of
insertions). If your product
meshes with the readership, craft a
promotion and test it.
8. Liquidate Your Old Inventory Now
Hey, we all make mistakes.
Last year's hot red dress may be this
year's iced-cold rag. So it
goes.
Your old inventory is not
getting any better or more attractive.
What's more, inventory takes
up warehouse space, requires
insurance, administrative
time, and mind space.
—Cut your losses, and
Liquidate the stuff [aging inventory] ASAP.
—Offer the old stuff at a
reduced price to your customers who
make another purchase.
—Sell the dead weight at
auction or to a liquidator or
wholesaler.
—Donate the unwanted items
to a worthy charity.
9. Charge for Out-of-Pocket Costs and Expenses
Many service businesses
charge for photocopies, long distance
telephone charges, Overnight
deliveries, fax charges, postage,
meals for late work, travel
and lodging costs and expenses, etc.
—You may be able to add
these charges to your roster of fees and
expenses. Some companies
even add a 10% surcharge to the
out-of-pocket costs and
expenses. Collecting this money can
significantly increase your
bottom line.
10. Collect Your Accounts
Receivable
Many customers will gladly
sit tight and stretch out the time it
takes to pay you, when you
let them. While collection is an art
and you don’t want to lose
customers, every day you don’t collect
money costs you money in
terms of working capital. Keep track of
your accounts receivable and
push your customers to pay their
bills on time.
11. Organize - Analyze
What's Working / What's Not
We all get tunnel vision
from time to time and often keep doing
what we've been doing. Maybe
it's habit, maybe life becomes comfortable.
Step back. Take a look at
what's working, what's profitable, what's not
working, what's costing you
money, and how you can improve. Get
buy-in and develop an
implementation plan.
12. Hold a 'Focus Group'
and/or Conduct a Survey
Organize a focus group, or
maybe two sessions; include your best
customers and your least
satisfied customers. Offer a prize or
bonus to encourage
participation. Ask them why they like doing
business with you and why
they don't. Ask what you can do to
improve...
13. Read Your Customer Feedback / Letters / Complaint
Forms
This material is a veritable
goldmine for you and your
organization. What better
way to improve than to learn what your
customers dislike about your
products, service, etc.? Answer
every last piece of
correspondence, and re-tool your programs.
You'll be amazed at the
positive results.
While it can be Very
difficult to land new customers, your
existing customer base
provides a goldmine of new opportunities
and profits. Wield the pick
axe today!
14. Upsell Vigorously
—Upsell means to increase
the order size or the purchase
frequency.
—To discover more unbeatable
upselling techniques and strategies,
obtain Publishing Gold's
special report: 'Unbeatable Upselling
Techniques.'
[Send US $10.00, per copy,
postpaid, to PublishingGold.com, Inc.,
PO Box 758, Armonk, NY
10504-0758 USA. International members
please add additional $4.00
for extra postage.]
To unlock the profit-making
opportunities that are hidden in your
business and implement the
strategies and ideas featured in this
special report, e-mail
Joseph Gelb at Joe@SmallBusinessAdvice.com
-30-
Joseph Gelb is a CPA and
Attorney at Law. He specializes in small
business growth and
development. Author of, “How to Start a
Million Dollar Service
Business” and “Tax Accounting for
Small Business,” Mr. Gelb
can be reached at T: 1-516-374-1387;
F: 516-374-1175. Ordering
info: PO Box 436, Woodmere, NY
11598-0436 USA. http://www.SmallBusinessAdvice.com