Like it or not, we are living in those times.

Market forces worldwide are causing a whirlwind of creative destruction for businesses and their owners. The question is, how will you react to our current economic circumstances, and how can you make the money you’ll need to survive?

In past columns, I’ve talked about seeing the world as entrepreneurs do. This is simply a matter of looking at events (no matter what they are) and reacting not in a negative way, but rather in a way, and from a perspective, that uncovers value, upside potential and opportunity.

With that in mind, I thought it would be a good idea to devote a series of articles this year to getting “Back to Business” – with proven strategies and tools that have transformed companies around the world and in every type of economy, including downturns like the one we find ourselves in now.

Not only will these strategies help readjust your entrepreneurial attitude, they will also help your business survive and thrive immediately – and will serve as the foundation for continuing growth well into the next economic spring and summer.

So how can you gain some clarity for your business amid all the media noise and pessimism? First, you must realise that the needs of your customers and your market are different than those needs were a year ago – or even six months ago.

Simply put, you’ll have to adapt to those different needs and change your business in the direction of meeting those needs in order to survive. The new vision for your business should be highly focused – and scaled to what your customers truly want.

In these times, success won’t necessarily be based on what you want to offer, but rather what the market is telling you to offer.

KFC Corporation V Iowa Department of Revenue is one of the most interesting and important cases on franchise taxation in the last 20 years in America.

The ramifications of this ruling are important to anyone working within a franchise system in the United States, so over the next couple of blogs we will discuss the case and what it means in some detail.

KFC V Iowa Department of Revenue was based on the belief by the state that KFC was responsible for paying corporate income tax in the state based solely on its receipt of royalties from franchisees in Iowa.

In June 2009, an Iowa District Court upheld the state's imposition of tax. KFC quickly appealed the decision to the Iowa Supreme Court, which heard oral arguments in the case in May 2010 and issued its decision on December 30.

In the case, KFC argued to the Iowa Supreme Court that the Department's assessment of tax violated the Commerce Clause of the U.S. Constitution.

Previous Supreme Court case law had found that the Commerce Clause required a taxpayer have a physical presence in a state before the state could require the taxpayer to collect and remit the state's sales and use taxes.

The Department of Revenue disagreed with KFC's position, arguing that the state could impose its corporate income tax on KFC regardless of KFC's physical presence in the state.

So what was the ruling and what are the ramifications for franchises based on it? Stop back for my next post and hear the rest of the story.

Do you know how many customers you need (or how many sales you need to make) today to make a profit?

How about to break even?

Do you know how long you’ll have to work this year just to pay your taxes?

What about how many prospects you need in your sales pipeline to generate enough customers to make your profit margin?

What is your profit margin?

If you’re struggling to answer these basic questions, you’re not alone.

But you can jump your profits immediately simply by actually knowing the numbers that lead to them.

In fact, the majority of the most profitable and highest growth companies are those that know their numbers at every possible level. They know very clearly you cannot manage what you do not measure.

The key to knowing your numbers is simply that:  knowing and understanding exactly what your business needs to produce to give you the profit you need to survive and grow far into the future.

Most business owners I’ve coached over the years have no clue what their real numbers are. They have a vague guess or a “gut feel” – but they don’t really know – mainly because I think they don’t want to be faced with the reality the numbers will ultimately show them.

To prosper, you’re going to have to put the fear of numbers behind you and embrace the reality they will reveal to you. Not only will mastery of your numbers give you an edge over your competition – it will give you the power to make better decisions in real time, regardless of the economy.

What can numbers tell you?

First, numbers will tell you where you are right now. Beyond revenues and expenses, your numbers will show your profit margins, as well as vital figures relating to sales. If you know how many people come through your doors a day and how many actually buy something, you suddenly have a handle on the number known as your “sales conversion rate.”

By that measure, if you know you always convert 15% of your prospects into a sale, and you know you need 12 sales to profit – you can easily determine you’ll need 80 people through your doors on average to be profitable (12/15% = 80).

Now the question becomes, “How can I get 80 people through my doors?”

That’s another column, but at least you know what you have to do in volume to make your profit.

Second, numbers will guide you where you want to go. Are you looking for an extra $10,000 in gross profit on a 25% profit margin? You’ll need to generate a turnover of at least $40,000 ($10,000/25% = $40,000).

Are you a professional who charges $100 an hour who now wants to double your income? You might need to determine whether it is better for you to charge $200 over 2000 working hours a year (highly unlikely given you can’t charge every working hour) – or charge $400 multiplied by 1000 working hours a year (meaning you can take some time off once in a while).

In either case, the numbers will give you an indication (based on your market and profession) what can work for you. They will also show you where you might need to revamp your business so you can get to your targeted revenue (as in finding additional and alternative revenue streams for your professional service to get you to that $400 an hour goal).

Finally, numbers will help you form a plan to get there. Sometimes, the numbers will reveal your current skills and market conditions – or your current mix of products and services – just won’t support your revenue and profit targets.

That’s not bad news – it’s just news. But it will help you determine what you will need to do to improve and enhance your professional skill set – or revamp your product and services mix.

The numbers might show you that you can afford to hire a great sales person to sell and two additional administrative people to handle the books while you network or leverage your highest skills to build the business in new and innovative ways.

Can you present a workshop and have an entire “back end” of your own private label products? Could you do that if you were in your shop 12-hours a day? Probably not. But those opportunities wouldn’t ever present themselves without a good handle of the numbers of your particular business.

So what do the numbers look like in your company?

If you are in sales, how many calls will you need to make next week to get the number of appointments you’ll need to make a sale?

If you are in retail, how many customers will you need in your shop to break even and make a profit? And how big will that profit need to be?

Take some time – right now – and introduce yourself to the past, present and future numbers of your particular business.

Because if you don’t master your numbers, your numbers will surely master you.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

Last month, we looked at the “Five Ways” and showed you how easy it was to get a 61 per cent increase in your bottom line … If you missed it, call for a back issue, because it truly is a great “secret” of business.

This month, we’re going to see how you can use those numbers to achieve an UNLIMITED marketing budget for your business.

That’s right – unlimited. Most companies aren’t good when it comes to figuring marketing budgets, and use a variety of figures, whether it’s a set amount per month, a set percentage of sales or just a number they decide on when a salesperson calls to sell advertising …

So if you could have an unlimited budget, how big could you grow your business? Let me show you how this works before I get into specifics.

Imagine you went to the bank and gave them $100. Then, 30 days later they gave you back $200.  How many $100 bills would you go to the bank with every day?

Now what if you could use that information to create an unlimited number of new leads and customers in your business?

Well, you can – if you focus on your “Acquisition Cost” and the “Lifetime Value” of your customers, topics we’ve looked at before but that now take on new meaning in light of the “Five Ways.”

Acquisition Cost is simply the cost of “buying” your current customer. If you’ve put $1000 into advertising and had 100 phone calls, you’re paying $10 for each of your leads. If only 10 of those leads “convert”, or make a purchase, you’re paying $100 to capture each sale.

Now, what’s this customer really worth?

Typically not much on a first purchase. But, even if it was just $200, you are putting in $100 and pulling out $200.  That said, in most retail businesses, a “bought” customer doesn’t begin to provide break-even or profitable revenues until the second, third or even fourth purchase.

However, the value of every purchase after those initial buys are just like gold for your business.

This is where the idea of the “Lifetime Value” of your customers is so important. Simply put, “Lifetime Value” is the amount of money your average customer will spend with you over a buying lifetime.

I’ve used the example before from my old dog food business. In that business, I knew my average customer would spend $800 a year on their dogs, and the average dog lived about 10 years. I presumed a customer would stay with me half that time, meaning the “Lifetime Value” of my dog food customer would be $4000.

What if I knew I could spend up to $38 to acquire each customer to get $800 a year per customer through my door?

Well, for my first month, I’d do better than break even. By my second month, my customer would be fully profitable, and at the end of the year, my marketing efforts would generate a better than twenty times return on my initial marketing “investment.”

So how often would you spend $38 to get $800?

It’s really just simple “marketing math.” Determine how much each new customer spends with you, figure your gross profit and “presto!” – you have your new marketing budget.

Let me explain …

In my dog food business, my customer’s first purchase averaged 6 weeks for delivery, totaled $108 and had a gross profit of $38.  Thus, my marketing allowance for “buying” each new customer – up to a total of $38 – was simply that.

Do your numbers and know that as long as you can cashflow the timing between when you pay for the advertising and when you get your customers’ money, your marketing results will be the same as if you were using the bank.

The idea of the unlimited marketing budget is to get you thinking in terms of your marketing efforts as investments rather than expenses. And with any investment, you are always looking for a return.

It also forces you to look at your advertising and marketing efforts in a whole new way. Why  toss thousands of dollars out your door looking to build a brand image when you could spend those dollars more tactically to actually increase your bottom-line – and build a brand as you’re doing it by buying customers?

Once you’ve bought your prospects and turned them into customers, know you’ll need to get them buying more, spending more and staying longer with your business. Why?

Because profits really come from repeat business, and your Return on Investment (ROI) is really determined by how long you keep customers.

Now you can see how these two factors – Acquisition Cost and Lifetime Value – add a powerful dimension to the “Five Ways” formula. Again, it works for any business in any industry or category.

In the next few months, we’ll get into more details about how to lower your Acquisition Costs and increase your Lifetime Value. We’ll also look at specific strategies to boost each one of the “Five Ways” factors in your business.

I would also be interested to hear what kind of results you get from these useful tools, now that you’ve realized their real secret is in the incredible value you can gain from getting the best information possible for your business.

A free resource

Our interactive “Five Ways” calculator remains active at the following link:

actioncoach.com/free-business-calculator-profit.php

It’s simple, it’s free, and it’s designed to give you an idea of how powerful the “Five Ways” can be for your business.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

Most business owners struggle for years chasing higher profits.

Most fail. And they do so because they are relentlessly trying to make their bottom-line grow by focusing on upping sales or cutting expenses.

After all, those are the only factors you can work, right?

What if I told you there are many paths to bigger profits? And showed you a way to drastically increase your bottom line by working any one – or all of them?

You see, most of the owners coached by my team or me are so stuck on getting more customers, more revenues or more profits, they miss seeing a much bigger picture.

They don’t realize all three of those numbers are the result of 5 other factors …

And when you know all 5, you can MULTIPLY your bottom line.

Would you be a little more excited about your business every Monday morning if you knew your profits were “multiplying”?

Well, in this issue and the next, I’m going to guide you through what I call the “5 Ways” – the formula for profit I believe is responsible for more business growth than any other “secret” I know. Best of all, it works for any business, including yours.

How?

By remembering that profits, revenues and the number of customers are all the result – an end score. And just like baking a cake, unless you change the ingredients, the results stay the same.

The “5 Ways” focuses on the following 5 factors that drive profit in any business – and these 5 alone:  Lead Generation; Conversion Rate; Average Dollar Sale; Average Number of Transactions and Profit Margins.

Those are the same 5 factors are highlighted in our “5 Ways” illustration.

Increase one – or any – of these factors and you start multiplying your profits.

I’ll show you how, and we’ll work through each factor one-by-one.

Leads:

The first factor in the “5 Ways” is leads. So what’s a lead?

It’s simply the total number potential buyers a business has contacted – or that contacted the business – over the course of a year. Leads are also known as “potentials” or “prospects.”

Conversion rate:

This is the percentage of people that actually bought. If 10 people walk through a store and three people buy, that store’s conversion rate of 3 out of 10, or 30%, for that day.

Number of customers:

This is the number of total customers, and is determined by multiplying the total number of leads by conversion rate.

Average dollar sale:

This is the average dollar amount per sale – estimated over the course of a year.

Average number of transactions:

This is the number of purchases the average customer will make over the course of a year.

Revenue:

This is the total amount of overall sales for a business.

Profit margin:

This is the profit percentage of each and every sale. Simply put, if a business sells something for $100, and profit was $25, the profit margin is 25%.

What does this look all look like? Let’s run some numbers.

Your Company

Let’s say your company has determined the following:

Number of Leads                    4000

X                                             X

Conversion Rate                     25%

=

Number of Customers             1000

X

Number of Transactions          2

X

Average Dollar Sale                $100

=

Revenue                                  $200,000

X

Profit Margins                         25%

=

PROFITS                                $50,000

What does this mean? Simply, you are running a business that converts 1 in 4 prospects into paying customers; customers who average two purchases at $100 per purchase each year. Your company enjoys a 25% profit margin on revenues of $200,000. Total profit? $50,000.

A Simple Increase of 10% … in ALL 5 Areas …

Over the next year, let’s aim at an increase of just 10% in each of the 5 areas. Now, many companies will be able to do bigger numbers, and most of the companies we coach do far greater increases over a year. But let’s just aim at some simple things to work in each area.

Watch what happens to your bottom line:

Number of Leads                    4400

X                                             X

Conversion Rate                     27.5%

=

Customers                               1210

X

Number of Transactions          2.2

X

Average Dollar Sale                $110

=

Revenue                                  $292,820

X

Profit Margins                         27.5%

=

PROFITS                                $80,525.50

Interesting, isn’t it?

The $30,525.50 increase in profit ($80,525.50 – $50,000) in percentage terms equates to a 61% boost in the bottom line ($30,525.50 / 50,000). Phenomenal leverage.

Remember, we are multiplying here, not just adding. And if you think 10% is impressive, run your own numbers or the same numbers with a 20% increase and it will start to blow you away.

A free resource

If want to run a variety of numbers on your own, we’ve developed an interactive “5 Ways” calculator at the following link:

actioncoach.com/free-business-calculator-profit.php

It’s simple, it’s free, and it’s designed to give you an idea of how powerful the “5 Ways” can be.

Next month, we’ll see which of the 5 factors to work first, how to best use the formula and how to create an unlimited marketing budget.

Hopefully, this great “secret” will guide you to greater profits, and also show you how powerful knowledge can be for your business.

Because as I’ve said before – there are no secrets in business or life. There’s just information you don’t know yet.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

Jack Welch, the former CEO of General Electric, used to get rid of the bottom 20% of his employees each year. While some see this as a harsh way to handle business, Welch had both strategic and practical reasons for following this mandate.

First, he realized this type of “pruning” was necessary for GE’s success. So he made it part of the overall company plan. He knew that in order for GE to be the best, he had to have the best people on the job for him – and room to replace those who didn’t work out.

One reason is that Jack, as CEO of one of the world’s largest conglomerates, was responsible every 90-days for continually improving numbers.

Second, Jack believed in a company culture that rewarded performance. As others have pointed out, a lot of Jack’s “firings” were mutual. Some employees simply didn’t like his aggressive style, his penchant for numbers and details, his vision for the company or his standard of accountability for every department.

Sometimes company culture clashes with an employee’s value system. Sometimes the employee is constantly at odds with the overall culture and ultimate mission of the company.

Despite the wishes of some government and union types, owners need to free up unproductive workers with people who can actually to the job – sometimes so the company can survive.

So let’s say you’ve decided to raise company standards. You’ve developed a clear mission, you’ve established the rules of a positive company culture and you’ve got a new attitude toward your customers and suppliers.

But some of your team aren’t with the program. Some never will be. What do you do?

The best thing to do is stay the course. If you’ve ever segmented your customers into A’s, B’s, C’s and D’s, you could also apply the same rationale to your employees. Some may not you’re your standards, but others will be attracted to a company that knows what it wants and where it is going.

For those of you who haven’t set standards, you need to. Take a cue from Jack. Not only will you benefit long-term, you will also allow others to achieve success in their own right.

1. Establish your own Vision, Mission and Culture for your company. What’s your company culture currently based on? Anything? Nothing?Jack was a big believer in a culture based on innovation, efficiency and continuous improvement. He also believed in rewarding results, from awarding employee bonuses based on innovation to allowing staff to participate in stock option compensation. Does your company have incentives or reward employee performance?

   In my experience, every company gets the staff they deserve. If you want to improve your team, work on improving your approach to your overall business. It begins by creating a Vision and a Mission for your company. It continues by sharing both with all your team.

2. Develop strong leadership. Without strong direction, your business will be like a ship without a rudder. This doesn’t mean you need to be an autocrat or a dictator. Just the opposite. I’m talking more in terms of “quality” here. Passion and the ability to take total responsibility are important keys.At GE, Jack was a fiery leader who was incredibly passionate about the direction he wanted for the company. He let people know what the goals of the company were, and gave his team the direction and resources needed to get the job done. He also took personal responsibility for GE results. That’s an important point to make. Jack didn’t operate in a vacuum. He had his own bosses to whom he was accountable. They were called his shareholders.
3. Have a common goal. Both you and your team need to know what the goal of the business is. When Jack ran GE, he had 12 businesses under the GE umbrella. All had their own goals and objectives – but each operated under the overall GE Vision and Mission. That helped all team members to see the “big picture,” one they could be part of and adapt to their specific situations.
4. Set the rules of the game. Team members need to know what they can and can’t do. Everyone must know what game your company is playing, as well as the rules of the game. It’s up to you to create the rules and the playing field. If you don’t, your team will be without direction, and will set their own guidelines for you.
5. Have an action plan. All your team members need a position description that spells out their duties in clear and unambiguous terms. This helps define responsibilities and also helps limit jurisdictional disputes about what a person should or shouldn’t be doing.Ideally, all of this is done in a systemized way, one that can be written down, replicated and repeated. Do this by department and you’ll have an operations manual for your entire business.
6. Support risk taking. You must be willing to take risks. If not, your team will lag and not want to push boundaries. If you don’t push your team to take business risks, your company will push conservatively towards its goals. Know that risks and rewards are two sides of the same coin – and make sure your team knows that, too.
7. 100% involvement and inclusion. Practice the art of inclusion. Ask your team for their opinions and listen. The key is to make sure everyone is involved and everyone gives their all to their respective jobs. In Jack’s view, “every person counts.” Every person does. And you really want them to count in moving the whole team toward the company’s objectives.

Just remember, Jack increased GE turnover six-fold from the time he started to the time he left. He couldn’t have done it with people who didn’t buy into his vision for the company – and he had a pretty big vision for GE.

Nor could he have done it with employees who underperformed and resisted change.

Can you?

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

So, you started the company, you built it up, but are you the best person to keep running it?

It’s a tough question.

Entrepreneurs are not always the best managers. In fact, they are often some of the worst.

For entrepreneurs who find themselves “stuck” or see their companies at a growth plateau, a great question to ask yourself is whether or not your greatest strength is managing what you’ve built.

For most owners, it isn’t. For most of them, what they really need to do is get out and start a new venture or enterprise.

Because entrepreneurship is what they do best.

What are the characteristics of a great entrepreneur?

Different from those of a manager or employee. That’s why owners are entrepreneurs in the first place. Beyond a vision and drive for something more, true entrepreneurs realize trading time for money is not the way to get rich.

However, being stuck as a manager in your own operation is not productive, especially when your talents lay elsewhere. But how do you get out of your own business in a way that benefits everyone – including yourself?

First, you must recognize “you” may be the issue. Once you admit that, options and opportunities become more clear. Ideally, you already have some systems in place in your business and a good team you can trust to run at least some portions of your operation.

Then, you must take a leadership position to put new leadership in place.  There are a few great ways you can successfully make it happen that have proven effective for other owners in your position over the years:

1. Recruit two or three high caliber people and let them work their way to the top. Don’t let them know you are looking at them as your replacement one day; instead, mentor them and let them lead their various divisions and see for yourself who would be the best fit for the company long-term.
2. Look within. Here, you’re looking at your current roster of executive staff you currently have for one or possibly a group of employees who could takeover the company and run it long-term. You might even find a way to create an income flow for yourself long-term from this type of arrangement – one that would let you do something else, like….
3. Find and run a business that is not dependent on you. Ideally, this is the business you start after you sell or find a creative way to get your cash out of your existing business.

That said, there are a couple of ways NOT to replace yourself. In some instances, these tactics may have worked. Just remember, those successes are the exception – and not the rule.

1)      Make a clean break. This is the easiest way to replace yourself. Here, you basically go out and hire a pro to come in and run the business. That person comes in, and you go out. Obviously, this isn’t recommended for a number of reasons. First, the new person has little or no institutional knowledge of your business or its history.

Second, such change is usually too drastic for customers and employees. Sometimes, it’s even too drastic for the business owner – who in many instances undergoes a change of heart six months or a year down the road and decides to come back. Many times, the company the owner returns to is not the one he or she left.

2)      Put a family member in charge. This is also an easy way to replace yourself, and it is also not recommended. The reasons for this are obvious:  resentment among top management and employees; perceptions of nepotism; the idea that skill sets don’t match the high standard of a founder.

Putting a family member in charge could be an option if the plan of succession for a business is already laid out that way, all team members are aware of that plan and the person tapped to lead the company has paid his or her dues working in the company from the ground up.

Most times, however, owners aren’t so prepared or long-term oriented in this regard, and the envy and resentment of family members in charge leads to problems from which most companies never recover.

Regardless of the route you take, the important thing to realize is most issues in business start at the top. It’s why a company suffering for lack of sales is probably led by a boss who is not a great sales person. It’s why a company with a dysfunctional team is led by a person who is not a great manager. Or why a company that seems unfocused is run by a person chasing after every new market or idea that seems to hold opportunity.

Maybe you’re the person I’ve just described. You had the great idea, the brilliant innovation or the breakthrough product. But maybe you’ve taken the business as far as you can take it. Maybe it’s time to get out of the way and let a new team of professionals take over so you can move on – and start your next business.

Recognizing you are not the perfect sales person, manager or marketing director isn’t bad. It can be liberating.

Realizing you’re the perfect entrepreneur can be the just what you need to really succeed in business – at a level you may have never dreamed possible.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

Here’s a little known secret about business.

It doesn’t matter what your turnover is, or how many employees you have, or how many customers you've got.

It doesn’t matter how many offices you own or if you’ve got a cool company logo.

Profit is the only thing in business that counts.

Say you want to increase your profits. Where do you start? First, you need to determine where you are. Just saying you want to increase your profitability 25% is meaningless unless you have some benchmark to measure against.

In that vein, you need to discover what your average dollar sale is and what your current profit margins are.

Know going into this exercise that you might be tempted into thinking reducing costs is the key to higher profits. Keeping costs down is important, but if you really want to make more money, you have to increase your income.

Know also that you’ll be focusing a lot of your efforts on marketing – an area most business people view as an expense.

I suggest you start thinking of marketing as an investment – with every new customer viewed as a customer you have just bought. I also suggest you spend at least 50% of your time in this area of your business.

Generally, increased profits come from four areas: a better handle on management, money, marketing and merchandise. These “4 M’s of Profit” work together to help boost your bottom-line, and you can take a few things from more extensive strategies in each category to start leveraging your profits right now.

Let’s take a look at 7 things you can start doing today to make your income statement look better next year:

1)      Provide team training. This is a management task, but one that can really improve your company’s overall performance. Does the team know they are even a team? Are they aware of company sales goals or objectives? Are they even aware of the types of products you sell or services you offer? Do they know what your highest margin product or service is? Do you?

The point is, you can’t create leverage or any kind of synergy unless your team knows where they are and where they need to go. Either you need to provide direction – or they will provide direction for you. Start now to develop true team direction and leadership in your organization. It will pay off in a major way sooner than you may expect.

2)      Segment your current customers into four grades:  A’s, B’s, C’s and D’s. Concentrate on your A customers. They are the most profitable, most loyal and best source of referrals. Your C and D customers? Sack them. They are a waste of your time and resources, and they are constantly looking for bargains and discounts. Keep in mind the 80-20 rule that says 80% of your business comes from 20% of your customers. Those customers are your A’s. Spend your efforts and resources on finding more of them, rather than catering to the C’s and D’s.

3)      Keep track of costs and set budgets. This seems like a no-brainer, but it is amazing how many businesses have no idea what their actual costs are. Spend a whole week and check every expense. You might be surprised how much you’re actually spending on some things, and how little you’re spending on others. Regardless, this is the first step in identifying where you can cut any waste – and any savings here directly affects your bottom-line.

4)      Increase your margins and prices. This may be counter-intuitive and terrifying, but it is the easiest way to immediately increase profits. The good news is, most times you raise prices most customers won’t even notice. Those that do are typically your C and D customers anyway. Look at it as a nice way to tell those customers, “goodbye.”

5)      Stop discounting. This is another strategy that has a profound impact on profit. When you stop discounting, you literally stop giving money away. Think of it this way:  if you constantly discount, why even bother having a retail price? Not only does discounting cost you money, it gives your customers the general impression your “normal” prices are a rip-off. The flip-side of this, especially if you are in a “discounting” oriented business, is to add-on value instead. In some instances, you may be able to raise your price, add value for very little cost out-of-pocket and enormously leverage profits. In the end, it’s all about perceived value for your customer.

6)      Make it easy to buy. Look to lower the barriers of doing business with you at every level. This could mean allowing creative payment terms or financing options (you could even make this a new profit center in your existing operation!). It could also mean allowing trade-ins or trade-ups on merchandise, or creating a layaway plan, depending on the type of business you have. The point is, once you have the customer, make sure you do everything to help them spend as much with you as possible.

7)      Down-sell. Finally, you may have heard of up-selling and cross-selling, but down-selling might be a new one for you. What exactly does this mean? Basically, no customer leaves your premises without buying something. If you know a customer can’t afford a higher priced item, show that item to the customer first, then offer the lower priced item as an alternative.

A key to this strategy is to make sure you are absolutely certain your up-selling isn’t working with a particular customer or product. It’s always better to up-sell as a general rule. But if your goal is to ensure money is generated at every opportunity, down-selling in certain circumstances may help fill that role for you.

Since we’ve talked about adding value, I’ll even throw in one more strategy that could leverage your profits. Create your own private brand or label. In some retail outlets, the private labels outsell the big brand names – at margins higher than the big brands could ever get.

Who knows? Your private brand may take your business in a whole new and very profitable direction. Because profit really is what business is all about.

And I can guarantee it’s the one business model that will never go out of style.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

I have a theory, and it’s a theory I have seen proven again and again in business.  And, it’s a theory that has made so many companies so much money, that it literally blows me away how few ever use it.

Think about this … who is the number 1 prospect to buy from you tomorrow …?

That’s right, the people who bought from you yesterday …

And that’s where my theory kicks in.

You see over the years, several reports have shown that most companies ignore my theory and spend 6 or 7 times more on chasing new customers than they do on getting past customers back.

And yet, the majority of profit in any company comes from repeat business.  Without repeat business a company will always struggle to grow and make profits.

So, back to my theory …

A company that doesn’t send thank-you cards to its customers leaves a lot of profit on the table …

It’s not just the thank-you card, it’s what sending the card shows me about how you do business.

Look at it this way, when was the last time you were sent a thank you note from a company you did business with … ?

If I’m right, it was a long time ago, if ever …

Big companies, small companies, they’re all as bad as each other.  They spend a small fortune getting you to come in and buy and when they have you right where they want you, they let you get away …

Most don’t even do the basics right.  But even if you get the basics right, let’s see how well you’re doing over all …

Here are my 6 steps to getting your customers buying from you again and again …

1. Collect their details – and I don’t just mean their name and number.  You need to learn as much as you can about them.  Preferences, birthdays and anything else that will help you turn them into a regular customer.  One thing to make sure of, you need to have a great database system, but no use keeping names if you don’t use the next 5 steps …
2. Send a thank you card and invite them back – and do it in hand writing, even on something as simple as a postcard.  It’s crazy how simple and inexpensive this is, yet so few ever do it.  You can even include business cards they can give to their friends …
3. Plan future buying – this is so simple yet very rarely done.  What if you sat down and thought through, or even called or met every customer and discussed their future needs.  Just think of how easy I would be for a printer to remind you or even call you about the fact that you are running out of letterhead.
4. Inform your customers of your entire range – ever had customers say, ‘oh, I didn’t know you sold that’?  You want every customer to know everything they can buy from you.  Just think of how people have insurance with several different companies, when was the last time your insurer called and asked if they could offer you a quote on all the policies you don’t have with them.  You need to be more pro-active with customers.
5. Write a monthly or at worst quarterly newsletter – with everyone going to email newsletters I am of a firm belief that it’s back to the old way of written and printed newsletters that will get the results.  With so much technology, some times it’s the back to basics that works best.
6. Special Offers – if they’re not receiving offers, carrying a VIP card, or in some way made to feel important, then you aren’t getting as much from your customers as you should be.  Think of your favourite restaurant, could they send you a text every Monday with the menu specials for the week.

I’m sure you can think of dozens more ways to get your customers coming back.  It’s not about ideas though, it’s about action.

It’s about putting any or all of these ideas into action in your business now … and if you do nothing else … at least send someone, or everyone a thank-you note …

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.

You know almost every big business started small, in fact many of them part time from home.

And yet, so many small companies fail to ever become more than a job and a wage for the owner. They fail to become true businesses and remain forever a BUSY-ness for the owner.

And to be blunt, there’s a reason most never grow.  You see there’s a reason your first business is the hardest one.  It’s because you have so much to learn.  Not only do you have to run the company, grow it and finance it, you have to learn as you go.  It’s a great challenge, one of the greatest.

But, let’s be honest, if it were easy, everyone would do it.  The challenge is only up to those of us with true entrepreneurial spirit …

So, let’s examine how to take any small business and make it big …

Here’s my true definition of a business, a “Commercial, Profitable, Enterprise that Works, Without Me …”

That’s right, the whole aim of the game is to get it to a stage where it works, so you don’t have to.

Here’s how you need to break down the definition …

Step 1 … A Commercial Enterprise … here’s where you get the basics right.  It’s vital to build a big company that you have the ability to deliver your products and services with high quality, great service and consistent productivity of your people.  Three main areas you need to work on … money, delivery and productivity.   Money is all about knowing your numbers and knowing you are making a profit on every sale.  Delivery is all about making sure every one of your customers is served consistently and with high quality and great service.  And productivity, about getting the most from yourself and your people.  This is the first stage of business growth and one many never bother to work through.  If you want to grow it, take these first steps …

Step 2 … A commercial Profitable enterprise … Here’s where you build revenues and capitalize on the profitability you built in step 1.  There are 4 areas you will need to build upon.  You will over time build the systems and strategies you have for Lead Generation, Converting Leads into Sales, Repeat Transactions and your Average Dollar Sale.  Building our business beyond a small company will need you to learn and build in these areas.  Over the next few issues of this magazine I will write articles on each one.

Step 3 … A commercial profitable enterprise, That Works … Here’s where you have to build systems, systems that run the company.  As you document, record, film and photograph how everything is done in your company you take it from a business that is dependant on good people to one that is dependant on good systems.  Add to good systems, good people and you end up with a great business that now works …

Step 4 … A commercial, profitable enterprise that works, Without ME … This is all about building a team.  If you want the company to run without you, then you have to build a team and a leader to take your place.

Step 5 … Growth … Get everything you have done to work together in harmony, with Synergy and open multiple offices, shops or territories.  This is where you multiply and use the system you already have working again and again.

Step 6 … Freedom and Results … now it’s big and you can let your team build it, it’s been several years, probably 7 to 10 years of you worked hard and smart, but finally you have made your small business big …

I know this seems like a lot of work, read my books for more details, but it takes time and learning, stay with it, it will be worth it in the end.  Owning your own business is definitely a great challenge, but it truly is filled with great reward.

This article is reprinted courtesy of My Business magazine, one of the leading business publications in Australia.