Organizing Your Collections Processes Most small businesses greet the collections process the same way they would greet a venomous snake in their kitchen. No one wants to deal with it until their life is at stake-or in this case their business. With some preparation and a little courage, you can charm the snake right out of your business. You may want to keep your records yourself, hire a third party or invest in a software program. To get started, consider these important questions: How will I keep track of overdue accounts? There are a number of bookkeeping software programs on the market that will help keep track of customers (each with different terms) buying on credit throughout the month. You can also create a report by hand, but manually keeping records of this magnitude may be a liability to your business when software programs are cheap and user-friendly. How often should I review my accounts? Exercise some flexibility. You may want to review some accounts that are 30 days overdue on the 35th day and some on the 40th day. Doing this will prevent 40 files one day and none the next. This is also a task that can be handed to a team member to do. How do I verify that the accounts on my report are still overdue? You will need to coordinate your account files with the record-keeping system that tracks your sales and payments-whether it is a ledger or a software program. To discuss any of these ideas or for assistance implementing an organized collections process, please feel free to contact us. We will be happy to assist you. Important Profitability Ratios The following business ratios are commonly referred to as profitability ratios. You can use them to monitor how well you business is performing. Whether you choose to do your own financial statements or to have someone else do them for you, understanding these important ratios will help you manage your business more successfully. Gross Profit Margin Ratio = Gross Profit / Sales. This ratio indicates if you need to make changes in your pricing and/or your cost of goods and services sold. Net Profit Margin = Net Profit/ Sales. This ratio tells you what your net profit is as a percentage of sales revenue. Return on Assets = Net Profit / Total Assets. This ratio lets you know how well your business is using its assets to produce profit. Return on Equity = Net Profit / Owner's Equity. This ratio indicates what you've earned on your investment in the business during the accounting period. Ask us to run a Business Performance Review for you. You'll see for yourself how various metrics combine to tell you how your business is performing and most importantly what aspects of it you need to work on. There Are Just 4 Ways To Grow Your Business Understanding that there are basically just four ways to create a better business can play a crucial part in your entire business planning process. The four ways are:
That's it. There are no more. These four factors will give you critical focal points for growing your business. When combined together, they also give you enormous leverage. For instance, given that you could increase each one of the factors above by just 10% (not too difficult a task), the total combined effect of that is an impressive 46.4% increase in your business. Is it possible to do that? Yes, it is. By applying the four ways to grow judiciously, you can make that percentage increase not just possible, but highly probable. We can help you discover dozens of strategies to help grow your business. And it all relates back to these four ways to grow. Ask us how today. Play to win-win-win Trying to garner customer loyalty without paying attention to team loyalty is like bungee jumping without the bungee. You'll kill yourself trying. Today's experts identify an unyielding link between customer and employee loyalty. Leaders with a sense of responsibility and commitment to treating people well are far more likely to attract and retain the best employees. They also command the respect of their employees who will see it as their responsibility to fulfill the company's mission to deliver superior customer service. This has immediate and long-term benefits. When the service is good, there is an immediate appreciation from the customer. Additionally, it gives employees a sense of pride, ownership and purpose. Making a commitment to your team and your customers is a win-win-win situation. Customers are happy. Team members feel a sense of ownership and purpose. And your business will gain the trust of its customers and employees. Brain Teaser Answer the following question instantly. You can't take your time. You have to answer immediately. Let's find out just how clever you really are. First Question: You are participating in a race. You overtake the second. What position do you finish? Answer: Nope, not first. You overtake the second and you take his place so you arrived second!!! Second Question: Very tricky math! Note: This must be done in your head only. Do NOT use paper and pencil or a calculator. Try it. Take 1000 and add 40 to it.
Answer: Did you get 5000? The correct answer is actually 4100. Don't believe it? Check with your calculator! Be Picky when it Comes to Your Customers That's right. It's your job to make them want you as much as it is to give them what they want. It will be a whole lot easier if you know exactly whom you want. If you haven't done so already, be sure to clearly define the type of customers you want to have. Be as precise as you can in identifying them. For example: We serve family and individual outdoor recreational enthusiasts of the greater Boston area. Our customers are likely to be in the middle to top income bracket, will likely shop the Internet and are drawn to the latest and greatest gadgets, equipment and outdoor sports. An example that is too general would be: Our customers are campers. Like everything else, success requires communication. Be sure that everyone on your team knows who they are serving and why they were chosen to work for you. Membership as a customer or an employee is a privilege. Think about your most desirable customers. How would you describe them? What characteristics do they share? It pays to know this when you consider that the majority of business comes from repeat and loyal customers. Resistance to Change Resistance to change often stems from the extent to which the changes impact each worker personally. Remember that reluctance is often the product of insecurity or threats to one's feeling of competence. Some people feel comfortable with old systems and fear learning new systems. Complaining, camouflaging errors, withdrawal, apathy or overt anger are common manifestations of fear and reluctance. Stay positive and focused during these periods. These behaviors are signs that your team is actually going through the change process. Address these behaviors head-on and make opportunities for people to constructively address their hesitation or reservation. Now is the time for support and encouragement. Some will need more than others. Look forward to more discussions about change in future editions of this newsletter. If you're in the process of introducing change in your business, we are happy to assist. Great Leadership Builds Great Businesses According to a survey of business coaches, leaders need to pay more attention to, and focus more closely on, their people skills in order to remain productive and efficient. These are five common pitfalls. Poor communications skills - both written and verbal, which 41% of survey respondents selected as the main top-level management problem in their organizations Failure to develop subordinates - chosen by 32% of human resource managers Rigid and inflexible management behavior - 29% Indecisive and/or nonassertive management behavior - 20% Not being a team player - 18% Consider getting some feedback from your team about , to see if you can improve in any of these areas. We are skilled in the art of facilitating a productive Team Advisory Board to help you determine what leadership style your people will respond best to. 5 Tools for Handling Criticism Criticism doesn't have to hurt or elicit anger. Here are five ways to lessen its impact.
We can help you increase trust and improve communication in your organization. Ask us today about our "Business Workout" seminar series and learn how participation in these informative, fun and fast-paced workshops can help you build a much better business (and have more fun in the process!). About Our Consulting Services
We are members of the Principa Alliance, an international network of business consultants and our goal is to help you build a stronger, more profitable business and enjoy a higher quality of life as a result. When you work with us to improve your business you're gaining access to a global knowledgebase and a wealth of consulting experience that is so much more powerful than any one firm could offer. By combining our knowledge of your business, the personal relationship we share with our clients and the consulting tools, support and networking power of the Principa Alliance, we can help you achieve more with your business than you imagined possible. In short, we can, and will, do so much more for you than just 'keep the score.' Contact us today to discuss how we can help you implement any of the topics described in this newsletter, and help you build a business that delivers on its promise. DISCLAIMER Information provided in this publication is intended as general information only and should be considered carefully for your own business situation before use. This firm and any associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.
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