Small Business Development Center
At Chemeketa Center for Business & Industry
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Category Archives: Progress

Six Key Ideas to Grow Your Business

By Chemeketa SBDC

Your ability to think, analyze and decide is the key determining factor of your profitability.

To help you sharpen this ability, here are some key principles for business success that are relevant and important at every stage of your business life. If ever you aren’t happy with the business results you’re getting, revisit these key points.

1. The Product Must Satisfy A Current Need — The first principle to consider in selecting any new product or service is to determine if it fills a genuine, existing need customers have right now. A new product or service must solve a problem of some kind for the customer or make his/her life or work better in a cost‐effective way. You must be very clear, from the beginning, about exactly what your product or service does to improve the quality of the life or work of your customer.

2. Offer Good Quality At A Fair Price — The second principle for business success with any product or service is that it must be of good quality at a fair price. If it’s in competition with other similar products or services, it must have what’s called a Unique Selling Proposition ‐ some feature or benefit that makes it different from and superior to others out there.

3. 3. Be Careful With Your Money — Tight financial controls and good budgeting are essential. Successful companies use accurate bookkeeping and accounting systems. They put these systems in place at the very beginning and carefully record every penny they spend. Cash flow is a critical measure and determining factor of business success. Always carefully consider every expenditure. The basic rule for entrepreneurial success is this: Only spend money to earn money.

4. Get Efficient Through Technology — Working hard is important, but there’s one thing even more important — working smart. That’s what technology helps you do. You get more done, you get it done easier and you get it done better. By using technology you’re able to do some things that would simply be impossible without it. There is an array of technology tools that allow you to build your business in extremely smart ways. Be sure to take full advantage of them.

5. Maximize Your Marketing — Perhaps one of the most important principles for business success is strong momentum in the sales department. This requires an emphasis on marketing that permeates the entire organization. Everybody must think about selling and satisfying customers all day long. Create a daily sales checklist, set performance goals, and unify everyone’s effort by sharing goals team‐wide.

6. Create A Culture — This is about cultivating passion in both your team and customer base. Your culture clarifies your identity, your values and your beliefs, in addition to more basic things like the products or services you offer and how you price them. Some growth strategies are obvious and have immediate results. Others, like creating a culture, have more indirect results, but are still extremely important.

 


Now is a Good Time to Look for Operational Changes

By Chemeketa SBDC

Even though we’re on the other side of the recession there are questions about the future direction(s) business will go. But the nature of business owners is to “do something”. So — rather than waiting and watching, now is a good time to look at opportunities for change. Regardless of what is happening around you – it is always a good idea to be examining and adjusting your operational strategies to remain current and profitable.

If you have a sense that your company has had inconsistent results from your product lines or types of service, then you may want to consider working out a plan to correct and strengthen your company’s position. The most effective strategy would include:

1. Conduct an operational analysis by type of product/service or type of customer and determine where profits or losses are derived. Don’t be surprised if you isolate an area that is totally draining your cash reserves. Be careful here; consider all the implication of actions to correct the problem. Is the service or product actually a draw to customers and once they are in your shop, they purchase goods from you that carry a healthy profit? If this is the case then your loss may be, in reality, an advertising cost rather than a loss. Analyze.

2. Spend your time, money and energy on those areas of your business that bring in the best return. Advertise and sell the products that make the profits you need. You do not need to “slash prices”. You must learn to go after your best customer, not just anyone who may happen by. Identify and sell to the customers that are truly the key to the future of your company.

3. Consider contracting out the business that shows borderline or no profits. A business that specializes in your unprofitable product or services may be happy to act as your subcontractor and you may both be able to see profits from the venture. You can increase cash flow simply by selling out inventory and equipment of an unprofitable line in order to concentrate on what you do well.

4. If you must terminate a phase of your business, do it over time and help your customers find alternative vendors. Good customer service requires advance notice. Don’t just take action abruptly. You may very well undermine your customer’s faith in the ability of your company to provide support for those lines you do keep.

5. Promote what your business does well. Your company has a story to tell. It includes who you are, how you came to be where you are now (a strong, profitable company) and what you do well. Consider your business story and make sure that your public image is consistent with these facts. Accentuate the positive. Tell your story in words and actions. Brand yourself.

 


Projecting Sales

By Chemeketa SBDC

Even if you are an existing business – you should be forecasting – projecting your sales.  You may use actual numbers if you have historical financial records.  But what do you do if you have nothing to refer back to?  You will need to determine how many potential customers are there, how many of these potential customers are likely to buy from you, decide the average sale per customer and then project this out for the year. Try this:

First, determine the total number of potential customers living in your territory.  (Don’t forget – the more clearly you can define your customer – the more realistic your research!) If you sell to the general public, you need to find the information from the new US Census data for your market area.  You can find this information on the web or at the library (http://www.census.gov).

If you sell to other businesses, there are many potential sources of information; one of the best is a trade association that represents your industry.  You can also find this information through a web search or at the public library.  Once you have determined the total number of potential customers living within your geographical area – you have the base to begin narrowing down your target market.

Second:  determine the number that will likely buy from you. You need to be realistic.   Consider your competition (both in number and quality), consider that some of the people will not buy from you or your competition, and consider people will find substitutes for your product.  What percentage of the total available population will you be able to attract?

Third: determine your average customer sales per year. How many purchases will your average customer make in a year? How much will they spend on each purchase?   Is this a repeat business or once and only once.  Does the average customer buy the same product/service or will they need other complimentary services?  Trade associations are good sources of information to help answer these questions.

Fourth:  determine your annual sales volume. You have determined the number of customers and determined the average amount each customer will spend per year.  Multiply these two numbers together to calculate your expected annual sales volume.

Finally:  Evaluate the annual sales volume figure.  Does the number you calculated make sense?  If not, go back and work the numbers again.  What assumptions have you made about your customers?  How accurate or risky are these assumptions.  You can guess, and this is not a bad place to start.  But – then – you need to back up your assumptions with actual figures to gain the greatest degree of reality for your projections.


Business Reinvention

By Chemeketa SBDC

It’s January again, and time to take stock and make plans. How’s your business doing as we head into the new year? Has the economy turned your business model upside down? Does something need to change or you’ll go out of business? Are you restless and know you want something else?  Something more, something less? If something isn’t quite right, it’s probably time to reinvent.

But what does reinvention mean? The good news is that it doesn’t mean you have to throw the whole thing out and start over from scratch. Reinvention needs to be big enough that it’s transformational, not just a small series of tweaks here and there. Yes, you will be making major changes, and no, you don’t have to do them all at once. If you know your current business practices aren’t working, or you feel lackluster even if they are, trust your instincts and investigate that.

The first step in the process is to look at every aspect of your business and ask what needs a makeover. What is it that you really want? What parts of your business are not leading you in that direction? This could be your marketing, your products or services, your employment structure or employees, your size, or anything else that is getting in the way. Where are your biggest headaches coming from? What will give you the results you are looking for? Do some brainstorming and list every idea that might help. Get out of your comfort zone, consider all possibilities no matter how farfetched they may seem. Think big.

Then prioritize these areas in terms of what will give you the greatest return for your investment—your time and money. Ask for help from other business owners, your employees, a business coach, or anyone who you think will add value to your conversations and your processes.

Next, create a master plan for how and when the changes will happen. Decide what you will start with and when you will move on to the next item on the list. Make sure to include who will be doing what, how much things will cost, and the results you expect when you make the changes. A realistic timeline is important; a rollout that is too fast will shock the system and may backfire.

Then garner support from family and business associates for the new plan. Major changes can get derailed if you don’t have enough energy behind them, so build a supportive team. Change, even desired change, can be uncomfortable, so go easy on yourself and the others involved.

It is important to chart your progress as you move forward, so create a series of metrics to do this. Focus on the benefits of the new arrangement (you’ll need to continually focus on this to stay on task). And celebrate milestones when you achieve them.

And, if in your investigation you discover that reinvention for you means selling the business, going out of business, or some other track that steers you away from being a business owner, listen to that as well and devise a similar plan for recreating your life.