What the recession has done to business and what to do about it

As readers of my blog will know, turning off the television, newspapers and radio will do wonders for your positivity and mental strength in running a business.  The last thing any business owner needs is a daily diet of economic doom and gloom especially when the media picks out all the negative stories and gives less space to positive ones (I’m not blaming them – we get the media we deserve!). 

The truth is there are lots of business owners out there (many of them I know personally) who are having bumper years.

However, whilst we can shield our eyes and ears from the prophets of doom it is likely that your customers will be daily receivers of this negativity and it would be crazy not to think it doesn’t have any effect on them.

The truth is, they are influenced by the media which has caused their behaviour to change in a way that may never be the same again pre 2007/8.  However, it is very easy to draw generalised conclusions about this e.g. all customers buy on price because they don’t have any money.

This is a dangerous game since if we draw these conclusions based on limited experience it could have a very damaging impact on business growth.  For example, if you believe that your customers don’t have any money, you are unlikely to offer them your extra services.

Over the last six months, I have been digging deep into these changes in customer behaviour and other game changers in the recent economic developments and have come to a number of powerful conclusions and related action points which smart business owners must know about.

I’m going to be revealing this information in a telephone seminar this Thursday 1 March 2012 at 10am.  If you are new to telephone seminars (they are great!), I give them every couple of months to my clients, contacts and people on my email list.

This one on Thursday is going to arguably be my most important yet.

If you would like to take part in the telephone seminar, email me at russell@rsaccountancy.co.uk.

There are 3 golden rules of selling, here’s one of them……

I got a call from one of my team today.  He had just won a new client for some tax work.  Excellent news, but not out of the ordinary.  Until he told me that he had phoned this prospect, after receiving an email 3 months ago, a total of 7 times and had no response.  He’d had no further contact other than the initial email.  That’s 7 phone calls, 7 phone messages and nothing back.

On the 8th call, he spoke to the prospect and the prospect decided he wanted to become a client.

What made my team member continue to phone this prospect despite there being no sign that after the initial email he was still interested?

Because in our business, 7 times is nothing, that’s standard.  My record?  Try 17 times.  That’s 17 phone messages over an 8 month period without a single call back or any encouraging sign that the prospect was still interested.  After 17 phone messages, I get a call, within 3 days, the prospect was a new client and he actually turned out to be one of my best ever clients.  Why didn’t he return my phone calls?  I never asked!

I had a conversation with another guy the other week who said that he was never pushy with his prospects.  Well, you know the old saying about timid sales people – they have skinny kids!  I laugh at the idea of being too pushy, how can you possibly be too pushy when you have something that will really benefit the person you have met?

If you truly, truly, truly believe in what you are offering, and you honestly believe the person you are offering it really needs it, then there’s no such thing as pushy.  Listen, you’ve got to know something about me – I am 25/8, constantly, without pause for breath, thinking about what we offer as accountants, I’m obsessive about telling the right people (not all people, the people who need what we have) about our services.  If one of these people raises their hands and says I am potentially interested, then I am going to do everything I can to help them.

When we think of pushy salespeople, we always think about door to door commission based sales.  But this isn’t sales, this is pure money motivated mind games, sales in a small business is “What you are your needs?  I have something that I think can help you”, you don’t have to be pushy but to be enthusiastic, obsessional, passionate – absolutely.

For every sale you lose for being OTT, you’ll win 9 for being enthusiastic -  people want to know that you believe in your product or service.

The Top 3 tips to make sure you continue to work ON your business whilst working IN your business

Michael Gerber in his book ‘The E-Myth’ coined the working in, working on phrase.

Working in your business is doing all the stuff that needs to be done to ensure your business generates cash and profits.  Working on your business is all the tasks that you don’t necessarily need to do right now but if you do, your business will become better.

Of course, sometimes tasks under your working on task list become so urgent they enter into the working in task list (we call this fire-firefighting!).  Many business owners, however, do not even get to their working on list, since they are just churning away in their business day in day out, week in, week out.

So if you are struggling to find time to do some working on your business (clue: there is no time) then here are 3 top tips for you…

1. Schedule in time to work on your business and DO NOT re-arrange this time EVER!  Yes, of course something more urgent is going to come up, that’s the point, but don’t let it.  Book a meeting with yourself and insist nobody bothers you, you wouldn’t interrupt somebody else’s meeting would you?  So don’t interrupt your own, or let anybody else interrupt it.

What?  I hear you cry, there is no time even to have a meeting with yourself because you are soooo busy?  What do you want me to say?  Then remain in your business forever, doing the same things without improving your business.  Of course, there’s no time – didn’t you see my clue two paragraphs ago.  You work in the day to put bread on the table, you work in the evenings to build your fortune i.e. if you really do not have any time, its long evenings in front of your laptop (or ipad) for you!

2. prioritise.  This really is a tough one.  You won’t be short on ideas about how to improve your business.  You could probably list out everything you need to improve it in about ten minutes.  Ideas aren’t the problem, time is (see point 1), so you have got to prioritise and it is difficult.  Here’s some pointers: what action will have the biggest impact with the least effort, start with that one.  Then, what action will have the biggest impact with the most effort?  Do this next.  Then go to the first action point i.e. bin all the low impact working on tasks.

It’s great having a water cooler in my office but is it more important than getting more testimonials on my website?  Probably not!  You will have lots of these trade-offs, choose wisely.

3. Get your team involved and get them to do the working on tasks.  This is my favourite because a) it means you don’t have to do it all and b) your team can probably do it better because they will be closer to the problems.  Yes its true, you are paying them to directly influence revenue but the working on tasks will affect revenue just further down the track.

If anybody has any more tips on this, feel free to email me at russell@rsaccountancy.co.uk

 

The one thing that keeps me awake at night……

Website designers will build and design your website for you, Caterers will make a great meal for your guests and insurance brokers will get you a great deal on insurance.

What will accountants do for you?

If you read my blog, I would love you to email me what you think an accountant will do for you but in the absence of time I will tell you what the majority of people tell me when I ask them……

Save people tax.

Which is fine,  more than fine – great, let’s save our clients tax (rarely do people say ‘help them increase their profits’, which is a real shame because accountants by being so close to the numbers are brilliantly placed to do this).  However, if no accountant has told you this, let me tell you something….there are 3 main ways to save tax and the majority of accountants will not tell you all 3.

The 3 ways are:

1) Conservative ways to save tax – these are ways to save tax that HM Revenue & Customs will not bat an eyelid at.

2) Moderate ways to save tax – usually fine as long as you have got all the angles covered and the paperwork signed, HM Revenue & Customs may ask but you will be able to defend it with the right advice

3) aggressive ways to save tax – these are tax strategies and schemes that HM Revenue & Customs openly disagree with and if the client undertakes such a scheme, they will be investigated (mainly because the client will tell HM Revenue & Customs that they have done something that HM Revenue & Customs doesn’t like).

I am in the minority of accountants that will always tell the client any tax saving option from all 3 ways.  Many don’t since either they don’t have the expertise or believe that option 3 (and sometimes 2) are too risky so they don’t tell the client at all, making the decision themselves on behalf of the client.

So, the one thing that keeps me awake at night is a client saying to me “why didn’t you tell me about this tax saving option?”  I make sure that I am not in that position by always giving the options conservative, moderate or aggressive.

I’m starting to get some requests to blog on the story of why 5 April is the tax year-end.  Seriously, it will be one of the most boring blog posts you will read (although I will enjoy writing it), dont’ tempt me!

If your company year end is 31 March, you’ve got to have your budget nailed down by the end of the month

31 March is the most popular year-end, mainly because it ties up with the corporation tax financial year (and almost ties up with the personal tax year-end – 5 April *).

So if you have this year-end, a question – have you completed your budget for the next year?

I’ve blogged before about how powerful budgets are but the thing I didn’t mention is that they do, and should, take a bit of time.  Since budgets are not just about putting a load of numbers together, or the classic – “let’s go for 5% higher profit than last year”.

I think that the planning for the budget is the most enlightening part, since it forces you to think about the business growth and how the marketplace is going to affect your business in the next year.

Question such as:

- What product or service line is the one to focus on?
- What product or service line do we need to stop?
- Who/when do we recruit?
- Have we got enough cash for our growth plans?
- What are the threats to our growth?
- How much do we need to spend on capital expenditure?
- What will be the product/sales mix in the year?
- How much should we spend on marketing?

and many more….

The point is, you won’t know all the answers and won’t be able to predict the future.  That isn’t what the budget is for.  The point is, you are forced to take a hard look at your business and assess the direction, strengths, weaknesses.

After all of this, you will be left with lots of numbers BUT the thinking behind them will have given you the insight into what works in your business and what doesn’t.

Tomorrow, how do you pick the profit target.

*Have you ever wondered why the personal tax year is 5 April and not a date at the end of month?  I’ll tell you the story at some point – I found it incredibly interesting, but actually most people will find it baffling and tiresome.

If you don’t use social media, will you be left behind?

OK, let’s get one clear – I am not a social media expert.  Far from it, I’ve come to the party late. 

I’m 35 years old (I know, from my photo you would never have guessed), my sister in-law is 24 years old.  When I first saw facebook, I immediately thought of privacy and why I would want to read what people had for breakfast.  My sister in-law had no such reservation, she was on it straight away and not in a ‘hey, I’m on facebook!’  For her, it was as straight forward as using email or her mobile phone.

I’m sure social media is a generational thing (and I’m only talking a 11 year gap between me and my sister in-law – I think that is too small a gap to be a generation!) but I have been worried that I was on the wrong side of technology and that younger business owners would pick this stuff up quicker.  So….I got in to it!

I believe (and you can’t quote me on this because as made clear – I am not a social media expert) that social media will very soon, if it isn’t now, be as standard to a business as having a website.  It is social media, not business media but all the same, if you are not on social media and you run a business you potentially could be missing out on a huge opportunity in getting your voice heard.

I heard Brad Sugars, founder of Actioncoach, once say that social media was an ‘interactive database’.  I really liked this – at one time all your clients and contacts would be on a spreadsheet somewhere, locked away on a computer, now though, everybody can see who they are – no privacy at all.

When you throw in the word ‘testimonials’ to the mix, potentially you are looking at a whole new way of communicating client satisfaction to prospects. 

If you have any decent stories of how you have used social media to benefit your business I’d love you to email me at russell@rsaccountancy.co.uk

 

Let me tell you about the day a hedgehog saved my life……

When I started my business, the options for what I could do for clients seemed endless.  I had so many ideas that it was difficult to know which avenue to go down.

Then I read Jim Collins ‘Good to great’, a business classic which I’ve blogged about before.  One of the most powerful ideas in the book is ‘the hedgehog concept’, I’ll paraphrase it but it goes something like this….

The Hedgehog is fairly useless at most things, its small, can’t run very fast and doesn’t really do a great deal.  However, if a fox appears or any other predator, he does the one thing that he is good at, no, excellent at.  Actually he is the best in the world at it – he curls up in a ball and sticks out his spikes (not a zoological term) so nobody can eat him. 

It’s a great trick and one that will keep Mr Hedgehog alive.  It is the only good thing he can do but there is nobody that can rival such a brilliant protective technique.

As it is in business……

You will come across lots of people who will take 2 hours telling you everything they can do in their business.  The product and service line is a book in itself.  You will also have come across other people who say ‘hey I’m a solicitor but I also run a wedding planner business’ i.e. jack of all trades, master of none.  The opposite of the hedgehog concept.

So have a look at your business and ask yourself ‘what is your hedgehog concept’ – what can you be the best in the world at that nobody else can do.

It’s not an easy thing because taken to its logical conclusion you will eventually be turning away some customers, but it will save lots of time like it did me…..if you stick to it!

Bizarre blog footnote…….two days after reading about ‘the hedgehog concept’, I found a dead hedgehog in my garden that my cat (Mr Tibbs) had killed.  I thought it was a sign, but to this day I don’t know if it was confirmation that the hedgehog concept was a good thing or whether it was a bad thing.  I went with a good thing and its served me well.  I guess all hedgehogs end up being a bit slow to curl into the ball.

When should you recruit a new team member? – Here’s a great tip….

“If you want a job done properly, you have to do it yourself”

Great piece of ‘wisdom’ that is utterly useless if you want to grow a business and earn more profits.

The truth is, if you want to increase your income and grow your business you have to recruit team.  If you have a team, to grow further you will need more team.

Sure, I’ve read the ’4 hour work week’, but look at all the top business successes that you know – they will all have team and be a master at managing that team.

Personally, I think the team management part of business is by far the hardest, most fun and enjoyable part of the game.  I also feel a certain moral obligation to create employment given the unemployment figures.  However, if you want to look at it in purely business terms – if you want to be bigger, you’ll need a team.

Finding a team is one thing, that’s the easy part.  Finding a great team – well, that’s an art form.  I’ve been obsessed with recruitment for the last 3 years because it is those decisions that will have such an impact on business success.  Your team should be leading YOU to greatness, not the other way round.  You’ve got to hire people who are better than YOU, not the other way around.  If you honestly think you are the best person to do the work, then good luck to you, but you won’t grow a business.

Anyway, lets assume you want to employ that next person.  How do you know when the time is right?  Here’s a quick tip – if you believe you can afford 50% of their salary (you’ll know this by checking out your profit forecast) then hire them.  They will make up the missing 50% in their contribution to the business and in freeing you up to do the important stuff.

 

How do your profits compare to your competitors?

When I am going through the business numbers with a client and get to the profit figure, I am often asked whether the profit is good or bad.

When a company is appraising its profit performance, the first number to compare the profit figure with is the budget (if there was one).  This will give an idea whether the business has performed to expectation.  The second number would be to compare with the prior year.  This will show whether the business’ profits are increasing or decreasing.

Both these numbers are easy to find and compare against.

The third number is potentially a more interesting number.  This would be to compare your profits to those of your competitors i.e. other companies in your sector.

This number is a little more difficult to find.

Not many people know this (unless you are an accountant) but if you have a private limited company by shares, whilst your accounts are indeed published at Companies House and available for all and sundry to view, the accounts are the abbreviated set which basically tells the viewer very little.  It is also impossible to truly tell what the profits of the company is.

However, there is a way to find this number…..

I have access to benchmarking software which effectively tells you how your profit compares to other businesses in your industry. 

So for example, I can tell how I rank against other accountants in terms of sales growth, gross and net profitability, turnover, debtors, cash, return on investment. 

The last time I looked at this myself, I ended up printing off a 60 page report and taking hours to dissect it (it was LOTS of fun!). 

These reports (although not usually 60 pages) can be produced for pretty much any sector and really do answer the question ‘how do I compare to my competitors’. 

If you are interested in finding out how you do compare email me at russell@rsaccountancy.co.uk

How to get more cash?

Cash is the lifeblood of a business, it is the oxygen that makes everything else in the business possible.  A business with no cash not only restricts growth but it saps time and energy away from key people in the organisation.  A business with no cash ends up being one where fire-fighting is the norm.

The systems around cash in a business are the most important systems but it is often a system which is overlooked. 

There are 3 main steps to getting more cash in your business….

Firstly, produce a 3 month forecast every month.  This will be time-consuming at first, but after a couple of months it will become easier.  It is essential for a growing business to know what is coming around the corner and be able to predict cash gaps and ‘surprises’.  It can be troublesome when the cash forecast is showing a dip at the end of 3 months, it is much worse if you predict it at the end of next week.

Secondly, cash problems in business are not really down to cash but down to the payment terms.  You want your payment terms to be as favourable to you as possible.  I would encourage any business to test this until you are blue in the face.  Don’t just look at what is industry standard, play around with different terms, be bold with it.  The difference between 7 days and 30 days can be massive.

Thirdly, it is a great step to have favourable payment terms but if you forget to invoice the customer then the cash will not come in.  It is very rare for a customer to helpfully to tell you that they haven’t been invoiced.  The longer gap between the sale and the invoice the increase or risk of payment problems.  Work on the invoicing/sale system which leads to cash so that there are no gaps, no bottlenecks, ensure it runs smoothly.  This may take some time (it could take 3-6 months and software investment) but it will be worth it.

The result of your efforts will be reflected in your bank account which is always very satisfying!