5 keys to get your business working harder so you don't have to

Business ownership is one of the American Dreams; being able to be in control of your own destiny and have the freedom to choose want you want to do and when.

But for many entrepreneurs, that dream has escaped them. They have fallen into the business trap. The dream of freedom has fallen into the daily challenges and frustrations that struggling entrepreneurs face every day.

1. No Cash – You may be selling, but there’s never enough cash to pay the bills at the end of the month. There no cash left over to invest in new technologies or to upgrade equipment or put into your pocket.
2. No Time – You’re not running your business, it is running you. You are spending most of your day solving problems and putting out fires. Instead you should be planning your company’s next big venture, or just have time to do things you want and spend it with the people you love.
3. No Team – Instead of having a team of professionals that are working together toward a common goal, you have a group of employees that are looking out on how to better themselves. It’s more about “I” than “We”.
4. Feeling Stuck – Your Company has hit the glass ceiling. You can see as clear as day where you want to go, but something or someone in your organization is holding you back from crashing through that barrier. Nothing you have tried has worked.

If you find yourself struggling in any or all of these areas you are not alone. These are very common challenges for most businesses. Though very common, successful businesses have learned to overcome them by focusing on these 5 areas to get there businesses working hard and they can enjoy more life

1. Planning & Vision – Having a common focus & goal that everyone can buy-in to.
2. Leadership Development – The business is not working because you are. You need to develop leaders within your organization that are aligned to the company’s focus and goals that will run organization.
3. Test & Measuring – What gets measured gets improved! Each leader and team member in the organization needs to have an activity based score card to help them stay on track towards reaching the company’s goals.
4. Systems –Leverage is about doing more with less. To get your business working as hard as you do, you need to create written systems for your team to follow to drive consistency throughout your organization.
5. Implementation – Without Action nothing happens. This is where accountability and discipline come together. This is where most businesses get struck and spin their wheels.  Your organization must agree on 3-7 priorities that they will focus on. Each team member must know and be responsible and accountable to how their role leads the company towards achieving your top priorities.

Want to learn more about how you too can get your business working harder so you can enjoy more life? Contact ActionCOACH Steve Goranson at 904-739-0200. www.actioncoachjax.com schedule your free 1/2 phone coaching session.

Steve Goranson has owned and operated the Northeast Florida of ActionCOACH since 2014. ActionCOACH is the World's #1 Coaching franchise with of 1000 offices in 50 different countries. They coach over 15,000 business each week.

Steve's commitment is to assist small business owners, to spend less time working "in" their business and more time working "on" their business so they can build a more valuable and sellable business. In the end, you’ll be spending less total time working, will be making more money and will have truly created the company and team you always dreamed of. In addition we will help you put the FUN back in your business and your life.

Call his office to schedule a free 1/2 hour Phone Strategy Session 904-739-0200

Business Advice: 1 Hidden Thing That Drives Your Company’s Value

At ActionCOACH our definition of a successful business is a commercial, profitable enterprise, that works without the business owner.  If the business can't work without the business owner, it's broke. You don't own a business, you own a job.  And... no one wants to buy a job or at least not pay a lot for it.

The main advantage of having the business being able to work without you doing the "technical" work in the business, is that you are now increasing the value of the business and at the same time making it more attractive to a potential buyer in the future.

In our previous post we discussed how the importance of the business owner not selling as a way to increase the value of the business.  In this post well focus on another area to increase the value of your business.

You already know that your company’s revenue and profits play a big role in how much your business is worth.  Do you also know the role cash flow plays in your valuation?

Cash vs. Profits

Cash flow is different than profits in that it measures the cash coming in and out of your business rather than an accounting interpretation of your profit and loss. For example, if you charge $10,000 upfront for a service that takes you three months to deliver, you recognize $3,333 of revenue per month on your profit and loss statement for each of the three months it takes you to deliver the work.

But since you charged upfront, you get all $10,000 of cash on the day your customer decides to buy. This positive cash flow cycle improves your company’s valuation because when it comes time to sell your business, the buyer will have to write two checks: one to you, the owner, and a second to your company to fund its working capital – the cash your company needs to fund its immediate obligations like payroll, rent, etc.

The trick is that both checks are drawn from the same bank account. Therefore, the less the acquirer has to inject into your business to fund its working capital, the more money it has to pay you for your company.

The inverse is also true.

If your company is a cash suck, an acquirer is going to calculate that she needs to inject a lot of working capital into your business on closing day, which will deplete her resources and lessen the check she writes to you.

How To Improve Your Cash Flow

There are many ways to improve your cash flow – and therefore, the value of your business. One often overlooked tactic is to spend less on the machines your company needs to operate.

In the restaurant business, for example, there is an often repeated truism that it takes three bankruptcies at a single location before any restaurant can make money. The first owner of the restaurant walks in and – with all of the typical optimism of a new entrepreneur – pays cash for a brand new commercial kitchen complete with fancy stove, commercial grade walk-in coolers, etc., as well as all new dishware, pots and pans, thus depleting his cash reserves before opening night. Within a year, the restaurant owner runs out of cash and declares bankruptcy.

Then along comes a second entrepreneur who decides to set up her restaurant at the same location and buys all of the shiny new equipment from owner number one’s creditors for 70 cents on the dollar, figuring she has made a wonderful deal. But the outlay of cash is still too great and she too is out of business within a year.

It’s not until the third owner comes along that the location actually survives. He saves his cash by buying all of the equipment off the second owner for 10 cents on the dollar.  

The moral of the story is: find a way to reduce the cash you spend on equipment, however you can. Can you buy your gear used on sites like eBay? Can you share a very expensive piece of machinery with another non-competitive business? Can you rent instead of buying?  In Jacksonville a great place to find used and new restaurant is www.a1restsupply.com.

Profits are an important factor in your company’s value but so too is the cash your company generates.  We call this phenomenon The Valuation Teeter Totter and it is one of the eight key drivers of the value of your company. Curious to see how you’re performing on all eight drivers? Get your Sellability Score here: www.actioncoachsellabilityscore.com 

How to increase the value of your business by 71%

How much did your home increase in value last year?  Depending on where you live, it may have gone up by 5 - 10% or more.

How much did your stock portfolio increase over the last 12 months? By way of a benchmark, The Dow Jones Industrial Average has increased by around 13% in the last year. Did your portfolio do as well? 

Now consider what portion of your wealth is tied to the stock or housing market, and compare that to the equity you have tied up in your business. 

If you’re like most owners, the majority of your wealth is tied up in your company. Increasing the value of your largest asset can have a much faster impact on your overall financial picture than a bump in the stock market or the value of your home.

Let us introduce you to a statistically proven way to increase the value of your company by as much as 71%.  Through an analysis of 6,955 businesses, we’ve discovered that companies that achieve a Sellability Score of 80+ out of a possible 100 receive offers to buy their business that are 71% higher than what the average company receives.

How long would it take your stock portfolio or home to go up by 71%? Years – maybe even decades. Get your Sellability Score now and you will be able to track your overall score along with your performance on the eight key drivers of Sellability. Like a pilot working his instrument panel, you can quickly zero in on which of the eight drivers is dragging down your value the most and then take corrective action.

Your overall Sellability Score is derived from your performance on the eight attributes that drive the value of your company:

1.  1.     Financial Performance: your history of producing revenue and profit combined with the professionalism of your record keeping.
2.  2.     Growth Potential: your likelihood to grow your business in the future and at what rate.
3.  3.     The Switzerland Structure: how dependent your business is on any one employee, customer or supplier.
4.  4.     The Valuation Teeter Totter: whether your business is a cash suck or a cash spigot.
5.  5.     The Hierarchy of Recurring Revenue: the proportion and quality of automatic, annuity-based revenue you collect each month.
6.  6.     The Monopoly Control: how well differentiated your business is from competitors in your industry.
7.  7.      Customer Satisfaction: the likelihood that your customers will re-purchase and also refer you.
8.  8.      Hub & Spoke: how your business would perform if you were unexpectedly unable to work for a period of three months.

To find out how you’re performing on the eight key drivers of Sellability and start your journey to increasing the value of your largest asset, get your free Sellability Score now: www.actioncoachsellabilityscore.com

Business Advice… Stop Discounting and Start Increasing Value!

Discounting if used properly can be an effective strategy to increase profitability and cash flow, but if not used properly it can cause serious consequences to the growth and profitability of your business.

Most of the time discounting is a gut reaction to a slowdown in business.  Businesses find it easier to discount the value of their product than to sell on value.

One of the biggest negative consequences of discounting is that we are training our clients to buy only on sale.  This can have a big affect on our bottom line.  I’m not really sure a business understands how much more they have to sell just to stay at that same profit level.

For Example if you have a…

30% margin
You discount your product or service 10%
You will have to sell 50% more to make the same amount of money.
Contrast that with…

If your margins are 30%
You increase your prices by 10%
You can sell 25% less and still make the same amount of money.
Now isn’t that interesting…

Discounting is an appropriate strategy if your inventory is high and you need cash to pay bills or if it’s a perishable item that you will have to throw away.  However instead of just discounting your product, use it as an incentive for your customers to purchase more.

Let’s assume you have a product that costs you $5.00 and you sell it for $10.00.  If you were to have a sale of 25% off, you would now be selling it for $7.50 and only making $2.50 instead of $5.00.

Instead of discounting the full price you can have a buy one get the 2nd item at ½ price.  Now you’ll at least be making the same $-profit if you sold 1 at full price.  Another option is a buy 3 get the 4th free.  You are in essence still providing a 25% discount but you are now making $10.00 profit per sale instead of just $5.00 if you sold just 1 item.

The advantage here is that you are moving more inventory and turning it back into cash.

When it comes to marketing, “perception is reality”.  If you have a 25% off sale you become labeled as a discounter.  If you have a buy 3 get the 4th for free sale, or buy 1 and get the 2nd item at ½ price, you now are perceived as a place where you get more for your money.  You are now distinguishing your business from your competition by providing adding value to your customers instead of being viewed as just another discounter.

5 Tips to Improve Collections Recovery

A Guest Blog By Raymond Joseph, Joseph & Marees PA 

30, 60, 90 Days? ....  When to Act ?

My checklist for when a client should turn over an account for collection.  

  "The check's in the mail".

 

 "Things are a bit tight right now".

 

 We are waiting on our money, but we will send you a check next month. We promise".

 

  

 Sound familiar. Unfortunately, you've heard them all before. Some are made with good intentions, but most of the time the results are the same....disappointment and likely cash flow problems for your business. 

 

MY CHECKLIST FOR WHEN A CLIENT SHOULD TURN OVER AN ACCOUNT: 

 

1. If the debtor breaks a promise, even once. My rule of thumb is pretty simple.  A person's word is their bond. If they break it, even once, they'll do it again. Explain to the debtor that you may be willing to work with them, as long as they keep their word. As soon as they don't, it's time to act.  As my Dad used to say "Fool me once..."

2. If the amount you are owed, is more than you can afford to write off. This may sound obvious, but most of us (myself included) are usually optimists. Especially if we are worried about losing money.  We want to believe the lies we are told. We may need to believe them, because the alternative is worse. Ironically, sometimes the bigger the debt, the more reluctant the client is to admit that there could be or is a problem. Many clients are embarrassed to admit they may have "made a mistake" by extending too much credit. Forget it,  don't feel guilty for extending credit. With extending credit comes a certain amount of risk. If you are not having any write-offs, your credit policy is probably too tight. The only solution is to take action, immediately. Many times we can help turns those lemons into lemonade. (How to will be described in a future article).

3. The debtor refuses to return your calls. Again, very simple.  If they won't talk to you or communicate with you, your wasting your time.  And time is not a commodity you can afford to waste when it comes to collections.

4. If the debtor refuses to make an immediate payment, even a small one.  I'll tell you one of my favorite techniques.  I call it my personal "lie detector"test.  It's usually very accurate. I give the debtor a very simpletask with an immediate deadline, i.e. "send me $500 today, as a sign of good faith" I make sure the amount  and deadline are realistic.  If the debtor breaks this small promise, you can bet he'll break a bigger one. Many times clients tell me they are waiting for a $70,000 check that the debtor is going to send "in just a few weeks". I remind them, if he just got through bouncing a $500 check, why wait another month hoping for that $70,000 check.

5. A bounced check !  This is a sure sign of trouble. As well as time for immediate action. Florida also has a beneficial worthless check statute. For a copy of the form letter that must be used, checkout our website.

Raymond Joseph

Joseph & Marees, P.A.

rjoseph@josephandmarees.com

904-636-8600 

Do you have a billion dollar business hiding inside your company?

Asking customers to pay to join a special group of your best patrons
can increase your revenue, encourage customers to buy new products and services from you, and provide a healthy boost to your cash flow. Just ask Jeff Bezos, the founder of Amazon.com and the chief architect behind Amazon Prime.

In exchange for $79 a year, Amazon Prime customers get:

• Free two-day shipping on millions of items
•  Unlimited streaming videos and TV shows
•  350,000 books to borrow for free.

It’s a compelling offer, which is why, according to TIME Magazine, more than 10 million people have signed up. If you do the math, that makes Prime close to a billion-dollar business for Amazon. And like most programs, members pay upfront, giving Amazon a big injection of positive cash flow.

But what is even more interesting is what being a member of Prime does to the buying behavior of the average Amazon customer. Prime customers pay their $79 upfront and therefore are eager to ‘get their money back’ by purchasing a bigger and broader array of products from Amazon. With free shipping and a $79 nut to recover, Prime customers go well beyond buying books from Amazon and now get everything from tires to turtlenecks from the e-tailer.

According to TIME, the average Prime customer now spends $1,224 per year with Amazon vs. the average non-Prime customer who spends just $505. In other words, Prime customers spend almost three times more per year than non-members.

Most businesses have some sort of loyalty program (buy nine sandwiches and the tenth is on us or get five hairs cuts and the sixth is free). The difference with Amazon Prime is they are charging customers to sign up for their special club and the fact that customers pay to join changes their buying behavior to want to recover their membership fee. 

Amazon did not invent the pay-to-join-our-club business model. Private members clubs have been doing it for years. To join an elite golf club, you pay an initiation fee of tens of thousands of dollars, which then acts as a barrier to ever leaving.

But as with Amazon Prime customers, becoming a member also changes a member’s buying behavior regarding other items.  When compared to someone shooting 18 holes at a public course, the average golf club member is much more likely to buy balls from the shop, lessons from the pro, and dinner from the dining room.

The “AMC Stubs” loyalty program charges moviegoers to join the club. In return, customers get free upgrades on the size of popcorn and drink orders, along with $10 of Stubs rewards to spend on anything in the theatre in return for every $100 spent. AMC’s best customers become even better customers by going to the movies even more often and filling up with goodies while they’re there. 

Look at the spending patterns of people who pay a premium to join a credit card company’s loyalty program. Customers who pay upfront for a premium card charge a much broader and deeper set of services to their card than people using a freebie card.

Getting your customers to pay to join your elite customer club requires that you design a compelling offer as Amazon Prime and AMC Stubs have done. But if you build it right, not only will the club itself turn a profit; it will also provide a quick boost to your cash flow and create a legion of sticky customers who buy more because they paid to become a member.

If you're curious to benchmark your company on growth potential and the other seven factors that drive your company’s value, take 13 minutes and get your Sellability Score here: 

5 Tips to Instantly Grow your Cash Flow

Profit and cash flow are not the same.  Profit is just a theory.   
A business can go broke by not setting aside enough financial reserves to meet its commitments, even while making a healthy profit.  

Here are five ways from ActionCOACH founder Brad Sugars' book Instant Cash Flow to supercharge your cash flow:

1. Sell More Big Margin Goods/Services …
   Why not move to products that offer bigger profit margins?  Can your business offer a slightly more expensive product on which you can make a higher profit?  Or can your business buy or produce smarter to make available more goods or services with lower prices and greater profit margins?  You should know exactly how much each product nets you, and emphasize those products which make you the most money.  If you work in the service industry, you should consider which services offer the most money for the least amount of time spent.
2. NO Discounting 
   If you constantly discount, why have a regular price?  Many businesses are always discounting instead of coming up with effective marketing, or an actual reason to buy their product.  Discounting not only costs you money, but gives the impression that your normal prices are a rip-off.  Customers may also hold off buying, thinking that the item that's $100 today may only be $80 tomorrow.  It's better to not discount and simply offer more add-on value.
3. Stop Running Ads that Don't Work …
   If your ads aren't making you money, then stop running them!  It is important to test and measure each ad to make sure that you're getting the maximum return possible.  Be sure to find out how many customers were referred to your business by your ad.  When you find an ad that works, keep using it.  It may take six months of testing and measuring before you find the right ad.  You need to view this outlay as an investment in your business -- it's an investment in finding out what works and creating that 'magic ad'.
4. Re-finance …
   If you have a number of loans, then you may need to consolidate them into one.  Consolidation gives you the advantage of paying only one interest rate and having one repayment.  Shop around to find the best terms.  The best terms don't always mean the lowest nominal rate, so make sure you choose the loan that suits your particular needs.  With banks becoming more and more competitive, there's a bank out there willing to give you a loan for less.  If your bank isn't willing to match their rate, then try another.
5. Where's the "Silver Bullet" in your business?
   Every business has something that they are doing (or not doing) that - when attacked - will generate instant cash flow.  Brainstorm with your employees for products that can generate instant cash flow.  Talk to your mentor, business coach or experts in your industry with which you have relationships.  Let them help you find the hidden dollars in your business that will allow you to move to the next level.

Looking for more ideas to increase the value in your business to make it sellable one day?  

Take this quick 15 questionnaire to learn how valuable your business in right now and the 8 areas to work on to begin increase its value today!  www.actioncoachsellabilityscore.com 

Do you have a Black Belt in Business?

What does it mean to earn a black belt in the martial arts?  To become a trained killer.  No,  martial arts training is a lot more.  It's a form of self-defense and exercise.  But, most importantly, it is a philosophy or a way of life.

I got involved in the martial arts at a very early age, but didn't receive my Black Belt in Tang Soo Do Karate until I was almost 30.  I found martial arts was not only a great form of exercise and self defense, but also taught me how to survive the battles of business and life.  When I look back, what I really learned was the importance of goal setting, focus, determination, and the use of systems.

Each martial art has a series of belts or levels, which each student strives to reach before they can become a black belt.  This systematized approach provides students a process to gain mastery over a particular level of skills before moving on to the next level.  Showing the importance of setting end goals with milestones along the way to keep you on track.

My sensei (Karate instructor) taught me that each level you reach before a black belt, you are just learning Karate but once you become a black belt, you are now doing Karate.  Once you reach black belt, you now have the knowledge and wisdom to apply what you have learned.  The journey doesn’t stop there.  There are new goals and milestones as you reach for the higher levels of being a black belt.  As a business coach, I have found this same systematized approached can also be applied to any business.  

When do you get your black belt in business?  When are you “doing” business instead of learning business?  At ActionCOACH we have a definition for this scenario, “A commercial profitable enterprise that can work without you the business owner”. 

So, how get a black belt in business?  Let’s take a look at the 6 belts you must master before you can be a black belt in business.

White Belt:  At this level, the emphasis is on basic business mastery over time, team, & money.  It’s about getting the chaos out of your business and getting organized.  It’s about making sure you can make payroll and that your employees understand their roles & responsibilities in your organization.  It’s where you learn to delegate tasks to your team, so you can concentrate on developing higher level skills needed to obtain your business black belt.

Yellow Belt:  This level is where you work on creating predicable cash flow in the business.  You develop your Niche and USP (unique selling proposition), so you can start selling on value and not price.  You find out why your business is unique and valuable to your customers.

Green Belt:  At this level, you are working on creating efficiencies in your business.  You are starting to develop systems that will run your business so you don’t have to.

Blue Belt:  Here you learn how to get the right people “on the bus”-- the right team players, who will run your systems that will run your business.

Red Belt:  This level is where we start to see all your hard work come together.  You’ll start to see the synergies of your systems and team develop.  Now, you start grooming your general manager who will run your business for you.

Black Belt:  Now you’ve made it!  You’ve created a commercial profitable enterprise that works without you.  You are now an entrepreneur with a business black belt!  You are  generating passive income from the business.  You can now take the skills and knowledge which you have learned and apply them to other businesses or start investing your profits, so your money is making money.

To learn more about how you can turn your business into a Black Belt business, sign up for our next free webinar.  Check out my latest workshops and seminars www.actioncoachseminars.com 

Are you afraid to raise your prices?

A few years back I was working with a client that was having some cash flow issues.  One of the first strategies I suggested was that she needed to raise her prices.

She thought I was nuts.  I recommended that she raise her prices 10%.  I can’t raise my prices, I’ll lose all my clients she told me.  

All your clients, I asked? 

Once she calmed down, she agreed to give it a try.  At the beginning of the year she sent a letter out to all her clients thanking them for their business and notifying them of the price increase.

To her amazement, she didn’t get much push back. Then she got that dreaded call from her #1 client (that accounted for 35% of her business) saying they couldn’t live with a 10% increase.  

She was frantic when she called me to tell me the bad news.  So I just simply asked her, how much of an increase would they find acceptable?  “I don’t know, I didn’t ask.  I was too worried about losing their business.”

To make a long story short, they did finally agree to a 4% increase.  That increase amounted to over 50% of the increased revenue she generated from all of her other clients combined.  Her client was willing to accept the price increase because of relationship and value they received from her.

Don’t be afraid to raise your prices.  That fear could kill your business.  What is fear anyways?  False Expectations Appearing Real.

Most of us are afraid to increase our price because we see our competitors keep dropping their prices just to get the sale.  That's because all they know how to do is sell on price and not value.  With that said, the business advice that I give my clients is to raise their prices.

I'm serious, even in this tough economy you can raise your prices if you know how and when.  Raising your prices in your slowest season might be tough but it's a must during your busiest season.

Here are 3 easy steps to raise your prices with no complaints.

1. Get a list of all your products and services that you sell and rank them on the amount sold for the same time last year.
2. Take out the most price sensitive items.
3. Now raise your price on the top 10% of items that are left

It's really that simple.  Another one of my clients that implemented this simple strategy has reported one of his best months ever because he was able to increase his average dollar sale with no resistance from his customers.

Please let me know your thoughts in the comments section below...

Fast Forward to Profits - How to increase your prices

One of the 5 areas that we focus on to help our clients increase their profits and cash flow is average dollar sale.  One way to do that is to raise your prices.  In fact it is usually one of the first strategies we recommend.

Most of us are afraid to increase our price because we see our competitors keep dropping their prices just to get the sale.  That's because all they know how to do is sell on price and not value.  With that said the business advice that I give my clients is to raise their prices.

I'm serious, even in this tough economy you can raise your prices if you know how and when.  Raising your prices in your slowest season might be tough but it's a must during your busiest season.

Here are three easy steps to raise your price with no complaints.

1. Get a list of all your products and services that you sell and rank them on the amount sold for the same time last year.
2. Take out the most price sensitive items.
3. Now raise your price on the top 10% of items that are left

It's really that simple.  One of my clients that have implemented this simple strategy has reported one of his best months ever because he was able to increase his average dollar sale with no resistance from his customers.

Please let me know your thoughts in the comments section below...