3 steps to grow your business

Small businesses can grow fast even in times of recession. 

Surprised to hear this? Owners of small businesses are constantly looking for ways and means to grow their business and increase their profits. Here is some very valuable information that will help both you and your business grow.

1. Customers are the key
The size of your small business depends on not only the number of customers you acquire, but also on the manner in which you fulfil the demands of these customers. In other words, it depends on the amount of goods and services that you are able to provide. So an increase in the number of customers will be of no use if you cannot meet their demands.

On the other hand, increasing the quantity of goods isn’t such a good idea if there is no increase in your customer pool. For your business to grow, you must get more customers, and also be able to supply to them.

2. Acquire more customers 
Developing an effective system of customer acquisition is also vital in ensuring sustained growth in your business. One of the fastest ways to do this is to ascertain how you have successfully managed to obtain customers till date, and increase your efforts in that particular direction.

Create a mailing list of your current customers, and keep them informed about special offers and promotions. Giving discount coupons and limited period offers for making referrals to your business will definitely please your customers. 

3. Employees – true assets of every business
Yet another method that can provide sparkling results is by motivating employees of your business to give ideas on business growth. Not only will this act as a morale booster, they  will also help generate some very innovative ideas.

If you follow these 3 steps, you can make your small business grow faster and bigger than you could imagine.

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Learn how to set SMART goals for your business

Setting SMART goals for business is important because being SMART is the only way to be to achieve any kind of success.

It could be a plan to promote a brand or achieve a sales target within a given time frame, setting smart goals is of paramount importance. Needless to say, the success or failure of any business also depends largely on the kind of goals that define it.

For those of you unfamiliar with SMART, here’s what it really means. SMART stands for – specific, measurable, achievable, relevant and time based. They, in fact, form the basis of setting efficient objectives.

Here’s a little about each:

>>  Specific: It is a very important element of business planning. Get straight to the point about what you want to achieve, when you want to achieve, the exact requirements and constraints, and above all, why you want to achieve the specific objectives. If possible, use percentages, figures, ratios and fractions to highlight your goals. For example: I want to achieve 20% more sales than I made last year.

>>  Measurable: It means that you should be able to measure your present performance against these objectives. So when you aim at a 20% profit margin you have a measurable objective.

>>  Achievable: Be realistic when you set targets, or else you might end up being very disappointed if you do not meet them. They should not be too easy or too difficult to attain.

>>  Relevant: Make sure the objectives you set are closely linked to your kind of business.

>>  Time based: Targets are of no use if they are not set within a given time frame. So when you say that you need to increase production volume by 500,000 units, make sure you specify the time as well.

Do you still believe that setting SMART goals for business is rocket science?

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The new IRD mileage rates

The IRD recently amended the mileage rates that can be claimed for business use of a motor vehicle expenditure.  The new mileage rates apply for the 2009 income year, ended 31 March 2009.

Self employed business owners may use one of the following methods to calculate the proportion of business use of a motor vehicle:
*  Actual records
*  A logbook, or
*  A mileage rate

The mileage rate applies in respect of:
*  Self employed taxpayers
*  Up to a maximum of 5,000 kilometres of work-related travel each year
*  Motor vehicles irrespective of engine size whether they are powered by petrol or diesel.  It does not apply to motor cycles

The rate set for motor vehicles has been increased from 62 to 70 cents per kilometre.
 
If business related travel of self employed persons is over 5,000 kilometres per annum then they should use one of these two methods:
*  Actual Expenditure – you will need to keep accurate records to determine the proportion of business use.

*  Log Book Method – You must keep a log book for a test period of at least 90 consecutive days, and then apply that proportion for the log book term (up to 3 years).

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How much is your time worth?

Successful people use many time management strategies to manage and value their time.  This article offers a few simple time management strategies to help you use your time more effectively.

Realise that time is running out
Time is a unique resource, which is finite and expires at the same rate for every single person. When it’s gone, it’s gone…forever! Other key resources like money and people can be found – although I accept that it may not always feel that way!

We all start with 1,440 minutes every day. It doesn’t matter how much demand there is for more time, the supply will never increase…ever.

Time is money
Benjamin Franklin said that “time is money”. Every minute wasted will have a cost. How do you value your time and how much is your time worth? It may be time to decide right now to calculate your worth!

What’s the minimum that you want to earn this year? How many hours will you work this year, after deducting weekends, public holidays & annual leave?

Let’s say that you want to earn $180,000 and you will work 1,856 working hours. By dividing $180,000 by 1,856 you’ll be able to calculate you required hourly rate. In this case, you’ll need $96.98 per hour.

But are you 100% productive?
If you’re in business, you’ll need to adjust this figure to allow for down time, etc. Let’s assume that you’re productive for only 60% of the time. Your time is now worth $161.64 per hour (180,000 divided by 1,856 x 60%).

How tolerant are you now going to be of anyone “stealing” time from you?

Find out where you’re wasting your time
So now you know the real value of your time, what (or whom) are the common time wasters?

“Have you got a minute?”; “Of course, I have time for a quick chat”; “My door is always open”. Sound too familiar?

The 1st major challenge you must overcome to manage your time more effectively is YOU!

Successful, productive people know how to handle the never ending barrage of interruptions by using proven time management strategies. Make it hard for people to abuse your time by respecting your own time.

Learn to say “no” and set yourself goals and deadlines to avoid veering off track. Audit your time to identify non productive areas. Eliminate tasks that need not be done at all. Ask yourself: “What would happen if this task wasn’t done at all?” “Which activities that I currently carry out could be done more efficiently and effective by some-one else”?

Learn to delegate. Learn to outsource. Be tough.

The Pareto Law time management strategy
One of my favourite time management strategies is the Pareto Law (or the 80:20 principles). Pareto’s Law can be summarised as follows:
* 80% of the outputs result from 20% of the inputs.
* 80% of your results come from 20% of your efforts;
* 80% of your income will come from 20% of your clients;
* 80% of your sales will be generated by 20% of your products;
* 80% of your problems will come from 20% of sources;
* And many more

Carry out your own 80:20 analysis and you’ll probably be surprised at the results.

Time is the scarcest resource on this planet. Remember, YOU have a choice on how you choose to use yours. Life isn’t always perfect and you may struggle to follow these principles all of the time. Don’t give up and develop better time management habits to create the freedom and lifestyle you choose. And most of all have fun!

Let me show you a few of my secrets that have helped me save time and money which will work for you too!  You’re invited here!

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How to spot if your business is declining

Much has been written about the current economic climate with some reports suggesting that the number of companies liquidated in New Zealand 2008 was up by 40% on the previous year.

Often, one of the hardest things for any business owner is to admit that their business is declining.  This article will help you spot some of the early warning signs.

The following list highlights some of the danger signs that should prompt you to take urgent action: 

*  You’re losing customers; increasing customer complaints or a loss of a key contract;
*  You consistently fail to meet sales targets & operating budgets;
*  You’re not paying staff on time or they resign to seek alternative employment;
*  Your accounts payables are not paid on time; your accounts have been put on hold or you  dread the ‘phone ringing for fear that it’s someone chasing payment;
*  You cancel insurance policies;
*  You are late paying your tax obligations or, worse still, do not pay them;
*  You deal with cash flow shortages by raising finance using your personal assets as security;
*  Your bank dishonours your payments or your account is transferred to the bank’s debt management team.

If you are experiencing just one or two of these problems, the alarm bells may be ringing from Invercargill to Cape Reinga, sounding that your business may be on a downward spiral.  And if your business is experiencing more of these, then you should take notice, immediately, before it’s too late.

Receivership or liquidation is likely to be a costly and very stressful process and is almost certain to end with negative outcomes for you and your company.  It’s also a common misconception that Directors can’t be prosecuted if you trade as a limited liability company.  Liquidators can, and often do, seek to prosecute a company’s Directors if they can prove that they have traded recklessly by continuing to trade whilst the company is insolvent.  Liquidators are often forced to sell assets at below market value for a quick sale.  They may also enforce personal guarantees that you have given.

To avoid the ramifications of this, you should consult with your professional advisors urgently.  Remember:  They have the skills and experience of helping businesses.  They should be able to develop an action plan and implement it to address these issues.  This will probably include:
*  Identifying ways to gain more sales;
*  Reviewing your existing expenses to develop appropriate cost reduction strategies;
*  Existing productivity levels to establish ways to measure and improve them;
*  Reviewing your working capital requirements to help remain solvent;
*  Reviewing your business structure, including your current staffing;
*  Developing realistic financial forecasts and plans to monitor business performance;
*  Securing short term funding by negotiating with your current bank or other lenders;
*  Looking at potential opportunities to sell or merge part or all of your business.

Their 1st step will be to facilitate your ability to continue trading for the foreseeable future.  You’ll stand a better chance if you are honest with both them and yourself.  You’ll need a documented business plan with realistic assumptions and financial forecasts as many lenders now insist that you have them. 

If you are in any doubt or are currently worried that your business is declining, contact your professional advisor immediately.

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