Small Fish - Small Business Tips and the Latest News

Key Numbers to Drive Profit

Do you ever look at the reports from your accounting software or are they meaningless to you?

A typical set of Financial Reports contain a lot of numbers but reading them can be daunting, hiding the critical numbers to success.

So what are the key numbers you should review that will drive your profit?

1. Revenue Growth %

   1. This indicator generally gets a lot of attention and rightly so. The number though should not be looked at in isolation, revenue growth is OK but profitable growth is better.

2. Price Change %
   

   1. This is the percentage by which the price you sell products either increases or decreases. Small regular price changes are easier to implement that one large change. 

3. Cost of Goods Sold %
   

   1. Cost of goods sold is the cost to get a product or service to market before taking into account overheads. This is an important number as it drives your profitability, a small decrease in COGS can have as much impact on Gross Profit as a large increase in revenue.

4. Overheads %
   

   1. We often look at our overheads but we should review them as a % of revenue. If you can increase revenue while not increasing revenue your profit will increase, likewise if your overheads increase slower than revenue you will be more profitable. If your overheads rise at the same rate as revenue, you may be working harder for no more profit

5. Days Receivable
   

   1. This is the number of days on average it takes your customers to pay. The lower the number the better your cash flow. If the number is growing you cash will get squeezed impacting working capital.

6. Days Payable
   

   1. This is the number of days on average you take to pay suppliers. Small improvements in this area by negotiating better deals can have a huge impact on your working capital position.

7. Days Inventory
   

   1. This is the number of days on average your stock is sitting in the store room or show room. This ties up cash impacting your working capital, so reducing days inventory by better buying or merchandising can have a big impact on your cash and profit position.

All these numbers are available from your Financial Reports, either from the Profit & Loss or the Balance Sheet. How many of you look at your Balance Sheet each month? Considering I have spoken to numerous small business operators who don’t look at their Profit & Loss report the number is surprisingly large.

Take the time to review the Financial Performance of your business each month, it will be worth your while and will help you trade more profitably.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

Delegation - How To Make It Work

We often talk about how do you make things easier and free up time to get things done. If you are going to achieve more you are going to need to delegate more as you can’t do everything yourself.

We are often relectant to do this: "no one does the job as well as me" is an often quoted statement. My answer to this is how well did you delegate? Delegate badly and instead of improving your day, your frustrations reach on all time high. Delegate well and you will start to see genuine progress.

The difference between these two contrasting scenarios comes down to one thing. How clearly did you explain the delegated task? Each time you delegate a task, understand that that the task must be clear before it can be succesfully completed.

• Connections. How does this relate to what I do?

• List of steps. What do I do know now?

• Expectations. How will I know when I’ve succeeded?

• Ability. What support will I have?

• Return. How will the company benefit from my efforts?

If you put these simple steps into place, your delegation will be succesful, freeing up time to get other things done.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

Who Represents Your Business? Everyone

Marketing a small business can be tough and we all use as many techniques as we can to get our message out there. For a long time the big companies had their logo’s emblazoned on trucks and cars everywhere, but as it has become cheaper and more cost effective the name and phone number on the side of a car or truck has become the domain of SME’s.

A word of caution for those of you who use this form of marketing, you are now always a representative of your business and anyone who sees your car will see it as a respresentation of your business. So what does this mean? Road rage is not a good look for your business and neither is speeding or poor driver etiquette. We've all been on the receiving end of an unhappy driver letting us know their thoughts. When they have their business all over their car we immediately make a buying decision: I’m not doing business with that person. Likewise, peeling or poorly applied advertising does not create a good impression.

So if you are going to use this form of marketing be aware of the positives and negatives. Talk to your staff and make them aware of their responsibilites and remind them they are respresenting the business at all times. Review signage regularly and make sure it is appropriate and finally make sure contact details are up to date and accurate.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

Testimonials - Why They Are So Powerful

In the current climate, consumers are becoming more and more skeptical. They have heard all the claims from the snake oil salesmen and they no longer buy it, it is too easy to go online and check out the deals and see what is real and what isn’t. Therefore the customer needs more convincing than ever, before they will give you the most important element of every sale – trust.

One of the tools we must use in order to establish trust is the testimonial. When it comes to selling our goods and services, there are two powerful reasons why we should all use testimonials at every opportunity.

1. They give the intending purchaser some comfort that they won’t make a mistake
2. Testimonials can be used to defuse common objections. It is very powerful  to see some of their peers mention their similar concern, but then report a positive outcome.

I believe that testimonials should be used by everybody who has a customer base and who is actively looking for more. They are an absolute must if what you are selling can not be proved easily. For example, becoming smarter or earning more money.

So how can you go about getting these powerful testimonials:

1. Call repeat buyers and ask them why they repeat
2. Talk to long term customers and ask them what they like about the product or service
3. If you have a happy customer who is having trouble writing the testimonial, offer to write it for them!
4. The trick is to ask, ask for a testimonial. Begin with the words “I wonder if you may help me?”

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

How Much Profit Is Your Business Leaking?

Most businesses leak profit, often for simple reasons, which can easily be fixed. Is your business leaking profit?

The Business Audit Consultancy will help you identify and plug profit leaks. And help you make more money. And who doesn't want that?

Just ask Noven Purnell-Webb from Magedata – he says

"The questionnaire was a really easy way to get some quick and effective insights into how my business is running. By merely asking the questions, the obvious things can no longer be ignored and some surprising results emerged. A highly effective tool for any business owner trying to clear up the bigger picture."

Click below to read more or to book yourself in for a good probing (with questions of course). We think you’ll like it.

Read More Now >>>

Regards,
The Small Fish Team

Times Are Getting Tough - Get Better At Marketing

With the slow down in the economy and tightening of the financial markets, times are tough in the retail and Small Business sectors. This could potentially result in a number of business failures.

How do you protect your business from becoming one of the casualties? You have to operate better than you are today and better than your competition and there are only two ways to do that. You either sell more or spend less.

Let’s look at both sides of this equation, both selling and spending by your business. Both of these are impacted by Marketing or Advertising. Marketing and Advertising bring you clients to sell to, but they also cost you money. You know this, of course. But do you know exactly what it costs you to find a client to sell to? Do you know how many clients your marketing brings you? Do you know how much you sell to each client and what the return on your advertising is?

To make sure your business survives and thrives you need to know.

So how do you work it out?

Total sales last year divided by total customers = Total Sales per customer SPC
Total Advertising & Marketing Expenditure last year divided by Total Customers = Cost per acquisition CPA (Include existing clients as they are also included in the total sales number)

Simply, if Total Sales per customer is not much higher that Cost per acquisition, you are in trouble. This figure SPC – CPA should be well below your estimated profit margin. If it’s not, then you need to work on it.

What can you do? Get better at marketing, insure your marketing dollar is working for you and delivering you clients, and ensure you are making the most of your on line prescence.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

Thinking Is Free

The following passage is from a book called "Make Your Small Business Thrive" by Kevin Gilbert.

"Thinking is free, so do it more often. It is amazing the amount of people who do things without knowing the reason why. Remove yourself from the hurley burley of day to day life, even for an hour, and think. Too many people pre judge whether something is going to work or not, particularly if they have tried it before and it wasn’t successful. Don’t fall into this trap.Try things and if they don’t work, try something else. The next “big thing” may be something small. After all, little developments can make a big difference and they are a lot less scary to embark on. So try a lot of little things. Don’t overcomplicate what you do or how you explain it to people. Keep it simple but not simplistic. If something didn’t work then try again. The circumstances may well have changed. Very few “overnight successes” get it right first time."

So next time you don't want to try something because it may not have worked before, even if it is as small as re-implementing a new system that did not take off in your business at first, stop and think again. There is always a way to re-vamp old ideas. There are not too many things in life for free, but thinking happens to be one of them.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

Sell Value

In all the marketing and business improvement lierature we are constantly reminded to sell on value and not fall into the price discounting trap. So what does that mean, what is value in the consumers mind?

Well it could be any of the following components, or a combination of them:

1. Service – This includes providing a service that people may not want to do themselves (cleaning, car washing) or providing excellent customer service while selling your goods and services.
2. Response – How we respond to a customers requests or needs.
3. Variety – Especially in retail do we sell a varirty of goods that service a range of customers.
4. Knowledge – What experience do we have and how does this apply to the business or service we supply.
5. Quality – How do your products measure up to the competitors?
6. Guarantee – What guarantees do you provide? Do you have a refund policy?
7. Convenience – How easy is it to do business with you? Trading hours, phone or email access, parking?
8. Price – Do you have a pricing proposition that you stick to and can market?

If you are looking to sell on value and want to define your value proposition. Consider the following questions:

1. How do I differ from your competitors?
2. What need do I fill for my customers that no one else does?
3. If I ceased to exist, would my customers miss me?
4. What do my customers want that I do not have?
5. Who are my best customers and why?

If you consider these things carefully you will be able to determine your value position and market your business accordingly.

Nigel Hobbs
Small Fish Business Coaching Sydney
www.smallfish.com.au

The Principle of Reciprocation

The principle of reciprocation says that we should try to repay, in kind, what another person has provided us. By virtue of the reciprocity rule, then, we are obligated to the future repayment of gifts, invitations, and the like.

Simple example: When you are invited to dinner at a friend’s home, you then feel obligated to return the favour, don’t you? And for many, this obligation weights heavily until it is repaid.

In a sales situation, customers and prospects feel obligated to say “yes” to those they owe.

Knowing this, savvy salespeople perform unexpected acts of kindness up-front; they give of their time, knowledge and occasionally product and service samples.

Guess what this does?

It obligates the other party to reciprocate.

The principle possesses awesome strength, often producing a “yes” response to a request that, except for the existing feeling of obligation/indebtedness, would have been refused.

Simple example: If you want to generate referrals from a customer, first, give a referral!

Bald Fact: Create a sense of obligation, and you’ll make more sales. A fact that has been proven in the business community when business operators found that, after accepting a gift, customers were willing to purchase products and services they would otherwise have declined.

Looked at in this light, the apparent random, unexpected act of generosity might be regarded as a powerful marketing method that will generate future sales.

Nigel Hobbs
Small Fish Business Coaching Manly
www.smallfish.com.au

Somethings Fishy at the MyBiz Expo in Melbourne

If you’re going to be in Melbourne on Thursday 16th or Friday 17th June, you can meet some of the Small Fish team in person at the MyBiz Expo.

The Expo promises to be a fantastic networking event, with the opportunity to meet many people and gather some valuable and useful information that can help you in your business.

We would love the opportunity to meet with you too, to talk about your business. Could your business be more profitable? Is your business and the environment it operates within changing? Does the business leave you with enough time to enjoy your success? Are you in control of your business, or is it the other way around?

Speaking with a business coach in person is a great way to discuss these things, and to find out whether a business coach might be able to benefit you and your business.

Alternatively, you might be considering becoming a business coach yourself. Being a business coach is not for everyone. It is hard work, but very rewarding as you get to work with and help a broad range of people in business.

Come down and talk with the team to find out first-hand what being a business coach is all about. This is also a fantastic opportunity to discover the benefits joining forces with Small Fish!

The MyBiz Expo is being held at the Melbourne Convention Exhibition Centre from Thursday 16th to Friday 17th June, and Small Fish will be at Stand 30. To find out more, and to preregister, click here.

Regards from The Small Fish Business Coaching Team