4 Ways to Finance Your Business

Access to capital to finance your business (or lack of it) can make or break a business in its aspirations for growth. And your knowledge and abilities to put a deal together will have a massive bearing on that access.

Particularly in today’s times of the Banking Royal Commission in Australia and a negative global economic outlook.

But don’t despair, there is money out there for good deals. And deals can be good in many ways depending on who the financier is you are approaching. The key is knowing which financier to talk to about your needs and where to find them.

In this video, I outline the 4 doors of financing you can knock on. Each has their pro’s and con’s and each have their place. And I think #4 might surprise you.

Enjoy

P.S. I have intentionally left out Grants and Government Funding as one of the doors. Simply because I don’t believe this should be a staple in your financing options. Yes they can be good when they are around, but a business that relies on them is not a sustainable business. Don’t build your business model on grants.

P.P.S Remember to pay close attention to #4. It’s the one that gives you unlimited options.

Enjoy!

Jamie

Also: If you know how you want to finance your business, but are having a hard time with the next steps, check out our free 90-Day Planning Tool which can help you narrow down and hit those short-term goals.

If you’d like to learn a little more about SalesUp! Business Coaching and the work that we do, please watch this short video testimonial. We’re super stoked to work with some really awesome business owners and have been humbled and gifted beyond measure to help these fine folks create the life THEY want, and we’d love to hear from you too!

How to Create a Profit Model

Time to Watch: 5:56 well-spent minutes

Do you have a current profit model? Have you ever wondered about which changes in your business will make the biggest impact on your bottom line? Is so, you’re not alone – and this is the right place to be to find out the answer. This video tells you, with real-world examples, how to determine the level of profit you’ll be able to realize through different changes to sales and growth patterns.

If you’re interested in some related training, see our video “How to Create a Profit First Budget”  for a step-by-step guide that goes into a bit more detail.

Look, I get numbers are not the most exciting part about business ownership, but they are one of the most important. To see what I mean, have a look at Vol. 28 of our Business Nutrition Newsletter which exclusively deals with putting yourself in a strong financial situation, so you can sleep at night.

If money is where you’re really struggling as a business owner,  read this and then do this.

Now go out there and get amongst it!

Cheers,

 

P.S. Don’t forget to stay in the loop with our latest rapid training videos on SalesUp!TV

5 Ways to Make Better Business Decisions

When we started working with Adam he told us he didn’t have the time to measure stuff, let alone the time to compile and analyse the results.

Adam’s situation is typical of many small business owners.

While not all our clients say it to our face, we can see the anguish on their face when we start talking about metrics and reporting.

Here’s how we got Adam excited about numbers to the point where we had to put the brakes on him measuring too much.

We started by asking Adam, “What would you say to an athlete that was trying to run a record time but was not timing their efforts?”. Predictably he said he’d tell them they were crazy.

Next, we asked “How comfortable would you be flying on a plane whose pilot could not read the controls?” Again came a predictable response “Not very”.

“Or what about a doctor who prescribes medication without measuring any of your vitals like blood pressure, cholesterol, etc.” … Adam could see the theme.

Bringing it closer to home we asked “What about a business (not yours) that you invested your life savings into and the CEO didn’t know the profit margins on the work they were doing. They also didn’t understand the numbers behind their marketing so had no idea how to grow the business. How safe would you feel about your investment?” This one made Adam sit up a little straighter.

He knew where we were going, and we probably didn’t have to ask him the next question, but we wanted to drive the point home. You see Adam was not doing nearly as well as he wanted to—and on this point of measuring—he had his head in the sand.

Last question … “Adam, what’s the difference between all these examples and you and your business? If it’s important for all these other people to measure and read the results, what do you think might be good for you and your business?”

He got it.

There’s a business mantra “What gets measured gets managed”. And while we are huge proponents of this mantra, there’s another quote by Einstein that we also like. He says “Not everything that counts can be counted, and not everything that can be counted counts”. 

For small business owners, both of these quotes need to be taken into account. When you are short on time and possibly lacking easy access to data (although this is rapidly changing with cloud accounting and other apps), starting simple is the key.

Follow these four steps to gain some meaningful data which will enable you to start making better businesses decisions.

  1. Brainstorm a list of possible things to measure (here are some to get you started)
    • Marketing (lead sources, retention rate, website performance, referral rate, social media stats, campaign results, cost per lead, etc.)
    • Sales (conversion rates [dissected by lead source and salespeople], pipeline stats [how many fall off where], average quote value, average job value, margin, sales activities, discounts, new vs. existing customers)
    • Operations (major costs/sales, project completion duration, Work In Progress, quality stats, bottlenecks, scrap or waste)
    • People (turnover, absenteeism, survey responses, revenue/employee, etc.)
    • Financial – AR Days, AP Days, Inventory days, Gross Margins,
  2. Identify top 5 that will give you meaningful information for your business. Things to consider:
    • Which number, if measured, will make other numbers less important (e.g. an employee survey may give you way more insight vs. measuring absentee days, and it requires fewer resources to measure)?
    • Which numbers can we measure easily?
  3. Take the top 3 from this list and commit to measuring them for 90 days. If 3 is too hard, make it less. Your primary goal here is to develop the habit, make it easy to be successful and see the value from having some accurate numbers. Note: Allocate accountability for each number.
  4. At the end of 90 days, review what you’ve accomplished and do 1 – 3 of the following:
    • Amend what you are measuring – you may have found out that was not the best thing to being measuring
    • Add to what you’re measuring. Over time you’ll want to have a more robust scorecard than just 3 numbers. Gradually add to it as it makes sense.
    • Develop a wish list of other numbers to measure. Having numbers on your wish list lets you know they are not forgotten and can forgo the temptation to try to measure too many at once.
  5. Be sure to look at the numbers at least weekly. The more often you look at them, the more beneficial they will be. The exception here is, of course, numbers that require long periods of time to change, though these are usually few. Also be sure to display data in a format that is meaningful. (i.e. sometimes you need to see trends vs. stand-alone numbers.) For example. # quotes mean more when there is something to compare it too.

Building a Profit-First Budget

Budgeting is not something most business owners would list as one of their most exciting tasks – and that’s ok, but it is necessary, and there is a way to build a budget that makes profit non-negotiable. Here’s how you can create a budget which helps you think differently about how you manage the expense side of your business, and will radically change your profit results.

The Hidden Profit Centre in Your Business

Think HR has no bearing on profitability? Think again…

Having long been denounced as nothing more than a cost centre and a necessary part of doing business, the people management aspects of an organization (specifically HR) have been overlooked as an integral component of the profit structure of an organization. The link, however, is a lot stronger than many businesses have traditionally thought.

In a recent study on management practices in Fortune 1000 companies, the Center for Effective Organizations at the University of Southern California found that employee involvement measures (that traditionally sit well beneath the HR umbrella) show a solid ROI and link to the bottom line.

For small to medium-sized businesses who don’t even have an HR department, the impact of this study is even larger, as decisions made at owner-run businesses see an immediate trickle-down effect due to the smaller work structures, and can see a positive impact in the bottom linke much sooner than a larger organization. The key is in increasing the employee commitment to the organization.

Any one of the following measures can be implemented by a company to see a lasting improvement in financial returns (not to mention the cost-savings garnered from reduced turnover):

  • Employees generally feel that if an investment is made in them, they will return that investment in-kind. Establish a feeling of “repricosity” through:
    • Information-sharing
    • Skills training
    • Encouragement of ownership thinking
    • Fostering “buy-in” for organizational change measures
    • De-centralizing decision-making
  • Using technology for process improvement, not just cost-cutting benefits. If employees are brought into the process on the ground level, working backwards and can have input into process design, hey are more willing to manage change, and feel a greater benefit of new technology as a tool for them—not just because it’s cheaper for the organization
  • Building a culture which values job-security – which means attaching value to the person over the employee number.

Each of these measures is fiscally achievable in one way or another, even for very small businesses and engage in the employee’s higher level needs, which leads to increased productivity, better customer interactions, a willingness to tackle challenges and stick with the company–all which have a positive impact on profit.

Small tweaks can often have the greatest impact on profitabilty, particularly if they are seemingly unrelated to the bottom-line. Remember that everything in your organization starts and ends with culture, so before you tweak your marketing, sales prices, or slash costs to boost productivity, have a critical look at how investments to your people-practices can pay you back in spades.

3 Immediate Strategies to Boost Profits

If you are not profitable, your business has a death date. At the very least it is a long trudging journey of survival as you go day to day hoping to have enough money in the bank to pay your bills. That is no way to live, and I’m sure it’s not why you started your business.

It’s time to make healthy profits non-negotiable! Here are three strategies you can implement immediately to boost profits:

  1. Raise your prices – and if you’re like most business owners, your mind is already throwing up the objections “we won’t be competitive,” “Our customers are price-sensitive,” “We’ll lose our customers, ” and the list goes on. Before you spend too much time buying into your sabotaging beliefs, consider the actual impact of pricing through this example:

If your Gross Margin is currently 30% and you discount prices by 10% to win business, you need to make 50% more in sales to still make the same amount of profit. Versus if you raise your prices by 10%, your sales can decrease by 25% and you will still make the same amount.

And which customers do you think you might lose when you increase your prices? Yes, the pain-in-the-ass customers. And in our experience, most of the time minimal loss in incurred. What you really end up with is more profit.

As a small business, you want to be premium and expensive. And be sure your product or service matches your price point through quality and differentiation. If you are the same or worse than your competition, then forget about pricing, work on making your offering better first.

  1. Build a profit-first budget. What this means is you develop a conservative business model that sets you up for success in being profitable. Most people plow ahead with rose coloured glasses and ‘hope it will all work ‘ That is not a good strategy.

Here are your four steps to creating a profit-first budget.

  1. Make a conservative forecast for your sales for the next 12 months
  2. Decide what level of profits you want. (i.e. 15%)
  3. Build in your Gross Margin. You should know this. Make it conservative
  4. Make your overhead fit in the amount left over.

E.G. Sales of $1,000,000, profit of 15%, Gross Margin of 30% = Overhead allowance of $150,000.

This methodology will make you take a hard look at expenses. Click here to view a short video that dives a bit deeper into this point

  1. Negotiate – all business arrangements should be set up with the intention of win/win. That doesn’t mean you should take the first price someone gives you. There are always ways to find a better deal. Perhaps negotiating payment terms or buying in larger Or of course shopping around.

The underlying principle behind boosting profits and making this strategy work is your own negotiating skills. Most people are inherently bad negotiators. It invokes fear in people to ask for a better deal. To help you with this read “Never Split The Difference” by Chris Voss. It’s a game changer.

 

5 Ways to Make Better Business Decisions

When we started working with Adam he told us he didn’t have the time to measure stuff, let alone the time to compile and analyse the results.

Adam’s situation is typical of many small business owners.

While not all our clients say it to our face, we can see the anguish on their face when we start talking about metrics and reporting.

Here’s how we got Adam excited about numbers to the point where we had to put the brakes on him measuring too much.

We started by asking Adam, “What would you say to an athlete that was trying to run a record time but was not timing their efforts?”. Predictably he said he’d tell them they were crazy.

Next, we asked “How comfortable would you be flying on a plane whose pilot could not read the controls?” Again came a predictable response “Not very”.

“Or what about a doctor who prescribes medication without measuring any of your vitals like blood pressure, cholesterol, etc.” … Adam could see the theme.

Bringing it closer to home we asked “What about a business (not yours) that you invested your life savings into and the CEO didn’t know the profit margins on the work they were doing. They also didn’t understand the numbers behind their marketing so had no idea how to grow the business. How safe would you feel about your investment?” This one made Adam sit up a little straighter.

He knew where we were going, and we probably didn’t have to ask him the next question, but we wanted to drive the point home. You see Adam was not doing nearly as well as he wanted to—and on this point of measuring—he had his head in the sand.

Last question … “Adam, what’s the difference between all these examples and you and your business? If it’s important for all these other people to measure and read the results, what do you think might be good for you and your business?”

He got it.

There’s a business mantra “What gets measured gets managed”. And while we are huge proponents of this mantra, there’s another quote by Einstein that we also like. He says “Not everything that counts can be counted, and not everything that can be counted counts”. 

For small business owners, both of these quotes need to be taken into account. When you are short on time and possibly lacking easy access to data (although this is rapidly changing with cloud accounting and other apps), starting simple is the key.

Follow these four steps to gain some meaningful data which will enable you to start making better businesses decisions.

  1. Brainstorm a list of possible things to measure (here are some to get you started)
    • Marketing (lead sources, retention rate, website performance, referral rate, social media stats, campaign results, cost per lead, etc.)
    • Sales (conversion rates [dissected by lead source and salespeople], pipeline stats [how many fall off where], average quote value, average job value, margin, sales activities, discounts, new vs. existing customers)
    • Operations (major costs/sales, project completion duration, Work In Progress, quality stats, bottlenecks, scrap or waste)
    • People (turnover, absenteeism, survey responses, revenue/employee, etc.)
    • Financial – AR Days, AP Days, Inventory days, Gross Margins,
  2. Identify top 5 that will give you meaningful information for your business. Things to consider:
    • Which number, if measured, will make other numbers less important (e.g. an employee survey may give you way more insight vs. measuring absentee days, and it requires fewer resources to measure)?
    • Which numbers can we measure easily?
  3. Take the top 3 from this list and commit to measuring them for 90 days. If 3 is too hard, make it less. Your primary goal here is to develop the habit, make it easy to be successful and see the value from having some accurate numbers. Note: Allocate accountability for each number.
  4. At the end of 90 days, review what you’ve accomplished and do 1 – 3 of the following:
    • Amend what you are measuring – you may have found out that was not the best thing to being measuring
    • Add to what you’re measuring. Over time you’ll want to have a more robust scorecard than just 3 numbers. Gradually add to it as it makes sense.
    • Develop a wish list of other numbers to measure. Having numbers on your wish list lets you know they are not forgotten and can forgo the temptation to try to measure too many at once.
  5. Be sure to look at the numbers at least weekly. The more often you look at them, the more beneficial they will be. The exception here is, of course, numbers that require long periods of time to change, though these are usually few. Also be sure to display data in a format that is meaningful. (i.e. sometimes you need to see trends vs. stand-alone numbers.) For example. # quotes mean more when there is something to compare it too.

The Reality of Open Book Management

Truthfully, this is just one reality .. but a good one at that 🙂

Norm Jefferies of Computer Merchants has been running his company for over 20 yrs and I think it’s fair to say, he’s doing a damn fine job at it.

Norm and his team adopted the philosophy of Open  Book Management (OBM) at an early stage and it has become a key part of their culture.

In this interview, Norm shares how they implemented OBM and what the benefits and challenges have been of sharing the numbers within the team. We dive into the specific of day-to-day tactics, how OBM affects performance and how they make it a living and effective tool to align the team.

If you are thinking of implementing Open Book Management or are on the other side and think it’s crazy, either way you’ll get some direct benefit of learning from Norm’s experience.

Enjoy!


 

Links from the interview:

Computer Merchants website – http://www.computermerchants.com.au/

Norm on LinkedIn – https://www.linkedin.com/in/normjefferies

The Great Game of Business – http://greatgame.com/

Ownership thinking – http://www.ownershipthinking.com/

How To Know When It’s Time To Hire

When is the Right Time to Hire?

You may have noticed you’ve been getting busier, and it would be great to have an extra person or two to take some things off your plate. But what things? How many people? Before you throw money at the problem and hire another team member into your midst, you need to consider your systems and how they can be fine-tuned first.
  1. Consider the 80:20 principle: That 20% of your activities account for 80% of your results, so you are certainly going to want to concentrate on those items and pass a hat to someone else, so you can focus on growth. Have a look around at the resources you have first, to see if this delegation can be done internally. There are also many ways you can implement technology to help you do more with less.
  2. Determine if you can afford 60% of a new hire’s salary. In theory, the new hire will bring the remaining 40% of their salary to the table themselves through efficiency and capacity.
  3. Consider the burn rate. When hiring, you have to factor in 3-6 months of overhead costs while your new hire is getting up to speed enough to work at a higher level (and achieve financial results for your organization). Ensure you have enough to funds to cover this transition, and that you have the training to support their development.

Cloud Technology – What You Need To Consider Before Diving In

Cloud computing is all the rage … in case you didn’t know. It has the capacity to significantly increase your competitive advantage … if you know how. And therein lies the challenge.

Enter Clayton Oates.

Clayton has been consulting to SME’s about software for over 25yrs. So if you ask how long he’s been involved with cloud technologies, it’s fair to say he’s been there from the start. In this interview we dive into the reality of cloud technology today, what it can do for your business and what you should be wary of.

There are definitely some precautions to be taken. But not so many as to stay on the sidelines. Be bold and have a listen to the gems Clayton shares with us in this 30min chat.

Enjoy.

Note: You can find Clayton at the following links: WebsiteTwitterLinkedIn

If you’d like to download the interview mp3, right click here and choose ‘Save Link As…’