Tag Archives: Small Business Advice Windsor Ontario

A Calculation to Help Determine Potential Profits

A Calculation to Help Determine Potential Profits

A calculation for small business profit improvementThe Pareto Principle (also known as the 80-20 rule) is named after an Italian economist named Vilfredo Pareto. It is an interesting concept which can be applied to help determine insights for potential profit improvement.

Let’s look at two possible applications for a small business:

Possibility 1) 80% of your profits come from the top 20% of your customer base.

Possibility 2) 80% of your customer frustrations come from the top 20% most frustrating customers (better known as the bottom 20% of your customer base).

If the second possibility exists in your business, the reality is that your bottom 20% of customers provide you with no profit at all and in fact are likely costing you time and money.

How can you determine the your most profitable customers?

Do a Pareto Analysis on your customer base.  Here is a simple step by step process:

Step 1) Make a list of your current customers.

Step 2) Determine a ranking system for your customers.  A sample system would be to score each customer from 1 to 5 on the following attributes:

  •      Payment history – 1 for a quick payer to a 5 for a delinquent.
  •      Hassle factor – 1 for never a problem to a 5 for continuous hassle.
  •      Likability – 1 for we really like working with them to a 5 for we’d prefer not to work with them.
  •      Value for price fit – Score a 1 if they appreciate and really value what you do for them and to a 5 for no appreciation and less desire to pay for your value.
  •      Risk – Evaluate the business risk of doing business with each customer – 1 is for lowest risk and 5 would be the highest.

The above are just examples. You decide the correct attributes of a good or bad customer.

Step 3) Rank the customers according to the ranking scheme

Step 4) Consider the top 20% of the customer ranking.  If Pareto was right, the top 20% of your customers are where you make most of your profits. Don’t forget to thank these customers!

Step 5) Review the bottom 20% of the customer ranking. Ask your accountant, bookkeeper or business advisor to help you determine your profit from these customers.

Even without applying this principle to your specific business, we know there is not only the potential for profit improvement, there will be quality of life improvement to be enjoyed by you and your employees who won’t have to deal with as many frustrations anymore!

Find Time to Work ON Your Business

Find Time to Work ON Your Business

Find the time to work ON your business - Hyatt Lassaline Windsor OntarioMany business owners spend more time planning for their vacation than they do planning for the future of their business!

Often we’re so caught up in managing the day to day activities of working ‘in’ our business that we neglect working ‘on’ our business.

We know that we should be streamlining our business systems, developing customer relationship strategies and focusing on innovation (just to name a few!), but who has the time?

Here are some tips to help you find the time to work ON your business.

Make a Don’t Do List – Start with tasks that are easy to delegate – then delegate them! Some of these tasks might be enjoyable to you (like getting coffee), but if you’re serious about finding extra time to work on your business for freedom and profit, then the sacrifice should be well worth it.

Ask Permission for Planning Time – Often as business owners we’re used to being pulled in many different directions and are overwhelmed with interruptions. If we simply ask to work undisturbed employees and other interrupters of your time will learn to be more independent – leaving you time to work on your business. Set aside dedicated time every week to plan for your business’s future.

Spend Time Away from the Business to Plan and Brainstorm – Taking time away from your business in a relaxing environment is the perfect place to re-energize, refocus and work on your business strategy. Work with your tax advisor to be certain that your business planning retreat can be written off as a business expense.

Spending focused time regularly working on your business will have immediate and long lasting benefits, so don’t put if off any longer – commit to working on your business today.

Tips to Improve the Hiring Process

Tips to Improve the Hiring Process

Tips to Hire EmployeesDoes your business have an induction plan for new employees? Induction plans help ensure that new hires start off on a productive and positive note.

Here are some points to consider as you develop an induction plan for your business:

1)      Identify key current employees to provide hands on training to the new hire. It will take extra time and resources to properly train the new employee, so this must be accounted for.

2)     Create a checklist of essential items.

  •         Computer
  •         Email account setup
  •         Locker
  •         Uniform, phone, supplies
  •         Clean desk
  •         Clean truck

3)      Give the new hire access to training items, safety rules, passwords and keys.

If your business doesn’t have a formal process now for new hires, consider starting a system for this process. Don’t worry if it’s not perfect from the start, it can easily be reviewed and changed as your business evolves.

Small Steps to Business Success

Small Steps to Business Success

Steps to business success Hyatt Lassaline Windsor OntarioOften business owners are desperately seeking perfectionism to improve their business. Instead of trying to do business tasks 100% better, focus on doing several things 1% better and build from there.

Where to begin? Here are a few actions business owners can apply in only minutes a day:

  • Listening and communication skills – focus on listening better and giving thoughtful replies.
  • Learn a new skill – perhaps something to help you work more efficiently.
  • Become better organized – spend a few moments and tackle your desk, email inbox or paper files.
  • Talk to your customers – thank them and ask how they can be better served by your business.
  • Talk to you employees – learn their frustrations and address them to help improve productivity and morale.

These actions can have profitable, business building results. Start today!

What is Holding Your Business Back?

What is Holding Your Business Back?

It just might be you. It might be a self-imposed barrier that’s holding you and your business back.  

A self-imposed barrier is a thought or belief you have that is blocking you from seeing an opportunity.

A common example is when the business owner believes all their current customers are aware of every product or service the business offers, but in reality the customers do not.

Are you confident that all your current customers are aware of your complete business offerings?

Business advice to quickly improve profitsOne simple way to test this assumption is to assemble in a simple document a list of all the products or services your business provides. Politely ask your customers for a few minutes of their time to discuss your business’s offerings. You may uncover that your customers were unaware of many of your products or services.

The self-limiting belief described above limits potential sales to these customers. If you can open yourself to new possibilities, you might learn something new about your customer’s needs and frustrations.

You won’t know unless you start the conversation with your customers.

The Importance of First Impressions

The Importance of First Impressions

Are there areas of your business that are a little less than 100%? If we are focused on growing a business and besting the competition, we have to ensure that we are covering the basics -so let’s start with first impressions.

Potential customers may quickly make a purchase decision from your business, based on the following first impressions:

  • Hyatt - Lassaline - The Importance of First Impressions - Business TipsIs the exterior of the business neat and tidy?
  • Are the customers greeted in a friendly manner?
  • Are the trucks clean?
  • Do the employees have a nice and clean appearance?
  • Are the bathrooms clean?
  • Are the employees focused on business or on personal matters?

First impressions can make all the difference and just might be the deciding factor in a purchase or establishing loyalty with your business.

The Importance of Mutual Respect in the Workplace

The Importance of Mutual Respect in the Workplace

Most business owners feel that the most important thing to their employees is money. Have you as a business owner ever asked your employees what is important to them in the workplace?

If you survey the employees of any business and ask them to rank what is important to them,  ‘Respect’ always ranks higher than ‘Money’. In fact, with the surveys we’ve done, ‘Money’ usually ranks third or fourth.

Many business owners feel, ‘Why should I give respect when I don’t get any back?’ If this is your sentiment, then it proves that a lack of respect does exist in your business.

Mutual respect in the workplace is valuable and free Hyatt LassalineThe solution is mutual respect – The business owner and managers respect the employees and the employees respect the owners and managers. Leadership starts at the top and therefore respect improvement programs must begin with the leadership. The desire for mutual respect should be genuine, transparent and consistent to be effective.

Consider the following communication:

“Hi everyone, as the owner of this business I would like to behave respectfully in all my interactions. I welcome your feedback on this topic. In return, I ask each of you to also act respectfully. Does that sound fair to everyone?”

How can mutual respect be demonstrated?

  •          Truly listen to your employees and act upon their suggestions or opinions whenever able to do so.
  •          Give praise directly and in a timely fashion for a job well done.
  •          Share with your employees the goals of the business and endeavor to understand their personal and professional goals.
  •          Confirm the employee’s role in the success of the business.

The bonus benefit of establishing respect in the workplace is that it’s free to give and to your employees, it’s more valuable than money.

Building a Business System for Freedom & Profit

Building a Business System for Freedom & Profit

Are there certain parts of your business that you feel have to be done by you – the business owner?

Are there bottlenecks in your business because you – the business owner – aren’t able to accomplish certain tasks in a timely manner?

Are these bottlenecks in the areas of your business that you – the business owner – hates to do?

If you can relate to any of the above questions, there may be a lot of freedom and profit available from successfully implementing a system to help the situation.

Let’s review some excuses for and solutions for implementing change:

1) I am not ready or willing to give up control of this task

Let’s face it, most small business owners are control freaks – and for good reason. Until you are willing to give up control you will never get the freedom from the task. To make it easier to give up control, you can design the system to be the way you perform the task yourself.  Although the system will be used by others, as the designer, you can create the system the way you want. By approaching giving up a task this way, it makes it easier to give up control.

2) It’s too overwhelming and I don’t know where to start

The key is to break the tasks down into small pieces. Pick an easy task and create a system for the particular task. Just take a pen and paper and write down each step in performing the task as you do the task yourself.  To make sure you have not missed anything, have someone else try and use the system while you supervise. Even though it takes an extra investment of time up front, once you have completed the system, you’ll have the freedom to delegate the task whenever you like.

3) I tried it before and it didn’t work – there were too many mistakes

This could have happened for a number of reasons, but the most common is a ‘perfectionist’ expectation of the business owner. You delegated a task and it was not done as well as you can do it. You decided you are better off just doing it yourself. Mistakes cost money and you can’t afford them.

I had the perfectionist expectation myself until a ‘master systematizer’ explained to me, ‘Be happy if they can do it 80% as well as you can at first and tickle them up toward 100%’.

Put the proper effort into the system creation and pick a task that won’t ‘sell the farm’ if there is a mistake made. It is important to embrace failure as part of learning. Controlled failure. Think of it as ‘failing forward’.

In summary, the motivation for system building is this:   If you can build a system to delegate the tasks that you hate doing  and these tasks are causing bottlenecks too – your reward will be more freedom and more profit!

What is Your Business’s Strategy?

What is Your Business’s Strategy?

Business strategy, ideas for a successful business, business tipsDo you use the ‘hope’ strategy in your business? It goes something like this:

Let’s try something new and HOPE it works!

The hypothesis strategy is a more scientific approach. When performing a scientific experiment you must define your hypothesis first and then perform the experiment. The experiment is designed in a way that you can test if the hypothesis in true or false.

Here is a ‘hope’ strategy example regarding advertising:

Wait until a salesperson from a magazine or newspaper calls on you, react by throwing together an advertisement and ‘hope’ to have a positive financial result.

The advertising hypothesis strategy could be:

Hypothesis 1 – Our current and potential customers read magazine X.

Hypothesis 2 – Our current and potential customers have a specific need or frustration. The headline of the advertisement indicates that our business’s offering can solve this need or frustration.

– We then test our hypothesis by setting up a unique domain name for use within the advertisement.

– We then monitor the website hits to this unique URL.

You can see by the way the hypothesis is set up that you can get better test results. Under the ‘hope’ strategy, you don’t even know if any customers showed up a result of the advertisement. And if nothing happens, you will quickly lose ‘hope’!

Under the hypothesis strategy, if nothing happens, you can change something in the hypothesis and try again. You could change the headline or the publication. If you only change one hypothesis at a time, you can dramatically increase your probability of success.

This change in strategy takes a different mindset. This approach is a philosophy of learning and discovery. The worst thing you can do in make an incorrect assumption. But you can test your assumptions to make sure they are correct.

Does Your Business Offer a Guarantee?

Does Your Business Offer a Guarantee?

Business advice - Hyatt Lassaline Chartered Accountants Windsor Essex OntarioWhen a potential customer considers purchasing from your business, are there a number of risks to completing the purchase?

When you provide a guarantee, you remove the risks to the potential purchaser and make it easier for them to buy from you.

It is reasonable to assume that if you reduce the risks and make it easy to buy, more of your potential customers will convert to actual customers and make the purchase.

Here are 5 tips to developing a great guarantee:

1)      Position it clearly and boldly to potential customers: The worst guarantee is one that customers don’t know about. This may sound ridiculous, but as a small business advisor I often discover businesses that have a guarantee but didn’t tell their customers about it at the time of the purchase decision. This means the guarantee was not needed for the purchase decision of the customers that bought because they didn’t even know about it. The potential customers that didn’t buy could have been a customer, but they didn’t know about the guarantee and decided it was too risky to make the purchase.

2)      The stronger and bolder the guarantee – the better – a watered-down guarantee just doesn’t work. Make it big and bold. The idea is to get more customers to buy confidently, so big and bold gets more attention in the marketplace.  Often there is resistance to offering a bold guarantee. This is business owners may fear the market will take advantage of the guarantee. The reality is that a very small percentage probably will, but the percentage is typically less than 1%. The profits from the other 99% of new customers will be more than the cost of dealing with the unsatisfied 1%.

3)      Be specific how you define the ‘claim’ – As the business that is developing the guarantee, you get to determine the rules for a claim. While the guarantee needs to have some meat and be easy to use, you control the details. Make it ‘if this, then that’. For example, ‘If this tree doesn’t live for one year from purchase for any reason, then we will replace it for no charge.’ In this example, the claim was not cash but a free replacement which costs less to the business that a full refund.

4)      Test it first – If you are worried about how the guarantee will work and if anyone will abuse it, then test it in a controlled manner. You can offer it to a limited group of potential customers to see how it works. Then you can tweak it based on how the test works out.

5)      Research the existing guarantees in other industries – The design of a great guarantee does not have to come from your industry. There is no need to re-invent the wheel. If you just focus on the current purchase decisions you may be making yourself, you can experience how and if a guarantee affects your risks of making a purchase.