10 Ways to Improve Your Business Now
While you're working on goals for your business, why not take a look at these suggestions from an entrepreneurial expert?
No matter what time of year it is, it never hurts to reevaluate your business "resolutions" and set some new goals for your business. Using the popularity of top 10 lists as our starting point, here are some off-the-wall-but sound-business ideas you probably won't see on David Letterman anytime soon.
1. Take a bozo to lunch. Put together a list of several former clients who no longer use your services, call them and offer to treat them to lunch. Be sure to pick a fancy restaurant-Chinese takeout simply won't do the job here. The purpose? To find out what you've been doing wrong. Do not argue with them. Instead, listen patiently, ask lots of questions, thank them, pay the bill and then offer them a 10 percent discount on all services during 2004 as a thank you gift. Trust me, they'll tell you more than you want to know.
2. Charge more for premium services. Do you have clients who insist on knowing your cell phone and pager number and who call you at all hours of the day and night, including weekends? If so, are you charging them the same as your other clients who call you on your landline during normal business hours? Shame on you! While today's technology allows people to have access to your body and soul 24 hours a day, seven days a week, that doesn't meant they should get a bargain rate on top of it. The next time a client asks for your cell phone number, be sure to let them know that your "premium access" rates are higher than the rates you normally quote.
3. Learn more about your state's use tax. In addition to sales tax, which almost everyone knows about, most states also have a use tax that they impose on the stuff you buy from out-of-state vendors, including Internet sales, and consume in your business. As states are growing more and more desperate to raise revenue without increasing people's income tax rates, they are auditing the use tax more and more aggressively. Talk to your accountant and find out if you should start filing use tax returns before the state tax collectors find you out.
4. Learn an accounting software program. Business is a numbers game, and if you don't speak the language of accounting, you cannot understand what's happening in your business. While it's okay to use a bookkeeper during your first year or two in business, sooner or later you should bite the bullet and learn how to do this yourself. Most local community colleges offer evening courses in the most popular accounting and bookkeeping software programs, such as QuickBooks and One-Write Plus. If you prefer to keep using a bookkeeper, take them to lunch every three months to go over your accounting statements for your past quarter and have them explain why the numbers look the way they do.
5. Check your business's credit health. If your business uses credit cards or owes money to a bank, get a copy of your business's credit report from the three major credit bureaus-Experian, Equifax and TransUnion-and look for any mistakes that might affect your credit score (a statistical calculation that helps lenders assess your business's credit risk). A number of online services, such as www.freecreditreport.com will, for a small fee, provide you with monthly (or even daily) updates of your three credit reports and periodic updates of your credit score so you can spot problems and correct them before they get out of hand.
Worried about your business's (or your own) credit history or credit score? If you have large outstanding balances, you should be-interest rates are poised to increase in the next year to two years and you know credit card issuers will be leading the way upwards. If big credit card balances are keeping you awake at night, make these additional resolutions for 2004:
- Pay down at least one of your credit accounts all the way to zero and don't make any new charges to that account for six months.
- Take advantage of balance transfer offers that allow you to refinance your credit card balances at lower interest rates. With prevailing interest rates as low as they are now, your business should not be paying more than 6 to 8 percent per annum on all balances. Read the fine print to make sure there are no hidden fees for processing the balance transfer.
- Set aside 10 percent of your free cash flow (operating revenue less operating expenses and escrow for taxes) each month, and deposit it in a separate interest-bearing account. Let the balance in this account accumulate interest until December 2004, withdraw the full amount less $100 and use it to reduce your credit balances. Think of it as a Christmas or Chanukah present to your creditors to thank them for supporting your business the past year.
6. Bill frequently, bill regularly. Your clients are not psychic. They have a rough idea of how much work you've done for them, but they don't know exactly how much to pay you and they won't pay you anything until they get an invoice. Businesses that send invoices at odd, unpredictable times, or wait until the end of the year to submit a bill for everything they've done over the preceding 12 months, have only themselves to blame when clients play games and try to wiggle out of their obligations. Your invoices should go out each month, or as soon as you finish a particular job for a client, and should be as detailed as possible about what you did and when you did it. Oh, and don't forget to put the due date for payment on each invoice. Clients shouldn't have to guess about that either.
7. Update your contract forms. A lot of businesses today are using contract documents that were state of the art in 1975. Form contracts that you download from the Web or copy from a book are often inaccurate and out-of-date. At least once a year, show your contract documents to an attorney and ask them to spend "not more than X hours" reviewing them, cleaning up anything that might be wrong and bringing them up to today's standards.
Once you've done this, keep a master copy of each contract on your computer in read-only format so you cannot make changes to it. When you need to use the contract form, make a copy of the master and make whatever changes are necessary on the copy so the master remains pristine. Once you make changes to the master agreement, it's difficult to unmake them, the changes will multiply from contract to contract and no two of your contracts will look the same.
8. Clean up your computer files. If your computer's been acting up lately, don't assume it's a virus. It may simply be that you have too much stuff on your hard drive. At least once a week, you should do the following (specific instructions apply to Windows PC users only):
- Back up all your Word, Excel, PowerPoint, Office and QuickBooks files onto a data compact disk (CD-R or CD-RW) and then delete all the files remaining in these folders except for the ones you use every day.
- Delete everything in the Temporary Internet Files and Cookies folders.
- Go into your e-mail program (Outlook or Outlook Express) and delete everything in the Sent Items and Deleted Items folders-these folders should never have more than a handful of messages in them.
- Back up all your important e-mail messages onto a CD, or print out hard copies of them, and then delete all of the files remaining in your e-mail program.
The hardest step is the last one, as Windows does not make it easy to copy e-mail messages onto a permanent storage device (such as a CD or floppy disk). Ask your computer person how to do this as it's a real pain to print out hundreds of e-mail messages.
9. Hire someone. Yes, employees are expensive. Yes, you have to withhold payroll and other employment taxes. Yes, employees can be a pain in the neck and you can't always fire them when you want to. But with big companies laying off seasoned executives by the tens of thousands, the pool of available management talent has never been better. Many downsized executives are too old to go back to corporate America and are only too willing to work for cheap to get out of the house, learn some new skills, pay the mortgage and keep food on the table. You've got only yourself to blame if you don't take advantage of this situation-you may even find a partner willing to invest some of his severance package in your business to buy himself a job.
10. Get involved in your community. People complain all the time that there's no sense of community any more-and they're right. Today's technology is making hermits of us all by enabling us to live in our own little private worlds. But to those who complain, I ask: What have you done about it lately? Have you made any effort at all to do anything to help make your community a stronger one? We're all pressed for time these days, but if you do not give at least one thing back to your community this year by volunteering, getting involved in local politics, or joining a local civic group (heck, how about forming one that doesn't yet exist?) your life will be a poorer one, no matter how much money you make. Invest some time in your community, and it will come back to you tenfold.
Cliff Ennico is host of the PBS TV series MoneyHunt and a leading expert on managing growing companies. His advice for small businesses regularly appears on the "Protecting Your Business" channel on Small Business Television Network. E-mail him at firstname.lastname@example.org. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. Copyright 2003 Clifford R. Ennico. Distributed by Creators Syndicate Inc.
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