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Small Business Development Center
 

Part III in a three part series on the Basics of Managing a Business

This is the third and final part on the basics of how to manage a business. See Part I and Part II for info on understanding the mechanics of your business and the importance of cashflow.  
 
 
 

picture of officer stopping motoris

Papers of Importance
 
License and Registration Please: Are you properly registered and licensed? Do you have a business license, any industry licenses (if needed), and local licenses? Try out the WA State Business Licensing Wizard (5th heading down on the left) for specifics on licensing for your business.
 
 
 
 
 

uncle sam and money

Uncle Sam’s Share: Pay your taxes! As we all know, government agencies take tax payment Very Seriously. Stay on the right side of regulation and talk to an accountant or bookkeeper to determine what specific taxes your business will likely owe, when they’ll be due, get assistance with filing, setting up accounts with agencies, and making payments. 
  1. Common taxes that need attention are: Federal Tax returns, Federal Unemployment, State workers’ compensation, State unemployment tax, payroll taxes, and sales tax. For more information on taxes a business may owe in WA state and assorted due dates, click here

     
  2. You’ll also need to be aware of any local taxes. The Governor’s Office for Regulatory Innovation and Assistance has a helpful page called RUN your business that provides information on several state and local tax and regulatory requirements. The Department of Revenue's information about Filing Frequencies & Due Dates is also helpful. 
 
CYA (Cover Your Assets): If you haven’t already done so, speak with an insurance agent to talk through the type(s) of insurance you might need. Possible policies to consider: general liability, errors & omissions, product liability, property, auto, business interruption, key person, health and life insurance.  
 
Practices of Importance
 
Make a List & Check it Twice: Create, and/or write down, Standard Operating Procedures (SOP’s) for the most common tasks that will be performed in the company. It’s quite common for young businesses to just start ‘doing’ and not set up a written protocol of how to do things. Standard procedures make training, expectations and accountability all easier. Updating annually once you’ve settled into running the business is advisable. Making a master list of online tools or memberships that multiple people use with web addresses, log-ins and passwords is advisable too. Store it somewhere safe. 
 
Track your Transactions: A good bookkeeper is worth their weight in gold. You can’t evaluate your business’s true health and performance without accurate and up-to-date financial statements. Keeping a business’s books can be a steep learning curve and there are professionals who will do the data entry for you so you can use your time to do other things. 
It’s all About the Benjamins: Be timely in sending out invoices, clearly list the terms of payment (days to pay & interest rates on past-due items), cross reference received payments with invoice numbers and amounts, and follow up with customers if payment hasn’t been received within the expected repayment timeframe. Make sure you pay your bills on time. 
 
Take a trip to 10,000 feet: Plan annual strategy and budgeting periods to make sure you’re taking your business the direction you want to in a smart and profitable manner. Reviewing both on a monthly or quarterly basis is a good idea.  
 
Be the Horse’s Mouth: Clear communication with business partners, employees, and customers can be the difference between being successful and not making it as a business. Make sure you and employees follow up in a timely way with customers, vendors and anyone you interact with. You’re building a reputation for your business! Word of mouth and referrals are one of the most cost-effective ways to grow. Timeliness is often perceived as competency. Put your most competent foot forward! 
 
By no means is this list exhaustive (though it might feel that way at this point!). If you work on the concepts outlined in each of the three parts of this series, you’ll be well on your way to fully de-mystifying the secrets of the inner chamber of managing your business. Not only will you be a master of running your business’s control panel, others might start to think you’re the wizard behind the curtain! You, Toto, and other managing wizards will know the truth.  
 
Post date: 201810

When it comes to growing a retail business there really are only three ways to grow.

You can:

  1. Increase the number of customers you serve.
  2. Increase the average transaction value.
  3. Increase the frequency of customer visits.

Is one of these three ways to grow any better than the others? I would argue, yes. But it depends…

First, it is helpful to engage in a little analysis and self-reflection. Because knowing why you want to grow and which way you intend to grow helps you focus on the variables you can change.

Know this - all growth requires change. And with change comes some degree of stress.

So let’s look at the three ways to grow and some of the changes that may be required.

Growth by Number of Customers Served

Often the most difficult, and expensive, of the three. Think advertising. Here at the SBDC clients will often ask us, ‘Where should I spend money to advertise my business?’ Loaded question. Before we start building a marketing plan and allocating budget dollars to advertising, we like to educate clients about a couple of key metrics that any business owner should know; which are the Lifetime Value of a Customer and Allowable Cost to Acquire a Customer.

Let’s say you own a restaurant and the average sale, or ticket, is $50. Your average customer visits your restaurant six times per year. And they are likely to keep visiting as long as they continue to live in the area and you keep serving up delicious food with great service. Since homeowners sell on average every 7-10 years let’s start there, and be conservative at that.

$50 per ticket x 6 visits per year x 7 years = $2,100

If you knew that every time you minted a new customer your business would be accruing $2,100 of sales revenue…how much would you invest to get that new customer in the door the first time?

Once you know your allowable cost to acquire a new customer you can then hold your advertising dollars accountable. And if you choose this route for growth, know that additional spending is going to be needed. Because there is always a cost to growing customers. There’s no free lunch.

Growing the Average Transaction Value

From our restaurant example above this may be as easy as training your staff on the fine art of suggestive up-selling. If you can get more customers opting for drinks, appetizers or desserts your ticket value goes up. Now this may not put a ton of strain on your business financially but it does require focused effort in the form of staff training.

If you own a shoe store and all you stock is shoes you can reasonably predict how much inventory to carry. However, if you decide to add socks, insoles, shoe laces and leather conditioners as point-of-sale upsell items you now may have to increase your inventory purchasing capacity.

Once you start changing your merchandise mix with new categories that are logical extensions for your type of customers there will be economic impacts. Your Balance Sheet will grow as you have more inventory on hand. What will the off-set be? Because remember – Balance Sheets have to balance! Will you have more debt in the form of vendor financing? Or will your cash on hand go down? There will be impacts to your P&L as well. While vendors may promise to support your efforts to sell their products, beware of the hidden costs of taking on too much inventory.

Increasing the Frequency of Customer Visits

In today’s hyper-connected world this should be easier than ever before. However, modern technology is the proverbial double-edged sword. You have countless options to connect with your fans via social media platforms but at the same time that means that you are competing for your customers’ attention with lots of others.

Back to our restaurant example. If you had the email address, the home mailing address, the mobile phone number (and permission to send text offers) for all of your customers do you think that by reaching out to them directly  inviting them back to your restaurant that you could increase the average visit count from six times per year to seven? If you did just that, you could increase your revenues by 17%!

There are literally hundreds of tactics that can be used under these three ways to grow a business. If you would like some help figuring out how to grow smart the SBDC is here to help.

Post date: 201810

A couple weeks ago, our office needed the backdoor repaired. The repair person greeted me that morning with a friendly, “How are you doing this morning?” I replied, “I’m really happy to see you this morning. That door has been so sticky lately, we all feared we’d throw our back out trying to open it! You’re going to be our hero today!”

The repairperson’s next comment spurred the idea for this blog post. He said, “It’s really nice to be appreciated. Most people highly underestimate the value of being recognized.”

Take a moment to reflect on that statement.

“It’s really nice to be appreciated. Most people highly underestimate the value of being recognized.”

When was the last time someone stopped to thank you or recognize the work that you do?

Can you recall the last time you paid someone a specific compliment or expressed your gratitude in a way that made the person feel sincerely seen, heard, or recognized?

Several weeks ago, I received a handwritten note from a client. Wow, did it make me feel awesome! I was pleased to know our meeting made an impact and it meant a lot that the client took time out of their day to say, “Thank you.”image of thank you note

“Thank you.” Two of the most powerful words that can be articulated.

This weekend, I had breakfast with a friend. She told me about her daughter’s involvement in theater. After every scene or practice, the director provides the students feedback. Regardless if the director has praise or criticism for the student, the student’s required response to the director is “Thank you.” I thought it was an awesome lesson for these young people to be taught gratitude for honesty, for critical feedback, for the opportunity to grow, as well as learning how to accept praise and complements.

It may sound odd, but one of the reasons I often commute by bus is because it provides the opportunity to witness gratitude. It’s rare to come to a stop where a passenger gets off and not hear the words “Thank you.” Most passengers thank the drivers and most drivers warmly acknowledge the passengers.

So, here’s your challenge for the week… If you are not in the habit of expressing “Thank you” to your employees, customers, or co-owners, I encourage you to try it on! Being on the receiving end of “Thank you” feeds those around you. Meanwhile, as you start to bestow words or acts of recognition, it will subconsciously stimulate your internal sense of appreciation.

And for all you business owners out there, thank you for your courage. I admire your passion and leadership. I recognize how you bolster our local economy and contribute to the fabric of our community.

Thank you. Thank you. Thank you!

Post date: 201810

Let's face it...most stock photography sucks.

Perhaps worse, it can cost a small fortune to hire a real photographer to shoot what you want.

So what's a marketer to do?

Fortunately for you, there ARE a number of great resources to find awesome images for little to no cost!

Below you will find a curated list of the best sites for finding free photos. 

For the most part - they are free to use and made available under the Creative Commons Zero License

https://unsplash.com
Simply stunning photos! Lots of nature scenes, great search function. My current favorite site.

https://www.pexels.com
Maybe the largest of the royalty-free sites.

https://pixabay.com
Tons of free stock photos, vector graphics, and art illustrations.

http://www.lifeofpix.com
Lots more nature and architecture shots from Leeroy Advertising Agency in Montreal and its network of photographers.

http://kaboompics.com
Breathtaking pictures. Searchable.

http://jaymantri.com
Free Pics. Do Anything. Make Magic. Courtesy of Jay Mantri.

Post date: 201810