Archive for January, 2014


Mondays with Mike: The Four Steps of Ripple Innovation

Sand_ripplesWe’ve all been there.  You know – that period in your business when it all feels stale and tired.  When you feel like Bill Murray in Groundhog Day, waking up to the same old thing.  You know you need to shake things up, but you’re not sure where to start.  You could hire some know-it-all consultant and pay them to provide you with a band-aid that’s a temporary fix.  You could hold yet another brainstorming meeting and leave with the same five ideas you got last year.

But I suggest that you approach this revitalization project differently.  Find a problem in your business that you need to solve.  Whether it’s a need to cut costs, bring in new customers, streamline a process – whatever your challenge, articulate it and try using ripple innovation to solve your problem in a novel way.

  1. Ripple 1: Find the solution inside your company.  We’re often blind to potential solutions because we’re victims of rigid thinking.  Try applying fixes from one area of your business to another.  For example, ask your customer service reps for suggestions about how to improve they ways in which you bring in prospective clients.  Get your sales reps to share input about ways in which IT can be improved.  Share expertise among departments and you’ll come up with fresh perspectives.
  2. Ripple 2: Find the solution inside your industry.  Check out your competition.  Say you run a commercial cleaning business.  Take a look at your competitors’ ads if you’re looking to bring in new business.  Find out where other companies buy their cleaning supplies and see if you can get a better deal in exchange for a contract.  See what other companies are doing right and adapt their practices to improve your own business.
  3. Ripple 3: Find the solution in any industry.  Broaden your perspective and look at the ways in which other businesses face challenges and present solutions.  Look at companies who have all the customers they can handle and are making money hand over fist and see what you can learn from them.  The ice cream shop around the corner that always has long lines….maybe their Facebook page gives customers a heads up on new flavors and daily specials.  The automotive repair shop that has customers waiting for an appointment because of their outstanding guarantee of services….they’ve actively managed and promoted word-of-mouth by rewarding customers for referrals.  You can translate these lessons to your industry as well! 
  4. Ripple 4: Find the solution in nature.  Coming up with nothing fresh?  Take a look at the world around you, and you’ll discover that nature is the ultimate innovator and inventor.  If you’re having trouble retaining new employees despite the fact that you’re paying great wages, maybe you need to look at the ways in which animals protect their young and provide a longer, more nurturing training period so that your staff feels more confident and capable when you finally launch them on their own.

The big lesson in ripple innovation is that you’ll benefit from broadening your perspective and learning about why solutions work and how you can adapt the principles of those solutions to solve your particular problems.  


5 Ways to Boost Your Cash Flow Right Now

2014-01-13_1019During the 1992 presidential election, there was a sign that was reportedly hung by James Carville, Bill Clinton’s campaign manager in their Little Rock Office that simple stated “It’s the economy, stupid”. This was a reminder to everyone that worked there that the only thing that the national race was about was the economy. That year, I started my third business after failing in two others. This time, I made my own sign and tacked it up in my office. It read: “It’s cash flow, stupid”. It became my daily reminder and mantra. Starting out in my first business in 1980′s, I thought that the only thing that mattered was to sell my product to whoever would buy it. I reasoned that if you make sales, you eventually make money. This worked great until customers didn’t pay me on time or at the same rate as my business expenses grew. Unfortunately, even if my customers did not pay their bills when they were due, my employees and vendors still wanted to get paid on time. What I realized is that sales do not pay bills, cash does.

Collecting the cash from sales means everything. It is the gasoline that makes your business engine work. Without cash, your business literally suffocates. Most businesses fail because they run out of cash leaked through losses or other poor management practices.

How to improve your cash flow in your own business:

  1. Open the bank monthly statements. Check to see if you have more or less cash when comparing the beginning month and end of month balances. If the end of the month cash balance is higher, the company is cash flow positive. If the end of month balance is lower than at the beginning of the month, the company is cash flow negative.
  2. Learn to read the cash flow statements. Don’t outsource the math. By definition, cash flow is typically your monthly profit, plus the change in accounts payable, the change in accounts receivable, and the change in inventory. The higher this number is monthly, the healthier your company will be.
  3. Collect accounts receivable faster. The sooner a customer pays, the higher the cash flow. The Days Sales Outstanding (DSO) for your business should never be more than 133% of your invoice terms. Don’t extend credit to a customer that has not proven they can pay in a timely fashion. Remember that credit is a privilege, not a right. Better yet, get your customers to pay with credit card or prepay your services.
  4. Get longer terms from vendors. Extended credit from your vendors will boost your cash. Always pay within the agreed period of time. However, if you have 30 day terms, try to get 45 days by building up a reliable track record.
  5. Selling inventory faster and keeping your inventory levels lower.  Buying inventory only to sit for months on your shelf waiting for customer orders can take a lot of cash out of the business. Track your inventory carefully. Know what sells quickly and what never moves off the shelf. Know how long your customers will wait for a product and still be satisfied. This will determine the setting of reorder points (when a product is reordered to be put into inventory) and the reorder quantities (how much is reordered).

What have you done in your business to boost your cash?


5 New Years Resolutions Small Business Owners Should Keep

By now you’ve probably made a list of New Year's resolutions and already crossed a few off your list. And it’s still January. Don’t worry; you aren’t alone. Only about 8 percent of us keep our resolutions every year, according to the University of Scranton.

Defy that depressing statistic this year by sticking to these five resolutions from small business expert Lauri Flaquer.

#1. Embrace change

Don’t be afraid to change things up this year. “Look at your opportunities to grow and look at what needs to stay the same,” recommends Flaquer, owner of Saltar Solutions, a business consultancy in St. Paul, Minn. “Invite change and growth will follow.”

#2. Evaluate your performance

How good of a job are you doing? Not sure? “Many managers live in their own little worlds and are not always able to see things the same way outsiders see them,” she says. Put together a group of people whom can interdepedently tell you the truth about how things are going and considering asking your employees for 360-degree reviews.

#3. Make work fun

“Strive to be a company that your employees rave to their friends about,” says Flaquer. Focus on upcoming holidays—like Mardi Gras—and spring for a cake, beads and masks for the whole office, she recommends. Or host a monthly birthday party.

“It really doesn’t have to cost a lot of money,” she says. “I know a company that has a barbecue every Tuesday where one person brings in all the food for the department. Each person has to bring in food about four times a year, but they get to eat for free during every other Tuesday.”

#4. Clear clutter

You know that piece of inventory that has been sitting in the corner of the break room for the last two years? Get rid of it and don’t look back. If you haven’t used it, you don’t need it. The same goes for the mountains of vendor magazines piled up in your file cabinet, collecting dust.

Parting ways with your office clutter will make you feel better. “Clutter holds you back from having new ideas, fresh thinking and getting around your workspace,” she says. “Task your employees with clearing how their workspaces, too. Everyone will breathe a huge sigh of relief.”

#5. Join a mastermind group

A mastermind group is a collection of people that get together to discuss a business topic and look for solutions to problems. Flaquer recommends small business owners either create their own group with other local business owners or join one online.

“Look for a group of people who are more successful than you,” she says. “Those are the people who will push your forward and help you achieve your goals.”

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Work Your Biz Wednesday: How to Build a Network to Grow your Small Business

Are you building your network and obtaining new referrals? Learn how with these 4 tips from The Small Biz Lady, Melinda Emerson.


Nextiva Tuesday Tip: Getting Organized Using Project Management Software

91c5acd957b95442_Organize_Your_Desk.previewWas one of your New Year’s resolutions to be more organized in your business? If you work with a lot of freelancers, outside contractors and vendors in addition to your in-house employees, you know that managing all of the deadlines, data and scheduling involved can get confusing. Project management software can help you get it all under control.

Basecamp and Zoho Projects are two project management tools I’ve used and like, but there are plenty of others out there to investigate as well. Begin by figuring out what you need from a project management tool and whether you want to replace, or simply augment, your existing systems. For example, do you need to schedule and assign tasks, then track completion? Do you need to collaborate on documents and projects online? Do you need to track employees’ or freelancers’ time and billable hours? There are tools that can do some or all of this.

As you research different project management tools, keep these factors in mind:

Size: How many people will be using the tool, including both in-house staff and outside contractors, vendors or clients? Choose something that can grow with your business, but isn’t too big or cumbersome for your current needs.

Ease of use: Some tools are very simple while others are more complex and allow for a greater level of detail. If a tool is too complex for you and your team to learn easily, you probably won’t use it—so be realistic.

Cost: Most project management tools are either free, offer free trials or have free versions with lesser options. Don’t assume you can get away with a free option, though—if you need more than the free tools provide, make room for it in your budget.

Security: Sharing company data can get risky, so make sure the project management tool you select has the controls you need for security, such as enabling you to set different levels of access or permission. You don’t want a client viewing sensitive internal documents by accident.

Of course, the most important step in making project management work is getting everyone trained on the tool and ensuring they actually use it. Don’t let people slip back to old ways or do a mish-mosh of old and new. Set an example by using the new tool yourself and getting everyone on board. 


Mondays with Mike: 7 Simple Steps to Improving Office Morale

Worried about post-holiday doldrums in the office?  Afraid that short of spiking the coffee with Prozac, there’s little you can do about it?  Fear not!  These simple tips can help you brighten the mood and invigorate your staff.

  1. 10-tips-for-boosting-employee-morale-pop_6697Daily Huddle.  Don’t sweep your office problems under the rug.  Take a few minutes each day to air out concerns and address practical solutions.  Let your staff know that you’re making changes by giving them regular updates on the concerns they’ve expressed.  Tip:  Hold the meeting standing up.  You’re more likely to keep people on topic and to-the-point.
  2. Schedule Change-Up.  Offer your staff a chance to shift their schedules a bit.  It’s amazing what a little flex-time can do.  You’ll see refreshed, focused faces if you give your employees the chance to get out of their rut.
  3. Focus on the Why, rather than the What.  No matter what you do, you can benefit from reflecting on why you’ve chosen your field.  Accountants’ offices may not be the most exciting places to work, but if you can get your team focused on the real benefits they provide to your clients, then you can invigorate your staff and get them ready to tackle even the crunch of tax time.  Focus on your purpose.
  4. Say Thank You.   Simple.  Free.  So important.  Take the time to let your staff know that you appreciate their hard work.
  5. Listen.  Any good customer service rep will tell you that the first step to resolving a problem is to let the customer vent.  If a member of your staff has a complaint, it’s important that they be able to voice their concerns.  If a frustrated employee has no place to vent appropriately, then the dissatisfaction will spread to other members of the staff.  The important tip here is to let your staff air their grievances in private if possible, preventing the negative attitude from multiplying and giving you the opportunity to address legitimate complaints.
  6. Take the Bullet.  Does your staff have a gripe about a particularly unpleasant or difficult task?  Is there something standing in their way – an obstacle that needs to be overcome?  Be the hero!  If you step in and show that you’re not just willing to pitch in, but able to solve problems for your staff from time to time, you cement your position as the solution-finder extraordinaire.  By modeling the willingness to roll up your sleeves and get dirty on occasion, you’re setting the example of being a problem-solver.
  7. Change of Scenery.  Monotony is the slayer of enthusiasm.  Get your employees out of the office for a day and see how their collective outlook improves.  Pick a charity and spend the day volunteering, and when you return, have a new coffee maker or new desk chairs for your staff waiting for them.  Shaking up the routine can make your staff as enthusiastic as they were on their first day.

You’re the captain of the ship.  Keep tabs on morale and make sure you brighten up the office when necessary.  


What is Your Small Business Health Score?

This is a good time of year to assess the health of your company. Review these 10 elements and score your business to find out where you stand.

  1. Cash flow. Having a cash flow positive company is critical for success. This means the business has more cash at the end of the month than the beginning. How to score: Add 2 points for cash flow positive. Subtract 2 points for cash flow negative (less cash at the end of the month).
  2. Quick ratio. This simple balance sheet formula divides current assets minus current liabilities.  Ratios greater than one mean the company has enough current assets to pay its current bills. How to score: Add 2 points if the company's quick radio is above one. Subtract 2 points if it is below one. Note that a healthy quick ratio number will vary by industry.
  3. Customer annuities. This means repeat customers pay the company automatically every month. How to score: Add 2 points if this is true. Subtract 1 point if the company needs to recreate its revenue and find new customers every month.
  4. Fixed overhead expenses. High fixed overhead expenses do not give companies flexibility as sales and profit changes. How to score: Add 1 point if most of the company's expenses are variable. Subtract 1 point if most expenses are fixed or they are high compared to sales.
  5. Management team. Strong companies are not about their owners, but their team leaders. How to score: Add 2 points for a truly collaborative organization. Subtract 1 point if the CEO makes all the top down decisions.
  6. Employee turnover. Loyal employees generate more profit for companies than those with high turnover. How to score: Add 2 points if the company retains employees for at least 5 years. Add 1 point for 3-5 years. Subtract 1 point if employees stay 2 years or less.
  7. Strategic and focused plan. Companies that have a written plan about where they are going and employees that are clear about the company's direction succeed. How to score: Add 1 point if every company employee can articulate the plan. Subtract 1 point if they can't.
  8. keyboard_stethoscopeSystematic sales and marketing plan. Many small businesses only market when they have no sales, but immediately stop when they do. How to score: Add 2 points if the company has an ongoing systematic plan including social media. Subtract 2 points if sales and marketing is mostly improvisational.
  9. Infrastructure. Growing companies need to have an infrastructure that supports them. Nextiva uses the integration of tool from Marketo, SalesForce, and NuviApp (social) to deliver reliable communications solutions to their business clients. How to score: Add 1 point if the company has integrated systems that can be effectively  used by employees and customers. Subtract 2 points if each system is independent from each other or does work effectively.
  10. Outside advisors. Small business owners need to ask for help. How to score: Add 1 point if the owner has a formal advisory board. Subtract 1 point if the owner is insulated and never asks anyone outside the company for advice.

Scoring totals:

Above 10:  Congratulations! Your small business is healthy and well positioned for 2014. Look at improving any area where the score was negative to increase your strength.

0 to 9: At risk! Key parts of your small business need to be improved in 2014. You are vulnerably to changes inside and outside the company. Pay attention to the elements  where your score was negative.

Below 0: Danger! Too many parts of your business are unhealthy and your company risks going bankrupt this year. Seek help immediately!

What is your score?


3 Essential Practices to Managing Your Company’s Facebook Page

Almost everyone is on Facebook these days. The social networking site famously attracted its 1 billionth user in late 2012 and has added millions more since. By December 2013, a reported 1.19 billion people checked Facebook every day. With numbers like that, chances are good that your customers are also on the site.

So how should you, as a small business owner, manage your company’s Facebook page? Jason McDonald, director of JM Internet Group, a social media and SEO consulting company in Fremont, Calif., offers a few key pieces of advice.

Make it fun

First, don’t treat your Facebook page like your Twitter page. Twitter is a perfect medium to send out a dozen messages a day, many of them advertising your company via coupon codes, etc. Facebook is much different.

“Facebook is friends, family, fun. If you can connect to that persona, great,” says McDonald. This means posting status updates with photos, lighthearted comments about current events and engaging with customers. It also means avoiding self-promotional posts as much as possible. According to McDonald, companies should only highlight promotional messages (i.e. discounts) every 10th or 20th post.

It can be easy to make your Facebook page fun if you own a pizza restaurant (McDonald recommends posting pictures of kids at a little league party or the scene at your restaurant during Friday happy hour), but what your business isn’t so lively? What if you are the head of an engineering practice or CPA firm?

“You can still make boring topics fun,” says McDonald. “If you own an engineering company, put up a funny picture once a week and have a caption contest to engage your followers. The caption with the most likes gets a gift card or industry book.

“Or post blogs and news from other places that have to do with your industry. Or post something everyone can relate to like how Mondays can be a bit of a drag. You will get tons of comments from people commiserating.”

Most importantly, think from the perspective of your customer. Ask yourself why your customer is logging onto Facebook in the first place, McDonald recommends. Many of them are coming to be entertained; make your page fun and your number of followers will increase.

Make sure you control your page

While you may assign the task of Facebook posting to a lower level member of your team, make sure that you still know your account’s user name and password to avoid a potential disaster. “If you assign control of the page to someone else and that person quits, he or she may take the page with them,” says McDonald. “As a business owner, it is a security issue. Take inventory of what you control.”

Set up a corporate page, not a personal page

Facebook is pretty serious about verifying whom you are when creating a new account. “They will kill your page if you set up a personal profile instead of a business profile by mistake,” he says. “Personal profiles and business pages are different things. Make sure you are setting up the right one.” 

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Work Your Biz Wednesday: How to Make Tax Season Easier

2014 is here, and tax season is upon us! Make sure you are ready to go with these tips from The Small Biz Lady, Melinda Emerson.




 
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