Financial-Profit Mastery Archives - Hybrid Business Advisors

7 Small Business Weaknesses You Should Avoid

Posted on by Joan Nowak

Every business has its strengths, those things that they consistently do well to get people talking, attract new business, and keep customers coming back. Always a good thing. Unfortunately, strengths can sometimes cover up business weaknesses or flaws so they don’t get the attention they need.

For clarification, business weaknesses are areas where improvements need to be made because your current situation leaves you vulnerable to economic pressures, market forces, or aggressive competitors. In short, these are the things that hurt long-term, sustainable profitability.

Here’s an interesting way to look at business weaknesses. IF you were going to sell your business, what things would make it less attractive to a potential buyer? Note, the things that would make it attractive are typically strengths!

7 Small Business Weaknesses

#1 – No documented systems and procedures. As a result, critical activities including marketing, sales, hiring, service delivery, billing, and customer care are not easily repeatable by others. And, they are often inconsistent, inefficient, and ineffective. Taking the time to put down how tasks are handled saves time and money and makes training easier. It also ensures customers’ expectations are consistently met so they keep coming back. Need help with this one? Check out my Ultimate Systems and Procedures Guide for Small Businesses.

#2 – Business is too dependent on the owner or one key person. Some of this is due to a lack of documented workflows and procedures. But it is also due to a lack of delegation. A lot of small business owners are reluctant to delegate tasks to others because it requires time to train them or they simply don’t believe others can do it just as well. With documented procedures, training and delegation are a lot easier. And you may just find that others do it just as well – if not better! The more you delegate or outsource to others, the more time you have to work on more important tasks like growth and profit improvement.

Related: How to Delegate Effectively

#3 – Too many eggs in one basket. If your business is too dependent on one or two ‘big’ customers, your business is far more vulnerable. It’s easy to become content or complacent when you land a big account. But mergers, acquisitions, new competition, or even one bad experience can cause the customer to leave and result in a major revenue loss that you can’t quickly overcome. While you want to keep your big (and small) customers happy, you need to make getting new customers a priority too! Invest the time and resources to grow your customer base. You’ll improve your revenue and profit while reducing your long-term risk.

#4 – No proven methods for revenue growth. If you need customers quickly, what would you do? Whether you need a lot or a few, every business should have 3-4 proven ways to get new business. Things that consistently work. Things that you can depend on to deliver results. Trying new strategies is necessary to take advantage of changes in the market and new technology. But don’t eliminate what works. Simply add new stuff to your mix and be consistent! Only eliminate a tactic when it no longer produces the results you want or need to make it pay off.

#5 – Lack of differentiation. All products or services become commodity-like over time. Even prescription drugs become generic eventually! So what are you doing to make your company or services stand out for people to take notice? Why should they choose YOU? Differentiation for small businesses can take an assortment of forms relating to convenience or quality, including people, service levels, hours, systems, location, product variety, results, etc. What do you do so well that you can guarantee it or create buzz around it? You only need ONE! With differentiation, you no longer compete on price alone and your marketing is a lot more compelling … so it works!

#6 – Wrong people supporting your business. You can’t do it all. Your success as a business owner will depend on others — employees, subcontractors, and vendors (suppliers). So choosing the right ones and developing them is a key to sustainable growth and profit. Don’t settle or depend on just one. Invest the time and resources to select the best and build those relationships so everyone benefits.

#7 – Lack of cash. Do you focus on sales at the expense of profit and cash flow? It’s a common issue. Getting more customers or growing revenue does not guarantee more profit, personal income, or adequate cash to sustain your business. Focus on the bottom line. Grow profitable sales and stop selling what you can’t make money on. Establish a pricing strategy that supports profit, not just sales. Manage your expenses, especially labor, to sales levels. Bill promptly and extend credit wisely. Get a letter of credit before you actually need it and use it sensibly.

Any opportunities for improvement? If so, pick one and start focusing your efforts there. Little improvements can produce big results – more time, more money, and more control. So commit and take action.

About Joan Nowak. As a business improvement expert, business coach, and consultant, I’ve been helping entrepreneurs turn ideas into profits for more than a decade. My whole-business approach empowers clients and drives improvements in key areas including revenue, operational performance, team development, customer satisfaction, and profitability. Schedule a discovery call — book an appointment

How To Recession-Proof Your Business

Posted on by Joan Nowak

How do you keep your business profitable during uncertain times? The answer may be simpler than you think: through marketing and business strategies that not only help you maintain your current profits but also help you make more money. Here are some proven business and marketing strategies to help you recession-proof your business. They work for my small business clients and can work for you too.

Keep your pricing in check

In uncertain times, it is important to keep your prices in check. While it may seem like a good idea to raise prices beyond inflation to make more money, it can actually have the opposite effect. During tough times, customers are often on a tighter budget and are looking for good deals or a lot of value.

Where possible, keep your prices steady in order to stay competitive and attract more customers. You can also offer special deals or promotional packages to entice target customers and increase sales.

So how can you improve margins without raising prices? Two things come to mind. First, look for ways you can add value to your current products or services. Add complimentary services such as audits or maintenance checkups or offer additional warranties or even free shipping. You can bundle products or services together to make them more attractive.

Second, look for ways to reduce the cost of sales such as materials, inventory, and service / direct labor. Can you get discounts or better pricing from vendors? Can you improve efficiency in service delivery? All of these strategies can help you increase gross profit without raising prices.

Get lean and mean

When it comes to making your business recession-proof, getting lean and mean is key. You need to make sure that you’re operating as efficiently as possible and not overspending in areas that don’t need it. Here are a few ways to get lean and mean:

Re-evaluate costs. Take a look at all of your expenses. Can any be reduced without sacrificing long-term growth and profitability? Consider things like office or warehouse space, supplies, insurance, and travel. Staff and marketing are always options, but remember you still need sales and people to have a business. So put thought — short-term and long-term impact — into the cost-cutting you do.
Consider outsourcing. If you’re feeling the pinch of a tight budget, outsourcing may be an option for you. Outsourcing certain tasks or operations can help save money in the short term, as well as free up resources for more important aspects of your business.
Go digital. Investing in digital tools and technology can help streamline your business processes, freeing up time and energy to focus on the core aspects of your business.
Create a contingency plan. Creating a contingency plan is always a good idea in case something unexpected comes up. This plan should include backup funds, a line of credit, or other resources in case you need to quickly pivot or adjust your plans.
Stay focused on customer service. Customers appreciate how much attention they receive from businesses during this time period. Remember, being empathetic and helpful doesn’t cost more but customers notice.

Keep these in mind as you set your roadmap for the coming year.

Diversify your offerings

In the face of an uncertain economic environment, it is important to diversify your offerings. This can include expanding into new markets, offering new products or services, or creating new channels of distribution. It is important to stay informed and up-to-date on emerging trends so you can anticipate customer needs and identify opportunities to capitalize on them.

Like many of us did in 2020 when the pandemic hit, think outside the box. Or in this case, outside traditional ones for your business. By diversifying your offerings, you can reduce risk and increase the chances of staying profitable during uncertain times. Not only will this help you make more money, but it will also help you create a larger customer base and build loyalty. Furthermore, diversification can lead to cost savings, as you may be able to leverage existing resources or form strategic partnerships to create additional revenue streams.

Finally, make sure that you are closely monitoring market conditions and making timely adjustments to ensure that your diversified offerings remain relevant and competitive. By doing so, you can increase your chances of staying profitable during tough times.

Focus on your existing customers

It can be tempting to focus on getting new customers during an economic downturn, but it’s important to prioritize your existing customer base first. Your current customers are the ones that know and trust you and will be more likely to stay with you during difficult times.

So, maintain those strong relationships. Send out email newsletters to keep them updated, share relevant information and show them you care. Connect with them on social media and invite them to take surveys or offer feedback so you can continue to improve. Reach out by phone or email to ask them to write a review for your business.

Don’t be afraid to get creative: If your company does well by sticking with tried-and-true methods like coupons and sales promotions, don’t stop now! But try new things like raffles or contests every few weeks or months. Just have fun with it.

These strategies will help you maintain loyalty among your existing customers and can even bring in new ones. It may take some extra effort, but focusing on your existing customer base is essential for long-term success — and helps recession-proof your business during uncertain times.

Invest in content marketing

Content marketing is one of the most effective and cost-efficient ways to attract and retain customers during uncertain economic times. Content marketing involves creating and sharing content (such as blog posts, videos, podcasts, and social media posts) that educates and entertains your target audience. It can be used to build trust with potential customers and showcase your company’s expertise.

Creating content can help your business gain visibility and build credibility. By producing quality content regularly, you can connect with current customers, engage new prospects, and drive organic traffic to your website. Additionally, content marketing can help you stay competitive, even when other businesses may be scaling back their marketing budgets.

When it comes to content creation, it’s important to focus on topics that are relevant to your target audience. Create content that answers their questions, provides useful information, and solves their problems. This will help increase engagement and establish you or your company as a trusted source of information. And remember it’s okay to repurpose things you did last year or beyond. Just update and make sure it’s still relevant.

Like all marketing efforts, measure performance and track results. This will help you identify what works best so you can focus your efforts on creating content that resonates with your audience and drives more leads and sales.

Create a great customer experience

Attracting new customers is easier when people are already talking about your business. Positive reviews and word-of-mouth promotion can go a long way when times get tough. Here is a little fun fact to keep in mind: 74% of consumers identify word of mouth as a critical influencer for buying decisions. And that is what a great customer experience can help create.

Here are three fundamental ways you can impact the customer experience: quality products that solve problems or meet their needs, customer service that is friendly and knowledgeable, and a commitment to continuous improvement. These are the foundation or starting points.

It’s also important to remember that your customer experience goes beyond providing good products or quality service. It’s also about communication, convenience, building relationships, and creating a sense of loyalty. Engaging with customers on social media, responding quickly to customer inquiries, and personalized offerings or discounts can go a long way toward creating a positive customer experience. And when something goes wrong, how you handle it also goes a long way as well. And if you can create an experience that stands out from the competition, you’re more likely to keep customers coming back even in difficult economic times.

Go after new markets

Another way to keep your business competitive and profitable is to target new markets with your current products or services. To find new markets, start by researching who your current customers are and what other markets might be interested in your products or services. Identify any gaps that exist in the market that you can fill and target those specific audiences. You may also want to consider partnering with other businesses in related industries to access their customer base as well.

Once you have identified a potential market, you can begin to craft marketing messages that resonate with that audience. You’ll need to tailor your messages based on their buying behaviors and preferences. You may also need to adjust your pricing strategy for the new market, depending on supply and demand.

By tapping into new markets, you’ll be able to remain competitive and generate additional revenue during uncertain times. With the right strategies in place, you can recession-proof your business and come out stronger in the long run.

Keep an eye on your competitors

Keeping an eye on your competitors is a key part of any successful business strategy. During times of uncertainty and economic recession, it’s even more important to monitor your competition. By understanding what your competitors are doing to improve business and grow sales, you can make sure your own business remains profitable.

Here are a few things to keep your eyes on:

What campaigns or promotional efforts are they running?
Are they launching any new products or upgrading some they already have?
Are they offering discounts or savings?
Have they made any changes in their overall pricing strategy?
Are they implementing any new payment options or terms? How about loyalty programs?
How are they responding to the current climate: cutting costs, reducing staff, investing in new technology, or marketing?

Observing your competitors’ strategies can give you valuable insights into how to best position yourself for success during uncertain times.

In Summary

Yes, these are uncertain times for many small business owners. But challenges provide opportunities to grow stronger if you are willing to take action. You don’t need to do all of these business and marketing strategies today. But pick one to help recession-proof your business — and get started. Then add more as you go along.

Need help prioritizing what you need to do and how to do it? Let’s have a conversation. Click here to schedule a brief phone call.

Is It Time To Improve Your Business?

Posted on by Joan Nowak

Building a business is hard work. But sustaining growth and profitability require more than just effort. They take innovation, commitment and the right focus. So if you are frustrated with where your business is today and ready to improve your business, here are five suggestions to help you get started.

#1 – Have an Open Mind

Ideas and opinions come from a variety of sources. Some ideas are obvious opportunities. Others come from fleeting remarks by friends, colleagues, employees or even total strangers.

Today, more than ever, people dismiss ideas because they don’t like the source or messenger. Sad because good ideas can come from anywhere — if we open our minds to the possibilities. With an open mind and a willingness to try new things, ideas will flow and improvements will follow.

#2 – Invest In Your People

If you want to improve your business — start with your most valuable asset. Your team. It’s hard to be a great company without great people.

When you have a great team, innovation and creativity seem to flow. There is no need to force them to work together. Collaboration is something that happens because they value each others opinions. When you create an environment where people are engaged and productive, good things happen. It pays dividends.

Investing in your team make sense. The work place is changing so now is a good time to look at your culture, your hiring, your benefits, your training and most of all — your expectations. You can’t change things overnight, but over time you can. Just make it a priority.

#3 – Be a Profit Builder

Keep your focus on the bottom line. You can’t stay in business if you don’t make a profit. If you want to take care of your customers and your employees, profit is not an option — it’s a requirement.

There are a lot of ways to improve profit in your business. Cutting costs in an obvious one. But while keeping costs down is important, put adequate resources into other areas too. Here’s a few you may wish to consider:

Focus on growing sales of higher margin products and services. Products, like customers are not created equal. The growth of low-margin products can actually reduce your overall profit.
Gain efficiency and save time with systems and technology. It’s especially important for service businesses that are labor dependent.
Eliminate re-works that come from poor quality. Get it right the first time.
Evaluate your pricing to reflect value, not just cost. This can help you optimize the gross profit margins, a key profit driver.
Improve your marketing ROI with better targeting, compelling messages, diverse tactics and a follow-up system that converts more leads.

#4 – Balance Operations and Business Development

As a business grows, the day-to-day running and serving customers can become overwhelming. When this occurs, marketing and sales activities often go on the back burner, Building a pipeline of new business opportunities while increasing sales to existing customers takes time. It is not a stop-start activity. Plan and make business development activities something that is done daily, weekly and monthly. Whether you delegate or outsource these tasks, do it consistently. It will pay off on the bottom line.

#5 – Think Lifetime Value

As a business owner, you must establish a long-term view of customer value before you can appreciate how important it is to develop a relationship with customers and ensure everything is done to keep them as long as possible. What are your customers worth over their lifetime?

Here’s an example to demonstrate this point. You own a lawn-care company. The customer pays you $50 each time you mow their lawn. While the first transaction is only $50, they spend that each week from May – September, so annually they spend about $1,000. If they stay with you for four years, they will spend about $4,000. So is this a $50 customer or a $4,000 customer? The way you view them will dictate how you invest in current and future customers.

Get Started. Stay On Track

Are you ready to take a leap forward? To get started and stay on track? My focus and accountability program offers an affordable way to get the help you need. Click here to learn more.

How to Turn 1% Into Double Digit Profit Growth

Posted on by Joan Nowak

Profit growth or improving the bottom line is a priority for business owners — especially now as they look to bounce back from the Pandemic. But too often they look for the magical silver bullet. The one big innovation or idea that will turn a business around and make people notice.

Innovation is important in all areas of your business, but often small improvements over time can make a big difference on the bottom line. In fact, a mere 1% improvement in revenue or sales, cost of goods sold and expenses can produce double-digit profit growth!

The Power of 1%

Here’s a simple example to demonstrate the Power of 1-1-1

Revenue: With a 1% increase, revenue goes from $500,000 to $505,000

COGS: With a 1% reduction, cost of goods sold goes from $300,000 to $297,000

Expenses: With a 1% reduction, expenses go from $160,000 to $158,400

The result, Net Profit goes from $ 40,000 to $49,600. An increase of $9,600 or 24%!

Check it out with YOUR numbers to see for yourself.

So now ask yourself “Do I have what it takes to achieve a 1% improvement in these three areas”? Absolutely! Can you do more? Probably. The key is to start – so set a goal. By focusing your efforts in these areas, you too can make progress 1% at a time.

Of course, a goal without actions won’t do much to get you there. So here are some things to consider as you plan your profit growth initiatives:

Revenue / Sales: There are hundreds of ways to grow sales. While generating more leads is an obvious one, here are a few that are often overlooked. You can improve revenue by improving your sales conversion rates, get customers to spend more or buy more often or expand your products or services. Need some ideas, check out 155+ Profit Building Ideas

Cost of Sales or Goods Sold: Based on experience with hundreds of small business owners, this area offers a lot of opportunity for profit improvement. The costs included in the cost of sales or goods sold will vary based on your type of business. These are variable – and link directly to sales levels. Examples of costs include inventory, incoming freight, direct labor (associated with service delivery or production), raw materials, service related suppliers and sub-contractors.

So how can you improve this area? Consider some of the following: improve labor efficiency by eliminating waste, renegotiate prices with key suppliers and vendors, outsource or utilize sub-contractors, improve scheduling, plan purchases to get volume pricing, and eliminate rejects or reworks.

Expenses / Overhead: These are relatively fixed and include everything from wages and benefits to marketing and rent. In today’s economy, many have focused on trimming the fat – but the key is to do so without impacting your ability to grow and deliver on your promise to customers.

Here’s a few things to consider: re-evaluate staffing levels to align with sales and service requirements, re-evaluate benefits, develop compensation model that includes pay-for-performance elements (not just guaranteed wages), evaluate outsource options or leasing, re-quote service contracts and insurance, renegotiate rent or relocate where appropriate, track marketing to improve ROI, and establish a budget – and live with it.

Small improvements in all areas have a compounding effect on your bottom line. They build on each other. All it takes is a clear focus, some simple proven strategies and a commitment to do it.

Ready to Put Your Business on the Path to Success?

Would working with a business coach help you take your business to a whole new level? Then let’s explore the possibilities with a complimentary 30-minute session. It’s a chance to get to know each other, discuss your goals and the obstacles that hold you back. Together we can determine if there is a good fit between your needs and my services. Book appointment now.

Got questions? Call Joan Nowak at (856) 533-2344 or email Joan@HybridBizAdvisors.com

Break Down the Profit Barriers

Posted on by Joan Nowak

Marketing alone won’t solve your revenue or profit woes. It can actually erode profit further if done in a vacuum. Profit comes from a combination of factors working well together. If you want better business results, you need to break down the profit barriers between marketing, sales and operations.

Avoid Operating in a Vacuum

Marketing simply provides an opportunity to generate additional revenue. The key word here is opportunity. Regardless of what marketing tools you choose, most marketers evaluate their effectiveness based on activities or engagement metrics such as likes, clicks, calls, requests for quotes, appointments or visits.

But as the owner, actual sales generated and the associated profitability are far more important to your bottom line. Metrics like sales conversion rates, dollar amount of sale, and gross profit margins are vital measures for sales and marketing.

So how does your operations fit into marketing and sales discussions? Think about service levels and the impact they have on your reputation (future sales) and repeat business. The best marketing and sales efforts will be wasted if you don’t deliver what you promise customers in terms of quality and service. Customer satisfaction, on-time delivery, quality (rejects/reworks) and customer retention metrics can help you determine how well you perform in this critical area.

When you want to grow both revenue and profit, where should you apply your resources – time and money? The metrics above can be useful uncovering opportunities and weaknesses. So, it’s a good starting point. But here are a few other things I find helpful with clients.

Connect the Dots – and the People

Growing a business requires a full team effort. You need all your employees to provide creativity and commitment. It’s difficult to be successful when your marketing, sales and operations teams operate in silos. While they all have their roles, they can accomplish more when they work together with one common goal – to acquire and retain quality customers.

Bring down the barriers that tend to exist in many businesses – big and small. Connect the dots and leverage everyone’s knowledge and experience. Whether you are building a plan or solving a problem, tap into all the people resources in your business. Different perspectives can often bring better solutions or ideas.

Fix the Weaknesses

Before you invest more money in marketing, make sure your team is ready to convert the sales and deliver what you promise. There’s no point in getting leads – and then disappointing prospects or customers along the way.

For that reason, my work with clients on marketing always starts with an analysis of sales and operations. And yours should too. In addition to the metrics I mentioned earlier, here are a few additional things to consider as you look to improve these three areas:

Sales

Do our sales people have the training and skills to nurture leads, sustain relationships and close sales?
Are we prospecting for our own leads or do we rely heavily on inbound leads from other sources?
Is there too much emphasis on sales – and too little on profit or long-term value?
Do we track activities and results so discussions with others, including the owner, are based on data – along with customer feedback and gut.

Operations

Do our people have the training and appropriate levels of authority to do what is needed to solve customer issues or problems?
Is there too much focus on the quantity of work done – and too little on the quality?
Are we using technology to continuously improve efficiency, response time, scheduling and communication?
Do we have a consistent method to get feedback from our customers?
Do we track complaints and metrics that are important – and work as a whole team to correct issues we uncover.

Marketing

Are we opening the right doors for sales – and reaching the right prospects?
Is our message compelling and clear so it sets the right customer expectations?
Does our pricing align with our brand and value proposition – while providing the margins we need or want?
Is our marketing diversified to reach prospects through various methods?
Are we consistent and timely but flexible enough to take advantage of unique opportunities that may arise?

If you want a business that consistently delivers sustainable growth and profitability, break down the profit barriers and leverage your business for success.

Ready to work with a coach to solve your frustrations and leverage your business? Schedule your free session today. Learn More

When Can You Expect a Profit?

Posted on by Joan Nowak

In business, making good decisions is often the difference between success and failure. Do you rely on gut, numbers or maybe a combination of both? There are a lot of tools to help, but one of my favorites is a breakeven analysis.

What is Breakeven Analysis?

Breakeven analysis is used to determine when you will be able to cover costs and begin to make a profit from your business investments. You may have used it when starting your business to determine how much sales or revenue you needed to cover your fixed costs or overhead.

It’s helpful before starting a business. It’s just as important as your business grows and projections are replaced with reality — actual numbers. But it’s also helpful when making decisions on a variety of issues – Should I:

Invest in a marketing campaign, website or social media marketing?
Hire additional staff to support our growth?
Outsource a project or task to free up my time for important growth initiatives?
Purchase a new piece of equipment?
Upgrade our computers or phone systems?
Invest in technology to support growth?

While ROI is often used for many of these decisions, you can also use a breakeven analysis to answer the question “When will I begin to make a profit from this investment”?

How to Calculate Breakeven

To do a break-even analysis, you need to know two things. First, the cost associated with your investment decision. Second, your gross profit margin (%).

To calculate the break-even revenue, divide the cost by the gross profit margin percentage. For example, if cost is $5,000 and your margin is 45%, your break-even revenue is $5,000 / .45 or $11,111. In this case, you will begin making a profit when you hit $11,111 in sales.

For help calculating gross margin, check out my blog post, Gross Margin: What You Need to Know to Avoid Disaster.

How Many Customers Do I Need?

Clients also find it helpful to look at the break-even point from a number of customers perspective. You can do this if you know (or calculate) the average dollar sale or transaction for your customers.

To determine the customer break-even number, simply divide the revenue break-even (above) by the average transaction amount. Example: If the average customer sale for the above business is $283, the customer break-even is $11,111 / $283 or 39.3 (40) customers.

Decision Time

Once you calculate the breakeven, it’s decision time. Here are a few questions to ask yourself:

Is the breakeven reasonable and achievable based on the investment you are making?
If the incremental sales include new customers, what is the potential lifetime value of these new customers? How does this impact your decision?
How does this investment compare with past initiatives or others you may be considering now? Business is often about trade-offs and priorities.

Knowing when you can expect to see a profit can be a powerful decision-making tool. Use a break-even analysis to help you figure it out.

Ready to Put Your Business on the Path to Success?

Would working with a business coach help you take your business to a whole new level? Then let’s explore the possibilities with a complimentary consultation. It’s a chance to get to know each other, discuss your goals and the obstacles that hold you back. Together we can determine if there is a good fit between your needs and my services.

To learn more or schedule an appointment, call me at (856) 533-2344 or drop me an email Joan@HybridBizAdvisors.com

Markup vs. Margin – The Difference Can Cost You

Posted on by Joan Nowak

Your gross profit margin is a critical key performance indicator for overall net profit. Yet is is misunderstood by some small business owners.

Your gross profit represents what you have left over from sales (revenue) after you take out the variable costs – those that increase or decrease based on sales volumes. These are often referred to as cost of goods sold (COGS) or cost of sales — and it applies to all businesses.

If you sell products, like retailers or distributors, your variable costs include inventory.
If you make products, like manufacturers, your costs include raw materials and labor associated with production.
If you sell services, the costs include the labor associated with service delivery and may also include supplies required to do this.

Do you know your gross profit margin and how it compares to your industry? If not, take a few minutes to calculate it – divide your gross profit dollars by the sales/revenue for the same period. Please note that some small businesses include the above costs with expenses (versus the cost of goods sold). Talk to your accountant to make sure your costs are set up appropriately.

Demonstration: Markup Vs. Margin

Are you surprised? Many small business owners are. And here’s the most common reason why. They use markup to calculate the selling price and assume the markup percentage is their gross profit margin. Ouch. They are not the same.

In fact, if you mark up your products or services 30%, your gross profit margin on this product or service is actually 23.1%. Below is an example to demonstrate this.

Your cost for your product or service is $100
You mark it up 30% so your markup (or gross profit $) is $30
Your selling price (cost + markup) is then $130
Your gross profit is $30 – note the markup dollars and gross profit dollars are the same
But, your gross profit margin (gross profit $ / selling price) is 23.1%

I am not an advocate of using markup exclusively to establish selling price because it often ignores things like value and competition. But if you do use this method, be aware of the difference and start backward. Determine your DESIRED gross profit margin, then calculate the selling price required to achieve it.

BONUS: For a quick markup and margin calculation and conversion tool, click here.

Ready to Put Your Business on the Path to Success?

Would working with a business coach help you take your business to the next level of success? Then let’s explore the possibilities with a complimentary consultation. It’s a chance to get to know each other, discuss your goals and the obstacles that hold you back. Together we can determine if there is a good fit between your needs and my services.

There no obligation, only opportunity. So call me at (856) 533-2344 to learn more or schedule an appointment.

Business Innovation & Growth: How to Keep It Alive

Posted on by Joan Nowak

When money flows into your business effortlessly from banks and customers, it’s easy to ignore mistakes, take the path of least resistance, and live with the problems. But when times get tough, it becomes more difficult to ignore. It forces business owners to create REAL changes or go out of business.

Choose a Different Path

Instead of blaming others or the economy when things get tough, do what entrepreneurs do. Put on your creative hat and make the decision to rethink, restructure, refocus and rebuild. In doing so, you’ll come out ahead in the long run.

So if you are looking to turn things around, recognize that it’s time to stop putting band-aids on your business and commit to real change. Often the problems you have, like eroding sales and profits, long hours with little pay, or poor cash flow, are symptoms of bigger issues in your business. Get to the root cause and fix the real problems.

Where to Start Rebuilding

Get Rid of the Dead Wood. Employees are an asset, but only if they produce results. You need to be willing to let go of the people in your company who don’t. You know who they are. They show up late, collect a paycheck and add little or no value for your customers, team or business. They zap your energy and kill morale. So why do we settle and hang onto under-performers?

Sometimes it’s fear of the unknown. Johnny may be lazy, but at least he shows up. Sometimes it’s a sense of obligation. How can I fire my cousin or brother and still face my family? Sometimes we feel we can’t. because we never communicated our expectations or dissatisfaction. And sometimes we just feel too overwhelmed and don’t have the time to hire and train someone new. Whatever your reasons, you have a choice. You can fix the problem – help Johnny become an asset to the team — or make him go away.

Fire Deadbeat Customers. Again, you know who they are. They only buy with discounts or purchase low-margin products, pay late or after numerous collection requests, complain often, and treat your team poorly. What you earn from your ideal customers subsidizes your less-than-perfect ones. Why let them hang around to zap your profits and team morale? Fire them and replace them with customers who value what you do or sell.

Apply Innovation in All Areas of Your Business. Many owners associate innovation with new products or inventions. Innovation, by definition, is the introduction of new things or methods and it’s important if you want to achieve sustainable growth and profit.

The key is to apply it to all areas of your business. From marketing and sales to customer support, delivery, and team building. It’s simply a matter of continuously looking for better ways to do what you do.

RELATED ARTICLE: Is Creativity Required for Success?

Make Productivity Matter. Busy is not the same as productive. Productivity is about producing effective results or outcomes, in the most efficient way, with the least amount of time and effort. Now, who wouldn’t want that?

So do you measure and look for ways to eliminate waste, increase outputs or reduce hours associated with daily tasks or service delivery within your company? Do you have systems for the critical activities and consistently look for ways to streamline or improve them?

If you want to increase your margins, without raising your prices, take a hard look at your productivity levels and the waste in your business. It’s a goldmine for many small businesses.

Plan, Measure and Systematize Your Marketing. A lot of small business owners view marketing as a necessary evil. They know they need it, but often struggle to get it right. So when money gets tight or owners get busy, marketing takes the hit. Unfortunately, it comes at a big cost — sustainable growth and profit. So why is that?

First, some lack a strong marketing foundation with clear targets, the right products and services for them, and compelling messages to get them to act. As a result, it makes marketing harder to do. An integrated and consistent marketing effort produces a better ROI, but it does require a little planning.

Second, some fail to measure results so they don’t actually know if their investment (time and money) is delivering a return. It’s easy to cut marketing expenses when you can’t tie the cost to specific results such as new customers or increased revenue. Unfortunately, it’s not always the right decision.

Third, most marketing for small businesses is not systematized. There is no efficiency and most important, no consistency. Therefore, it costs more and is far less effective – an obvious frustration.

Focus More On Profit Than Sales. It may make you feel good to hit that target sales plateau or be able to tell others you do $1 million or more in sales. But if those sales are not providing you with the profit to sustain growth, increase your personal income and deliver the lifestyle you want – why bother?

As a business owner, you take all the risks. Your business must make a profit to stay in business. Your family, customers, employees and vendors are depending on it. Remember, sales growth is important, but profit and cash flow is king!

Kill the Paradigms. What beliefs do you hold to be true that really aren’t? We all have some. Those little self-sabotaging thoughts that act as constraints in our business and life. Here are a few examples: It’s impossible to earn a profit in this economy, I can’t get good help, customers are never satisfied, customers only care about price, marketing doesn’t work, I can’t get my people to do anything unless I’m there watching over them.

Any sound familiar? The problem with paradigms is they give you an excuse to settle for less, accept mediocrity or give up completely. Don’t let the attitudes held by others, but not supported with fact, hold you back.

Ready to Create Your Own Success Story?

If you are ready to move your business in a better direction, I invite you to experience the power of business coaching with a complimentary session. Click here to learn more or call (856) 533-2344 to schedule your session today.

9 Small Business Mistakes that Hinder Growth and Profit

Posted on by Joan Nowak

While experience can be a great teacher, learning from someone else’s experience can save you time, money and a lot of frustration – especially when it comes to growing your small business. So here are some common business mistakes you want to avoid or fix.

Mistake #1: I Can Do It On My Own

Most of us became entrepreneurs because we are experts or skilled at something and believed we could do it better than competitors or maybe our current boss. But building a successful business requires more than technical know-how. None of us are experts at everything – so surround yourself with other experts to fill the gaps. Whether you hire employees, sub-contract work, create joint ventures, work with coaches/consultants or develop strategic alliances – the support you need is available. Avoid this costly business mistake. Don’t try to do it all yourself.

Mistake #2: Keeping Your Business a Secret

Today, a website is a must-have for a small business. It is a great equalizer and can build credibility for you, your company and products. But it only pays off if people who want your products and services can find you. As a small business owner, search engine optimization with relevant keywords and content must be a priority. Use social media and other marketing tactics drive people to your site too!

Mistake #3: Creating Confusion With Potential Buyers

When starting a business, the goal typically looks like this: generate sales for your core products or services as quickly as possible by whatever means necessary. But if sales for core products are slower than expected, many begin dabbling with additional products or services to generate more revenue. Too many dissimilar products or different messages can leave people wondering what you do and why they should choose to buy from you. Focus on your core strengths and build from there.

Mistake #4: Great Products The Market Doesn’t Want

The best products or services will go unsold if you are talking to the wrong people – those who will likely never buy! Investing your time and money promoting your products or services to people who don’t have the resources, authority or need, today or in the near future, is both frustrating and costly. Who are the ideal customers for YOUR products and services? Be clear on this, find out where they are, how to reach them and then apply your resources to pull them in.

Mistake #5: Talk More Than You Listen

If you want to earn a customer’s business, you need to solve their problem or fill a need. So before you jump into your sales pitch, take the time to ask questions, listen carefully and determine what the customer needs. Your features and benefits are only relevant when they solve a customer’s problem or fill a need. Successful people tend to be good listeners – so you’ll achieve greater success when you spend less time talking and more time listening! Remember, technology and markets change, so keep your pulse on what customers need and adjust accordingly.

Mistake #6: No Follow-Up

Investing resources to generate leads for your company without a proven method to convert them into paying customers is costly. Whether potential customers come to you by phone, email, online or in person, a system for consistent and timely follow-up is a key to sales growth. Take the time to develop a procedure for moving prospects to customers. Take advantage of technology to ensure your process is both efficient and effective. Be consistent and watch your sales soar.

Mistake #7: Disjointed or No Procedures

Documented procedures for all the critical tasks and operations is a key to efficiency, consistency, continuous improvement and profitability. Yet despite the benefits, it’s ignored by many small businesses. This mistake becomes obvious when you hire and train new people, attempt to outsource or start losing customers due to poor service or missed deadlines. Take it one at a time, but make written procedures a priority in your business. The results will surprise you. My Ultimate Systems Guide makes it easy to start building systems and procedures in your small business.

Mistake #8: Hiring on the Fly

“Quick to hire and slow to fire” describes many small businesses. A strong team of people to support your business is certainly important – but only if they are the right people. There are proven hiring systems and tools, including a job description and clear goals, to help small businesses attract and retain quality people. Always hire with a purpose, invest in training, commit to developing your team and be willing to let go of those who don’t fit. Need an easy way to get the word out when you are hiring? Indeed.com is a great solution for small business owners.

Mistake #9: Roller Coaster Marketing

For many small businesses, marketing activities and spending look like a roller coaster, up and down based on how busy you are or how sales are doing. If your marketing is sporadic, your results will likely be the same. The key to attracting and retaining customers is consistency. It is better to do 5-6 lead generation strategies well and consistently than doing 10-20 of them periodically. And remember, marketing to existing customers is just as important as new business marketing — so incorporate both into your marketing efforts.

Which of these mistakes is impacting your growth and profit? Make it a priority to fix them – one at a time, if necessary. The sooner you do, the sooner your sales and profit will grow. And isn’t that why you are in business in the first place?

Ready to Put Your Business on the Path to Success?

Would working with a business coach help you take your business to a whole new level? Then let’s explore the possibilities with a complimentary consultation. It’s a chance to get to know each other, discuss your goals and the obstacles that hold you back. Together we can determine if there is a good fit between your needs and my services.

To learn more or schedule an appointment, call me at (856) 533-2344 or drop me an email Joan@HybridBizAdvisors.com

Want to Be a Profit Builder?

Posted on by Joan Nowak

When you hear the words business growth, what pops into your mind? Is it revenue, sales or maybe new customers? What about profit? What are you doing to build profit in your small business? Is it a priority or an after-thought?

There are a lot of ways to build profit in your business. Cutting costs is the obvious one. While keeping costs down is important, put adequate resources (time and money) into other areas – and keep your focus on the bottom line. Be a profit builder.

5 Ways to Build Profit

#1 – Grow sales of higher margin products. Products and services, like customers, are not created equal. The growth of low-margin products can actually reduce your overall profit. Do you know which products or services deliver the highest profit margins? You should. Then put your marketing and sales efforts into selling more of those.

#2 – Gain efficiency with systems. This is especially important in businesses that rely on labor to deliver their products or services. In a service business, you are only as good as the people doing the work – so their efficiency and effectiveness are critical to your profitability.

Take advantage of technology to save time. Utilize checklists so employees have the materials they need when they arrive at customers locations. Have a system for add-on sales opportunities. Schedule work to minimize drive times. Eliminate duplicate work. These are just a few – I’m sure you can find others in your small business. When you do, enjoy the extra profit that comes from doing more with less.

#3 – Eliminate re-works that come from poor quality. Re-works or callbacks are profit busters. It costs you money to re-do the work – and you also lose the opportunity to serve someone else with that person or crew. Make quality a priority. Get it right the first time.

#4 – Profit from your pricing. When you use a standard markup and cost to set prices, you ignore the most important ingredient – value. This comes from being better or different. Your pricing should reflect your quality, uniqueness, and convenience. Don’t be afraid to charge more when you can. As a small business, discounts and low prices will always work against you. Avoid them unless you have a strategic reason for doing so. More sales at any cost is not a recipe for optimizing your profit margins.

#5 – Improve your marketing ROI. Marketing is an investment. It’s not about how much you spend, but how effectively you apply your resources – time and money. In fact, many of my clients are spending less and getting more revenue. You can too with a few changes: better targeting, emphasis on retention, compelling messages, diverse tactics, and a system that converts more leads. Marketing is not about getting leads – it’s about getting quality sales through current and new customers.

As you can see from these examples, profit-building requires a whole-business approach to growth – not just sales. Your people, systems, marketing and daily operations all play an important role – so leverage them. With small improvements in all these areas, you’ll grow both sales and profit. And that’s a recipe for a better business.

More Profit Building Ideas

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