Mike Michalowicz's Blog, page 98

Make Your Business Money While You Sleep In 7 Ways

Think about the way your business runs:  you attract prospective clients, convert them to customers, collect the money, cultivate repeat business, and encourage customers to refer other prospective clients.  Each of these steps entails specific challenges, and one of your goals as an entrepreneur should be to automate as many of these steps as possible.  Automation – implementing systems that perpetuate your business without your involvement – is the key to generating income while you sleep.

Here are some ways in which you can set your business to earn a profit while you focus your attention elsewhere:

1. Make yourself into a product.

Once you’ve found success – or even while you’re on the road to it – you should look for opportunities to promote yourself as a brand.  Position yourself as the authority in your niche and develop products like videos or books that share your secrets of success.  The beauty of a book is that once the hard work is over – it’s written, edited, and a marketing plan implemented – then you simply collect proceeds while you move on to your next project.

2. Do fewer things.  

It’s impossible to automate aspects of your business if you insist on doing everything personally.  You need to train your staff to handle certain aspects of your business and the best way to accomplish this goal is to simplify your output.  Look at McDonald’s:  they do basically five things – burgers, fries, chicken, salad, and soda.  They package these things differently and sell them in different combinations, but the simplicity is what allows them to reproduce the menu in locations all over the world and sell their products without requiring highly skilled labor.  Identify your strengths and streamline your offerings, focusing on the items that you can train your staff to replicate.

3. Create continuity.  

Billing for each service or product you supply is volatile; both your revenue and your client’s expenses vary wildly.  By selling a subscription at a flat rate, you create a reliable income for your company and you provide your clients with predictable expenses.  Both parties are invested in maximum efficiency – maximizing quality and minimizing hassle.  It’s the ultimate win-win for both you and your clients.

4. Sell your system cheap and make money on the refills.  

We’re talking primarily about businesses that produce tangible goods, here.  The best two examples of this model are the Keurig coffee makers and printers.  While the devices themselves are relatively cheap, all of the profit is in the individual refills for cups of coffee or cartridges of ink.  If your machine makes a great cup of coffee or great quality copies, once consumers own your brand of device, you’re guaranteed their continued business.

5. Become the middle man.

Find a way to broker business and let other folks do the work for you.  Becoming an Amazon affiliate is a great example.  You link to their site; they sell, and you make money.  There’s also a fortune to be made in consolidating and coordinating the transportation of goods.  Be on the lookout for the opportunity to broker goods and services.

6. Become a teacher.  

I’m not taking about summer breaks and parent conferences.  Look at your business and find ways to teach other entrepreneurs how to acquire the skills necessary for opening their own business modeled on yours.  Say you own a successful pizza shop.  You might think that you don’t really have to opportunity to cash in on the educational aspects of your expertise, and you’d be flat wrong.  You could write a book or create a series of instructional videos on your family’s recipes, or you could market a consumable version of your plan for opening a profitable pizza shop.  An additional benefit is that you’re positioning yourself as an authority, and your name on a book enhances your brand.  Use this side benefit of creating your educational product to generate greater consumer awareness for your business.

7. Become an investor.  

Money makes money, but it’s important that you’re careful about how you invest as an entrepreneur.  Here’s my tip: look at your clients and assess their needs.  Find a company (in addition to yours) that addresses those needs and invest there.  Not only will you be forging a bond between your company and others that focus on enhancing client relationships, but you’re also cementing your position in your customers’ minds as the business that caters to their desires.  Once you’ve done the groundwork, you’re the good guy who makes money without effort.

 

I’m not going to try to minimize the grueling effort that it takes to launch and build a successful business.  What I am showing you, though, are some creative ways that you can make your hard work pay off once your business is on its feet.

 

The post Make Your Business Money While You Sleep In 7 Ways appeared first on Mike Michalowicz.

Episode 15: Profit In Management Consulting With Peter Laughter

Show Summary

Peter Laughter, CEO of Wall Street Services in NYC  joins Episode 15 of the Profit First Podcast. Peter explains how the staffing industry works as well as how he makes a profit from it.

 

Our Guest

Peter Laughter and is the CEO of Wall Street Services where they allow Management Consulting Firms and Program Managers at Investment Banks take on projects that are beyond their capacity. They provide highly skilled Project Managers, Business Analysts and Subject Matter Experts who help their clients implement key strategic initiatives. Peter joined Wall Street Services in 1995, driven by a passion for helping others identify barriers and self-limiting beliefs standing in the way of a fulfilling career.  Additionally Peter is a founding member of the New York City Chapter of Conscious Capitalism – an organization dedicated to transforming the planet by to liberating the heroic spirit of business. He has also finished the New York City Marathon, several 70.3 Triathlons, and regularly tells stories at the Moth’s Story Slams. More than anything, Peter loves riding the Cyclone with his daughter, Eddy.

 

Show Quotes

Management consulting firms are designed to find specialized people quickly. Most clients don’t have the ability to move as quickly as a staffing company.

I charge my clients a bill rate that is higher than what I pay my employees (typically about 40 – 50% over employee salaries)

Relationships and systems; both are critical factors particularly in finding the really hard to find people. They are not going to respond to an advertisement – get in contact with them through relationships with other people.

Work with customers that have a very narrow demand; focus exclusively on one specific market segment makes all the difference.

Profit is as important as oxygen, however, I don’t live to consume more oxygen.

When I do good work and my clients are happy I make more money. Taking good care of our consultants and making sure they’re happy with what we’re providing to them, more business comes my way.

Hire fantastic people. When you find good people who are excited about what they do, they work harder and they take care of your  interests without you having to tell them anything – because they are good people aligned with your values. You trust them and you enjoy going to work with them.

Profit follows purpose.

 

Show Links

Wall Street Services: http://www.wallstreetservices.com/

Peter’s Speaking Site: http://peterlaughter.com/

LinkedIn: http://www.linkedin.com/in/peterlaughter

 

Show Sponsors

Nextiva – VOIP phone providers for small businesses.

Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches.

TSheets – The #1 customer rated time tracking solution!

The post Episode 15: Profit In Management Consulting With Peter Laughter appeared first on Mike Michalowicz.

6 Habits Thought Leaders Should Get Used To

As an entrepreneur myself, I’m always on the lookout for words of wisdom from fellow innovators.  Looking to the rule breakers (who often evolve into rule makers) for ways to successfully challenge the status quo has given me the following six suggestions for my fellow entrepreneurs.

1. Strive for minimalism.  

Craig Newmark, founder of Craigslist, has found that he works best with a streamlined workspace that’s free of distractions.  His office isn’t cluttered with stacks of papers or an array of screens.  Newmark’s setup includes his desktop, a window, and Homer Simpson and Grandpa Simpson figurines.  That’s it.  A little nature, a little inspiration from his animated heroes, and the tools he needs to accomplish his goals.  Minimalist workspaces let thought leaders spend the important time where they do their best work: in their own minds.

2. Get regular exercise.  

New evidence confirms what we’ve always suspected – that people who get regular exercise perform better on cognitive tests and are more creative than people who are sedentary.  Guy Kawasaki, business guru, bestselling author, and public speaker extraordinaire has certainly found that exercise provides a welcome break in the middle of his work day and helps him maintain his focus when he’s working.  Kawasaki plays two hours of hockey midday and rides a stationary bike or does yoga in the evenings.  It’s hard to argue with the results of exercise on this admitted workaholic’s productivity.

3. Say “no” a lot.

I am a huge admirer of Seth Godin, and he taught me an important lesson when I approached him about endorsing my first book, The Toilet Paper Entrepreneur.  He declined – politely and firmly – because it didn’t square with his vision, his brand that he worked tirelessly to promote.  I learned that you absolutely must say no to the projects that don’t support your vision, or you run the risk of diluting your brand and your leadership.  Tenacity pays off, by the way.  Godin did support my second book, The Pumpkin Plan because it made sense for his brand to associate it with the principles I laid out in that book.

4. Embrace your inner introvert.  

Malcolm Gladwell is a simply brilliant public speaker, and it’s partly because he’s an introvert, and it’s also because he embraces his nature, rather than trying to be someone he’s not.  Public speaking for him is a performance – a role he inhabits in order to share the important thoughts that sold out every seat in the auditorium.  Thought leaders are typically introverts by nature – spending their most productive time turning inward to their own thoughts.  Check out Susan Cain’s book, Quiet: The Power of Introverts in a World That Can’t Stop Talking.

5. Get back to the room.  

I do a lot of public speaking, and I recently spoke at an event with Michael Gerber, Jack Canfield, and Guy Kawasaki.  Now these gentlemen were thoughtful, generous in sharing their thoughts and ideas publicly, but I noticed that they were absent from the social, networking portions of the event.  I had dinner with Michael, and I asked him about his routine – his work habits – and he typically speaks at events, sharing his stories and inspiring attendees, and then he goes back to his room and gets to work.  He doesn’t recharge by networking, but by turning inward.  That habit lets thought leaders work with the public and still have time to generate the ideas that make them worth listening to.

6. Take sleep seriously.  

Your body needs sleep in order to function at its highest level, and productive people create their own routines to get the amount – and quality of sleep – that works for them.  Joel Gascoigne, CEO of Buffer, realized that he was having trouble filtering out work concerns when it was time for bed, and it was negatively affecting both the amount and quality of sleep he was getting.  Establishing a routine that lets him reflect on the day’s work before consciously putting work away, clearing his mind for restful sleep, has been a productivity booster.

 

We all work differently, but we can learn a lot from the habits of uber-successful folks – the ones who reshape the world to fit their unique vision.  Modeling some of the traits of thought leaders can boost your productivity by helping you focus, encouraging you to turn your thoughts inward, and learning to shape your schedule to support your entrepreneurial vision.

 

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How To Work With Friends (When You Own The Business)

I’m going to be blunt.  The best solution to the problem of how to navigate the dangerous waters of hiring a friend is just to avoid it.  It’s hard, and it doesn’t usually end well.  I hired a good friend early on in a former business, and it was much harder than I thought it would be.  He ended up not having the skills I thought he did, and I ended up unable to afford to keep him on.  For the longest time, his parents refused to speak to me.  We’ve since mended fences, but it would have been better for our friendship and better for my business if I’d never hired him.

That said, I know that some of you will hire your friends, and here are some ways to improve your chances of making it work:

Never do a 50-50 partnership, at least not at first.  

50-50 feels all nicey-nice, but it sets up potentially catastrophic consequences.  You’re much better off structuring the deal so that each of you receives equity for effort over time.  I advocate starting each partner off at 10% ownership and evaluating the business – and what each of you has brought to it on a regular basis (quarterly works well) based on predetermined metrics.  Instituting a schedule and agreeing on the terms ahead of time lets the changes in the agreement be determined by objective – rather than subjective – means.

Set a clear distinction between business and personal matters.

One of the reasons that it’s so hard to successfully employ a friend is that friends relate as equals, and employers don’t relate equally to their employees.  It’s an inherently difficult transition.  If you’re going to hire a friend, I suggest making it clear that since both of your livelihoods depend on your new business relationship, that putting your social relationship aside might be necessary.  You may think it’s an extreme step, but it can make all the difference.

Make expectations crystal clear.

The problem with hiring a friend doesn’t arise until something goes wrong, and then good luck finding a way to discipline a friend whose job performance is unacceptable.  The key here is to outline your requirements and the consequences if they’re not met – ahead of time.  Rather than having to find a way to tell your friend that he’s not measuring up, let your objective standards speak for themselves.  Being clear ahead of time saves headaches later

Prepare for strong emotions.  

Since you share the same social circle as your friend, you will find that it’s difficult not to become too competitive with your new employee – a problem you don’t have with the rest of your staff.  This competition can create stronger emotions than you’re used to, and you need to agree ahead of time on what you’ll tell your group of friends should things not work out.  It may feel like a prenup, but that’s okay.  Taking steps to preserve your business and its reputation before problems arise is prudent for both you and your new hire.

Decide if it’s worth losing your friendship.  

The most common outcome for entrepreneurs who hire friends is that it ruins the friendship.  If you’re not willing to lose the friendship – even if the relationship sours despite your best efforts to preserve it – then you shouldn’t make the hire.  If you bring a friend on board, you have to be prepared to make the decision to save one or the other if necessary.  Everyone thinks that it won’t happen to them, but the numbers don’t lie.  Preparing yourself for the worst case outcome (while hoping for the best) helps you make a clear-headed decision.

Can it work?  Yes.  Is it likely?  Unfortunately, not.  My advice is to avoid hiring your friends.  If you absolutely must, then you need to prepare yourself – sort out how you’ll handle potential problems and resolve disputes – in order to increase your chances of success.  Weighing the importance of your friendship against the importance of your business – your livelihood – can be difficult, but you’ll find that if you avoid being realistic and honest with yourself, it will cost you more in the long run.

 

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Have An Effective Meeting With These 6 Steps

We all know the truth, and it’s time we started admitting it.  Most meetings are ineffective.  Frustrated with sessions that seemed to accomplish little except functioning as insomnia remedies, I set out to perfect my meeting style – shooting for “The Meeting to End All Meetings.”  I did extensive research on what makes a good meeting, and here’s what I’ve found:

Categorize your meeting type.  

There are basically three types of meetings: information dissemination, assignments, and idea generation, and if your staff is prepared to participate, knowing what sort of meeting you’re conducting, they’re more likely to be engaged and productive.  Prepared participants lets you dispense with background information and get right down to work.  Requiring your staff to walk into the room primed to absorb information, accept or make assignments, or share their ideas creates a climate of productivity.

Only essential people should attend.  

Keeping your meetings small eliminates potential distractions and uses your company’s structure more efficiently.  Empower (and require) the leaders within your company to share information with the folks who report to them.  You’re endorsing their leadership, and you’re making a much more efficient use of your own time.

Follow the rule of fifteen AND bring a timer.

The simple fact is that our attention spans are only good for about fifteen minutes.  Rather than going to crazy lengths to push your staff beyond what they can endure, embrace the rule of fifteen and use it to limit your meeting time.  Make it an absolute rule (enforced by your timer) that no one – not even you – can ramble on for longer than fifteen minutes.  Even better than whole fifteen-minute chunks of solid information is breaking the meeting into five-minute segments.  You may object to this point initially, thinking that there’s no way you can accomplish anything in only fifteen minutes, but you will discover that you  end up accomplishing more because you’re more prepared and focused.

Singular assignments.

George Washington once said, “My observation is that whenever one person is found adequate to the discharge of a duty, it is worse executed by two persons, and scarcely done at all if three or more are employed therein.”  Our founding father knew that efficiency improves when there’s one person responsible for tracking and reporting progress on a project.  Even if the employee you designate as the contact person isn’t the one doing the work, then that one employee comes to the meeting prepared to offer a concise summary of what’s going on, rather than using your valuable meeting time to allow every team member to meander through their portion of a larger job.

Have an agenda (and stick with it.)  

Whether you send an agenda via email before the meeting or you use a whiteboard to jot it down, having a written agenda demonstrates that you’re holding a meeting for a reason and that you value your staff’s time.  Use your timer to ensure that you accomplish everything on your agenda and that you neither belabor points unnecessarily or digress to the point that you’re off topic.  Modeling efficiency helps get your staff on the same page – literally and figuratively.

Ask for anonymous feedback.  

I employed this tip a bit skeptically when I was working on perfecting my meeting protocol, but what I discovered – based on the recaps and responses to my meetings – was that I wasn’t being a very good listener.  I realized that I needed to spend more of my meeting time listening – and writing down – the valuable insights and information shared by my staff.  Anonymous feedback from your employees will absolutely help you run more effective meetings, and will help you and you staff get more out of your shared time.

I’ve learned a lot about meetings, and one of the most interesting things is that inevitably, the people inside meetings want out of them, while the people outside the meeting want in.  Good meetings are powerful – especially the small ones – because they convey important information and help shape the direction of the work your company does.  Running efficient, effective meetings sends your staff back out into the office as informed, empowered employees who share a clear vision, direction, and plan of attack.

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You May Be Unintentionally Turning a Great Employee Into A Terrible One In 6 Ways

When we have trouble with an employee, it’s easy to place the blame on them.  If they’d only followed the procedure, or if they’d only understood the clients’ needs, or if they’d showed more initiative, then things might not have gone wrong.  The problem is that it’s not always the employee’s fault.  Sometimes we’re truly the one who deserves the blame.

Want to make sure you don’t unintentionally create the situation you’re trying to avoid?  Here are 6 behaviors that are guaranteed to cause problems in your workplace.

1. Give your employee a lofty title.  You might think that you’re doing an employee a favor if you hire them to handle your social media and have their business cards printed with the title of “Director of Marketing.”  You can be creating a nightmare situation, though.  I once hired a bright and talented employee, and for marketing purposes, I made her a director of one of my company’s departments.  When she did a little research and discovered that people who shared her title typically made far more money than she did, she quit.  Not only did I lose a great member of my staff, but she also floundered in her job search, discovering that she wasn’t actually qualified for the positions she wanted.  Give your staff appropriate titles that reflect not only their abilities, but also their real-world position in relation to the rest of their field.

2. Make a technical person into a manager – and vice versa.  We tend to promote people who excel in their field, whether it’s sales or accounting, giving them more money and a more prestigious title.  The problem , though, is that management has its own distinct skill set, and being a competent sales person doesn’t necessarily mean that your employee is capable of managing the entire sales department.  Likewise, a manager doesn’t necessarily have the fine expertise required to complete all of the duties of the folks they manage.  Make sure you hire and promote based on your employees’ abilities with relation to the tasks they’ll actually have to accomplish.

3. Fail to prepare for their arrival.  When new employees arrive home, the first question they’ll be asked is “How was your first day?”  The problem is that we often stick new hires in a corner to fill out paperwork, rather than carefully planning their first day in a way that leaves the employee with a great first impression.  Don’t give your new hires the impression that you’re disorganized or that you don’t really need their contribution to the team.  Plan carefully and wow your new staff.  Set them up to be impressed and feel honored to be part of your team.

4. Mishandle praise and punishment.  In addition to handling criticism in private, one of the most important things you need to learn is that employees need to know what they’re doing right.  It’ s best to give specific praise in front of fellow staff, reinforcing the positive behavior that you want to see continue from every employee.

5. Give one-way feedback.  If all of the information that’s exchanged between you and your employee flows in a single direction, then something’s very wrong.  Communication requires at least two participants, and if you’re not soliciting your staff’s feedback on how you’re managing them and what they need in order to be able to do their job successfully, then you’re missing the boat.

6. Fail to establish clear, measurable expectations and a formal review process.  Even if you communicate with your staff on a daily basis, you must ensure that you give them formal feedback on their progress and standing in your company.  Ideally, you should have formal employee reviews once per quarter, or semi-annually at the very least.  Clear, measurable goals mean that your staff knows exactly what they need to do to keep the boss happy and stay in good standing.  It also ensures that you keep your company headed in the right direction.

Yes, you’re the boss, and yes, you’re in charge, but being in charge also means taking accountability for things that don’t go as planned.  By establishing open communication, appropriate methods for disciplining your staff, and by planning for how you’ll handle any problems that arise, you’re setting your company up for success.

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Episode 14: Profitability and Top Level Employees with Dr. Sabrina Schleicher and Julie Wurzer

Show Summary

Dr. Sabrina Schleicher and her client, Julie Wurzer join Episode 14 of the Profit First Podcast. Sabrina and Julie discuss the importance of monitoring your expenses and hiring top level employees.

Our Guests

Dr. Sabrina Schleicher (left) is President and Founder of Tap the Potential LLC, America’s Leading Rural Business Growers. Dr. Schleicher and her team specialize in helping rural business owners overcome their greatest challenges to growing profitable, scalable businesses in their hometowns, while enjoying the benefits of small  town life, along with pride in running a business integral to the local economy. Dr. Schleicher recognizes that employee problems can be one of the biggest stumbling blocks for any business owner. With her background in psychology, and years of coaching small business owners to extraordinary results, Dr. Schleicher knows what it takes to find, keep and get exceptional performance out of your biggest investment—your employees. Access her comprehensive video training 5 Secrets to Exceptional Employee Performance (her gift to you!) at www.tapthepotential.com

Julie Wurzer (right) started Patch Abilities in 2004, after being “fired” (2 years prior) from her ag sales job at the local farmer’s cooperative … yes, fired. A couple years of self-discovery and a very active imagination (thankfully) led her to my “right” path. Patch Abilities Inc. (inc’d in 2008) specializes in small quilted wall hanging patterns, designed for any beginner with an itch to dive into the hobby of quilting. She took the big leap the first year in business and vended at International Quilt Market, their industry’s only trade show, her products were a hit and the rest is history. Julie grew the business from scratch to nearly half a million in sales in 2011. Yeah – quilt patterns – – crazy huh?

 

Show Quotes

It’s important to have the business owner work “on” their business rather than only “in” the business.

Analyze your advertising expenses; start with one big expense – how do you know that this is resulting in sales coming? Is it worth all of the money you are spending?

To hire a great employee you have to think of the A players as of the population. An A player performs at the level of several C and D player. Weed out the lower ranks and bring in an A player at top dollar. Hire someone that fits in with your business culture and works well with your ideal customers.

Assume that a lot of resume’s coming in are fluff. If you use the “pattern interviewing” method and start with a situation from their childhood and work your way through the years,  they will be more comfortable with telling the truth.

 

Show Links

Sabrina Schleicher on Twitter: @DrSabrina

Sabrina on LinkedIn: www.linkedin.com/in/drsabrina

Julie’s Website: www.patchabilities.com

Julie’s Blog: http://patchabilities.wordpress.com/

Julie Wurzer on Facebook

 

Show Sponsors

Nextiva – VOIP phone providers for small businesses. Fundera – Single source online funding for entrepreneurs. Also offers an adviser program for CPAs, bookkeepers and business coaches. TSheets – The #1 customer rated time tracking solution!

The post Episode 14: Profitability and Top Level Employees with Dr. Sabrina Schleicher and Julie Wurzer appeared first on Mike Michalowicz.

6 Negative Traits Of Entrepreneurship That Remain Unspoken

I’m a member of an entrepreneur group.  It’s full of people whose names you’d recognize, owners of companies with a world-wide presence.  I was stunned at one of the meetings recently, when one of the members stood up and confessed that he’d been struggling with crippling depression.  What surprised me even more was that several other members were in the same boat.  We think of entrepreneurs as optimistic folks, but it turns out that there’s a bit of a dark side to starting your own company, and it’s time we acknowledged it.

Depression.  

Whether you’re talking about feeling a little down or a full-on, nonfunctional episode, it’s not uncommon for an entrepreneur to suffer from depression.  The tendency to be embarrassed or to hide what others may perceive as a weakness exacerbates the plight, and withdrawing from the support of your friends and family can make the problem even worse.  Getting the help you need can not only turn things around for yourself, but it can also encourage others who might be facing the same struggle.

Personal sacrifice.  

Sam Walton, widely regarded as one of the great American entrepreneurs said, on his deathbed, “I blew it.”  Putting your business ahead of your family and the quality of your private life is taking a step down a road that will be paved with regret.  Entrepreneurs can sometimes focus on work to the exclusion of things that will matter more in hindsight – relationships with a spouse or with children.  We should strive to keep a balance of work and home.

Unhealthy habits.

There’s never enough time in a day to accomplish everything we’d like to, and entrepreneurs often prioritize work over things like exercise, taking the time to eat properly, and getting enough sleep.  As it turns out, setting aside time for a healthy lifestyle can actually improve our outlook and focus, but far too often we choose work over physically taking care of ourselves.

Trouble making and keeping friends.  

Part of the trouble with maintaining friendships as an entrepreneur is due to perception.  People will often think that since you own your own business that you have tons of money.  We all know that’s often way off the mark.  In fact, owners of small retail shops often make some of the lowest hourly wages of any workers.  When your priorities shift to your business, your old friends may not understand you, and you’ll find it hard to set aside time to make new friends.

High expectations.  

The media plays up Mark Zuckerberg’s success and features stories about wildly profitable businesses started from scratch.  What is less interesting to cover is that fact that a lot of businesses fail.  Knowing that people are looking for you to achieve great success can make it even more difficult when you’re struggling through a rough patch.  While some of the biggest opportunities await those who start their own businesses, the risks can be great as well.

Being the odd man (or woman) out.  

Entrepreneurs are leaders, rather than followers by nature.  We’re not content to take what life gives us, and that sets us apart from everyone else.  Being different can be lonely, though, and it can be difficult to find people who understand and relate to the challenges of owning your own business.

 

I was recently on a flight to Las Vegas for a couple of speaking engagements.  I was upgraded to first class, which made the flight much more enjoyable.  What’s interesting is that I started talking to some of the other folks in first class – there were fifteen or sixteen of us in all – and every single person I talked to in that section of the plane was an entrepreneur.  Every single one.  Now I don’t know how many business owners were in the economy cabin, but it hit me that there really is something different about entrepreneurs.  We’re a breed all our own, and even with all of the difficulties we face, there’s still nothing I’d rather be doing for a living.

That said, if we acknowledge the problems and challenges we face, we’ll be more apt to realize that some of our struggles are changeable – for example, there’s always time to exercise and eat well, even if you think there isn’t.  Some of the challenges, though, are part of the price we pay for pursuing our dreams.  We’re not entirely alone, though.  Other business leaders face the same struggles that you do.     

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Get Paid 5 Times Faster In 5 Ways

Whether you bill weekly, monthly, or as needed, most of us work on 30-day terms.  When you look at your receivables, though, and add in the collection period, those terms end up looking more like 45 days.  Especially for a small business, 45 days can seem like an eternity.   Imagine if you could get that money 5 times faster!  Think of how much healthier that could make your cash flow.  If you take some simple steps to alter the way you handle your receivables, you can do just that – get paid in 9 days…or even less!

Here’s how:

Accept credit cards.

I’m shocked by the large number of businesses who still don’t accept credit cards and still rely on snail mail and old fashioned paper checks.  Given the fact that you can turn any smartphone, iPad, or tablet into a credit card reader, there’s really no excuse for not changing your ways.  You’ll typically pay a small percentage – roughly 3% of the transaction total, but you get paid instantly!  Once you’ve set up your system, you can ask repeat clients if you can keep their number on file and offer them the convenience of billing them for their future sales as they occur.  Making it easier for your clients to shop with you makes perfect sense.  You can go from 45 days out to 0 days out…right away.

Offer bank financing.

This technique requires some legwork on the front end, but if you can partner with a lender ahead of time and offer free financing to your clients, you’re providing a valuable service.  More importantly, when you put your customers in touch with a financial institution for financing, you’ll get your money up front and leave the collections to the bank.  The bank will typically charge you a fee, but the customer can get low or no cost financing, and you have zero collection responsibilities.  Especially for high dollar purchases, you want to remove any barriers that might prevent your clients from saying yes.

Change your terms.  

So simple, but so uncommon!  There’s really no reason to default to 30-day terms if that doesn’t make sense for your business.  If you institute new terms for all new clients, say COD or Net 10, you’re speeding the process up considerably.  It’s harder to get existing clients to change their ways, but you can even phase in a change for those clients as well, as long as you give sufficient notice.  There’s no reason you should be a slave to tradition.  Make your terms work for you.

Change your billing frequency.

If you provide a service on the 1st of the month and wait to bill until the 30th, you’re slowing your cash flow down.  Alter your systems to bill as services are rendered, and you’ll see your money much quicker.  A note here:  this technique doesn’t work if you bill for small amounts that accrue over the course of a month.  In that instance, you’re better off billing less frequently.

Build a reverse cash flow model.  

The traditional model has been to provide a product or a service and wait for the customer to pay you according to the terms.  Let’s look at the way we used to buy computers:  Compaq or Packard Bell would front all of the money to build their machines and ship them to stores, where the inventory would sit and await a customer ready to part with some money at long last.  Along came Dell, and they revolutionized the market.  Instead of putting machines in stores, they allowed customers to “customize” their computers, pay for them, and only then would Dell ship them.  Money first, then product.  Customers felt good (about selecting from the rather limited customization options) and didn’t realize that they were turning the traditional model on its head.  You can turn the billing process around for your business as well by offering prepayment or monthly billing plans that buy clients repeated service or future shipments.  Breaking free of your preconceptions about how your product needs to be billed can allow you to make billing work for your business, rather than becoming a hassle that makes it hard for you to make ends meet.

 

I would never advise you to ignore every piece of traditional wisdom about running a business, but I will counsel you to examine your business practices – like your billing policies – and make sure they make good financial sense for you.  Sometimes a sensible change in policy makes sense and improves your company’s fiscal health.

 

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Unselling Is On The Rise

It is human nature to crave that which is exclusive – reserved only for a certain few.  Knowing that a product is in limited supply, or only offered to certain highly-regarded customers makes us eager to plunk down our hard-earned money – whether we need the product or not.  Don’t believe me?  Here’s an example: the American Express Black Card – or Centurion Card, as it’s now known, is the stuff of legends.  You can’t actually apply for one; you must be invited.  Amex shrouds its uber-elite card in mystery so ordinary folks like you and I have to speculate about things like the annual spend you have to generate in order to garner one of these coveted cards.

There are stories about wealthy folks who’ve bought Bentleys and even jets with the Black Card, but get this … the initiation fee is rumored to be upwards of $7000, and the annual fee is $2500.  That means that people are dying to get this card, only to spend a small fortune to have it and still bear the responsibility of paying the balance in full each month.  People covet the exclusive VIP benefits of the card, sure, but they also crave the notoriety that comes with that rare and exclusive Black Card.  People are willing to pay lots of money to spend their own money.  Exclusivity works as a marketing tool, and that brings me to the topic of Unselling.

Rather than working against human nature, work with it!  We’re seeing a big increase in companies who use the exclusivity of limited production, big ticket appeal to entice customers to seek those products out and in some cases even lobby or compete with other potential customers for the privilege of buying something.  If you can create the same kind of buzz around your product or service, your marketing work is done.

Here’s how you do it.

Create a compelling, cool offer that’s only available to the very best of your clients.  Unselling is particularly well-suited for high-priced items, so this is your chance to put together the ultimate experience for your customers.  You can’t Unsell a commodity item, so you’ve got to work hard to create a product or service that gives genuine value and really matters to your elite customers.  Think one-of-a-kind, unique offerings.  Your offer may be a limited edition bundle of your best products, or it might be membership in an exclusive rewards program that offers deals unavailable to ordinary clients, but the most important aspect is to create a sense of exclusivity and even mystery surrounding your product.  Mention in in passing on social media; hint at it in email newsletters.  Start building a buzz for those customers who comprise your big spenders.  Your goal is to get them to spend a little more…and be excited about doing it.

Whether you create a VIP rewards club or a package deal, the key is to create a series of hurdles or stages that your customers must go through before they have the privilege of getting your offer.  The idea is to get customers excited and to use the excitement they’ll feel about achieving each stage to create a sense of pride and loyalty, so that when they’re finally in your exclusive club, they’ll brag about it and generate interest among their contacts and your other customers.  If you notify a customer that they’re close to the threshold for achieving your exclusive offer, they’ll jump at the chance to cross that line.  You get revenue; they feel a sense of accomplishment.

Success breeds success, so you want to give these elite clients a place or a forum to help add to the excitement of your brand.  Imagine it … clients doing your marketing for you by raving about how awesome your company is.  It’s a dream come true.  Give them a special forum on your website or feature them on your Facebook page.  Let them use their fifteen minutes of fame to help sell your brand.

Because you screen your clients before they engage in the qualifying process, you don’t actually eliminate customers who qualify.  You simply use the excitement and sense of achievement created by going through your process to strengthen loyalty and boost your image.  It’s important not to turn off otherwise good clients by excluding them from your VIP treatment.  You want to make it predictably achievable for those folks who begin the process.  As they make each hurdle, they become more committed to finishing the endeavor.  Rewarding repeat business and encouraging higher spends yields enormous results.

Exclusivity – being designated one of the chosen few – is at the heart of Unselling, and it requires you to offer your very best product and your very best service.  In exchange, your clients use the loyalty and excitement they feel for your company in service of your marketing needs.  They carry your message for you and attract other clients who crave that exclusivity as well.

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