A lot of small businesses don’t have a fixed salary for their owners. They think the profit should be their salary so they don’t include that in pricing etc. Continue reading “Where is your salary business owners?”
Nearly two months ago, I shared why web design companies face cash crunches. Today I’ll show you a demo on how you can do that with ProfitBoard: Our cash flow management app for web design businesses.
Here I discussed one part of the problem and how to structure your project cash flow and payment schedules. Continue reading “Structuring your project cashflow – Why do web designing and IT services companies face cash flow issues?”
Accounts Receivable is the total amount of money owed to a company by debtors for buying goods or services on credit. This amount reflects in the balance sheet as current asset.
Generally due amounts of the invoices that you gave to your customers will fall under this category.
Accounts Payable is the total amount of money a business owes to creditors for buying goods or services on credit. This amount reflects in the balance sheet as current liability.
Generally all the payments you need to do to your vendors in future will fall on this.
In Journal all first transactions are recorded with specific date then these entries categorized into different accounts like sales, purchase etc. in a book called Ledger. In manual accounting all these entries need to be done manually but in accounting software respective ledger automatically created at the same time when we enter data in Journal.
Journal is of two types: single entry and double entry. In double entry each entry needs followed up with two accounts. This is another and detail form of journal entry.
Here is the Journal entry format:
NB: Read if you are a Student or Entrepreneur or Professional in a company.
For a very long time I have been thinking and practicing about how to improve people’s ability to be successful and in a way learning. It has always occurred to me why when a good tool or process is given to a good candidate result in higher output, but even better tools and processes fail for bad candidates.
The primary thing we all know is interest. But once that’s achieved you still suffer from bad output. Then I come across is intensity of interest. Then the motivation and gain of the intensity of interest. But still it was hard.
Then recently I concluded, everyone is missing some core things that they need to know to leverage and intensify their speed towards becoming the better self. The followings are key essential human characteristics that need to be correctly identified and practiced:
2. Problem solving 101
3. Responsibility, Objective clarity and ownership
4. Science and engineering of successful networking and practice to leverage daily.
5. Effective Googling (Or, you can say effective way of asking question and finding answers)[because if you can’t google correctly you get garbage ]
6. Emotional intelligence (a basic average here is still good)
Each of these points have many broad steps if practiced will work really fast in your favor.
I think these foundations and principles of getting successful should be taught to entrepreneurs, professionals, students and even normal people in their curricula. Even Superman had Kryptonite These are actually not difficult and can be taught and practiced easily.
So I have started sessions for our employees weekly. In future I’ll conduct this in colleges we normally get interns and hires from. We hope we can get people who already practiced and acquainted in these processes.
We’ll continuously post things on our blog and what we discussed here each week. Please do subscribe to our blog to get the email notifications when we post new things. You can find the subscription form here: http://eepurl.com/b0-UQL
So last week we introduced a cool new feature called saved searches and we introduced a budgeting of such. With this tool you can save the search that you frequently do and a bit frustrated to filter the Cash summery every time.
As shown in the picture. Once you searched something in the cash summery, click on the star icon to save that search. You can keep the dates boundary for your search or keep it open for adjusting to any date.
Plus you can mention the budgets you want to create. You can do budgeting for either income or expense for now.
This kind of budgeting would help you in budgeting expenses for a particular project or for a particular employee or activity that you tagged.
We’ll soon publish a video explaining what more and effective you can do with this tool. Till then ponder over your own ideas and create fabulous saved searches and budgets for them. And do let us know how it helped you.
Try it. See ya.
Once you’ve achieving recommended CIH, for couple of months and continuous good sales for 6-8 months, your next job as a business owner should be about straightening the revenue curve.
Might be now your revenue graph seems like this:
What you want to make it is like this:
Look we are not growing our revenues like anything, but we are ensuring our revenues curve straightens towards top. This ensures we can at least have this many revenue at any given month. It removes the basic fear of decision making if you don’t know if your next month sales will plummet. This also can help you in planning your hiring, fund planning, stock planning etc. This makes you now a serious businessman.
Now if we study the current graph of yours it might be a result of the issue of sales or product delivery. But now an effective CEO needs to ensure his curves are straightened on top of which he can make baseline decisions as we just discussed above.
Now let’s see the few steps necessary to make it happen:
- Ensure your sales guys are motivated continuously, well trained, and perfectly compensated.
- Ensure your delivery people have tools to make work faster.
- Ensure you created and operational structure & efficiency into the system.
- Ensure you align your company according to a profitable market segment.
- Now push the sales & hire if necessary.
And now ensure minimum target is set and make sure your organisation achieve it each month or quarter. Hope it helps
Ask us if you need any help doing these planning inside SlickAccount.
I’m not a good marketer. Neither a good sales person. ( my mom warned me not to use businessman and salesman in my words, so I’m writing sales person 😛 ) But when I’m in sales mood my conversion rates in sales go real higher. So here is a little secrete that can improve your sales much higher, as high as 20-35%. Especially effective for people who also understand what their service or product really is.
When meeting a customer don’t talk project or price from the start. Listen to your customers explaining why they want the product in the first place. In web design business, I used to ask, “What do you think a website can do for you?” or like, “Why do you want a website for your business?” You know it’s different than I’m telling what we do and how we are different.
Then listen. Listen till they drain up all their motivations and influencers who told them to make a website in the first place. This is really wonderful. You get to know who they really are. What’s the situation of their business. How their friends make them to think about designing a website can solve their issues. I heard like “My offline business is doing good. But you know I’m missing ways to scale up my market reach and sales. My XYZ friend who came for a dinner last month told me by creating a website I can get lots of inquiries from people who are searching for services like me. Also my YYN I HATE THAT GUY competitor is growing by creating a website.”
Then see when influencers are these, you can’t talk a lot about branding and colors. You should be better talking about if this piece of design can solve their issue. You also need to tell, what else may be required to scale this up too, like may be SEO etc. if you want.
Then I agree to what he said, “Yes! We could improve the sales of XXR OF OUR SWEET CLIENT to some X% by creating a better website.” And they inquire more and I try to confine the discussion to few more lines.
Then I ask, “How does your company want to represent it to your client? What’s the way you do market? And what your customers ask you often when doing sales?” or “I heard about XX company in your space. How is your solution or customer segment is different than them?” See here you are gathering ways you can make them successful online too. For new businesses it may be difficult to get a real picture.
Then listen to them carefully. See I don’t talk the design, look and feel of the website. I talk about their vision of their own company. Listen to phrases like “We want to be caring”, “We are actually good at XX, which can solve XX in the whole process”, “We make products with lot of care and heart”, “As we grow we want to be different than other companies and make our customers save more”, “We hate this, the other company is doing”. If you are listening to stuffs like our customers love it, then it’s time making customers the center piece.
Understand, for every company owner, his company is really good and he wants his company should look good as their sales man. And frankly they don’t know what color is best for them or what style, they just saw it somewhere or think of that would be best. It’s your job to recommend them a color. But understand their brand color and why these colors are or should be there. If indeed.
And when it comes to telling about price, just tell what your best upper price is. Never hesitate to tell. Or else they’ll feel you are cheating them. If they are that comfortable, which often they become, when they reach to this point. They would tell either “OK! that sounds good when should I pay?” or they would tell, “look I don’t have this amount of money?” or “The others say XX REAL LOW PRICE, your price is really high”.
If you get the first one then congratulations. You owe me a treat
If you got the last two, this is the time to tell why you are different. They just experienced a bit of it. It’ll help them compare the money they are paying vs the benefit they’ll get for it. If possible you can give them a ROI demo. And then tell how taking low money like others force you not to do good work. Explain them your expenses including salaries etc. if you can. People don’t want to hurt you. They would be OK and love to help you and also themselves.
If they stick to the price stuff, you should understand they are not yet well convinced. Often I say thank you at this stage, because I knew my time is much worthier. And I say “loved talking to you, You can look for X, Y and Z good designer out there who work at low price. They may help you? Wishes for your business, it’s just that my expenses are little higher and I can’t help reduce it :)” Don’t make them feel guilty. Sometimes they bring you more clients or comeback when they have money.
But if you feel the customer worth it, then you can ask, “What should be the price, you think?” And tell “See I can provide you this much in that price and you’ll be loosing XXX”. Look customers love getting value more than the discounts, though discounts can quicken the process. Read my upcoming book “3 Ways to Price: Part-I” releasing coming Sunday, before giving a discount.
Understand sometimes customers really don’t have money to pay you. That’s OK. If you can’t help with price, just refer them to others. I usually tell “Ask me any other help when you need like advise on designs if I’ll have time, I’d love you help you grow.” Sometimes I sit with the customer to figure out where they should start with the little money and then as some money flows in how to improve bit by bit.
But if you need to get to the conclusion. You need to understand why something is important for them and why they put money into it. Customers often don’t tell you what they exactly need from a service and you can’t guess either. Better ask them to explain, why it’s important. You’ll figure things out much better.
We see many businesses trying to get a lot of income in a highly competitive market by providing their services and product really cheap. While this is not a bad thing to be known as Low Price King if you did your maths on pricing and how to deliver in the budget, many among you file losses due to avoidance of Rule No1 of this market. i.e. “Be Lean & Stick to the plan”
You could be able to provide products because you figured out the volume to sell, maintaining the operation etc. Like in the case of Wal-Mart or BigBazaar in India, they have a very great supply chain to make them be able to do it.
So it’s important for your business not to be slightly over budget in any field. The major problem comes in Operations. You need to be lean and should use perfect tools and checks (bound by time & budget) in place to do so.
Let me give you an example:
If a small shop will sell 500 pieces of AwesomeCheapThing at $1 each day with a profit margin of just 5cents, he gets (5×500)/100 = $25 in profit each day. Let’s see if one day its supply truck came late by just 1 hour which reduced its sell to mere 450 pieces for that day. He lost 5×50 = $2.5 on direct sell. But if we analyze what he actually lost, we got to know he pays his sells man for that 1 hour without selling anything + electricity cost etc + he spent little extra for inventory of that 50 pieces which made his loss to little more higher making that product price to sell at $1.5. But we guys have a tendency to neglect such minor stuff and we just think that we lost only $2.5 for that day.
But the guy who is selling it at $10 and sells only 3 pieces may not have that much of trouble and all extras can be adjusted to his profit.
So if you guys operate in a low-profit environment, being lean and on time makes sense else you might be doing just another business that’s losing the only issue here is that you don’t know where you lost it. You can stick as some high strength glue to your operation plans. Losing is not a bad thing but knowing where exactly you lost is really crucial for you.
Training and education are important part of a healthy organization. You need to help employees improve their skills. Also you need to take business coaching continuously. That way you always remain more knowledgeable, advanced and well functioning organization.
WHAT ALL YOU NEED TRAINING AT:
- Technical & job oriented : New coding language, new form of marketing, sales and customer support.
- Communications & behavioral : You can reduce 30% work load just by communicating better amongst your teammates and to customers.
- Cultural & team-coordination : If you have all people share same cultural philosophy for your organization, you’ll attract more customers and good staffs to your organization. And team-coordination training make your team to work to achieve the same goal.
- Customer Induction : This is not a training but an education. Monthly once you need to invite one of your customer to your place for 3-4 hours, or may be on a dinner. Gather all of your team. Let the customer tell their story. How they do shopping and how they use your product or service. And make all the employees, be it marketing person, sales person, accountant, managers, HR person, product people or your office staff, to understand how they can improve the experience for your customer.
- Listening & questioning methodologies : Although it’s a part of communications training, I want to highlight it as a regular exercise. Every week, your employees should learn to question and then listen to the other person. This exercise will gradually boost the performance, understanding, confidence and ultimately the creativeness and innovativeness of each person.
NOW HERE’S MULTIPLE METHODS TO DO THIS:
- Have a small library. Else here an eLibrary with Kindle.
- Subscribe to Udemy etc annual plan for your team.
- Invite expert speakers or trainers to your organization.
- Sponsor your employees to workshop events.
Now what are the other training that should be included? What are other sources of training?
At 8i Creations we were helping businesses and design firms to bring more conversions/orders/inquiries from their websites. Here’s what I’ll sum up as the best practices. (Please don’t inquire 8i creations, we are no more accepting projects)
1. Define your business in 5 words. Headline it on your home page.
2. Solve 3 questions that customer would be asking when coming to a page & follow it up with a contact number/email id/form for further discussion.
3. Navigation text is important. Name links as customer would like to search it, not what your product name is. Eg. “SEO” may be defined as “Increase website visitors”. Similarly ‘Machine for tamarind processing’ is more suitable navigation text that ‘HP terminator 500’. Dharma Agrotech, one of our clients, has a multipurpose machine that can process Peeper as well as Groundnuts. But their customers may not search that way. See how we created different links to the same product. And the conversion was wonderful.
4. Be definitive about who your customers are and who are not.
5. Use videos & photos to describe your products and how it’ll benefit customers. Real photos can make you more authentic than stock images.
6. Customer testimonials are powerful. Use their photos or videos.
7. Clear and simple looking websites convert in an average 5 times more visitors than a website that looks very flashy & complex.
8. Give yourself a face. Put your pictures, pictures of where from you work and a complete address.
9. Invest money in SEO & Blogging if you can afford the money and time. It worths it. The more people come to your site, more you can convert.
10. And most importantly, make contact methods clear, visible and within quick reach. If your phone number is only at “contact us” page, you’ll loose 50% of possible leads. Wit says, convert them as soon as they make their decision. The low touch the contacts will be the better. Phone number or a form is better than only email id.
11. Did I forget to mention about content? Spend on a good content writer. Clear and conversational content are your best investment. Else ask the person-in-charge of your marketing or sales, if he/she’s good at content writing.
It works in this order:
1. More people know about your site: SEO & Blog
2. More people found the solution they were looking for: Site content & Navigation
3. More people contacted you: Clear and instant contact methods.
Hope you would like this post. What are the other best practices do you think?
Customers are different even though they purchase the same products or services from you. They all require different treatment, isn’t it? And you are responsible for building an organization that can better serve the kind of customers that gives you more value.
Once you have some customers, profitable businesses figure out the customer segment worth focusing at and weed out customer segment that don’t bring them any value or profit. All good managers and entrepreneurs know the power of this kind of data. They separate their customer base and continuously segment it. They continuously understand who their customers are and how they are changing.
Now let’s see how different and unique your customers are. Use a spreadsheet (or a CRM software). Add the following columns to your spreadsheet against all your customers name.
1. Channels they came from
2. The geography they belong to
3. The business they are in
4. The older or younger the organization is
5. The older or younger the decision maker was
6. The size of the company
7. The revenue of the company
8. Who in the organization contacted you
9. Who authorized you the money
10. Who got benefited directly from your service in the company (eg: the marketing team or the CEO or COO etc.)
11. The sales they gave you
14. The services they got from you
15. The quality & support they demanded
16. The profit you got from this customer
17. The effort you needed to market/sell them
18. The effort you needed to service them
Now apply 80-20 rule to this. Focus 80% of your energy and staff on serving the most valuable customer segment and 20% serving less valuable. Both things are equally important. While most valuable customers will give you most of the cash, less valuable customers may show you a different future. They can show you if there’s a new market segment emerging or a new kinds of product you can launch to capture a big potential.
Focus your marketing, sales, copy of your website, the product, the contract, the investments accordingly.
As a small business want to grow big this will make you focus your energy and resources in building more value and wealth. You save time, become more knowledgeable about the outcomes and bring more profit.
What else? What more can you do with this customer data? Do this and comeback and comment how this helped you understand your business better.
Asking a favor/help is not a bad thing at all if it doesn’t cost them more time and money. You will so so many people love you and share a helping hand.
During building our Accounting Software, for promotion, for advice, for understanding the foreign markets and small businesses there and for making things possible we asked all possible help we could ask for to everyone (even to a complete stranger sitting in USA or UK whom we never knew few hours back) and really can see the amount of help and love it is creating for us.
Be it to Rackspace, Twitter, several small businesses, lots of investors, market experts, accounting firms, local Bank officials; we got help-love form nearly everyone.
It really helped us getting insights, minimize our costs, being on our budget and grow. Thanks you all.
And my friends “Don’t shy away from asking a favour if and only if it’s not taking a lot of their time and money”.
For the first time I did a to do work list in the morning before coming to office; as quite a few successful entrepreneurs I know does. I used to do it after coming to office or else at night before sleeping.
The difference I feel is quite drastic.
Night is best for creative thinking, long term strategies and so milestones. But morning ones before office is best for very short-term planning. Just Today.
Wow! It feels like you’ll get more work done during the day and rapidly move forward.
What’s your experience and how do you make yourself check the boxes out?
Small businesses and startups (mostly service-oriented) ask me for how much should we raise or take loan after basic investments? Here’s a simple math that works fine:
Base money: Get expenditure for the next 6 months covers (this is min. Better is 12 months)
Wastage: Get additional 20% for wasting charges (all company waste money in additional stuffs not needed) Lo an installments: Make sure you don’t have installments from day one. Else include them too.
What to do in these 6 months?
Do enormous tests: assign 10 customer/sales to each test depending on your product or service. each test shouldn’t go beyond 2-3 weeks. take a note of everything you learnt from these tests.
Prepare a plan: now take a list of approaches you are going to follow from your observation of your test.
Define target market: Keep only 1-2 in mind and washout everything else.
What to do in next 6 months?
focus, focus: Scale up on that target market and on that approach, while experimenting narrowly on side.
Do scaleup investments: hire, productivity tools etc.
If needed take another funding for 6-12 months: Make sure you are doing good in that.
Hope it helps. Please if it was helpful signup and make other small businesses signup at: https://www.slickaccount.com
Recommended by startups and small business as one of the most simple and helpful software ever built.
NB: Now we are issuing accounts within 2-3days of signup. And all who didn’t get an account in past should expect it in next 5 days. Else we might not have been been helpful to businesses in your domain or of your size or are completely not intent to serve to the specific domain. If you forgot your account or couldn’t use it in trial period, please do write back to me at email@example.com However please make sure you search for it in your inbox. The email would be from firstname.lastname@example.org
We’ve many users who we already sent their accounts but didn’t opened the email yet. So please make sure of it. Search in both inbox and junk or spam folder.
Photo Credit: HowardLake via Compfight cc
The most common reason for business failure is people don’t invest in stuffs they should. And that’s called not taking risk.
Can this tool make me more efficient and I can get more out of what I’m investing and can get success done quicker.
They just continuously look into their wallet and tells oh scrap I shouldn’t invest in it. Else I’ll not have money for tomorrow. And that’s why they just keep having the money on their wallet and they never could increase it.
And it’s not just about monetary investment, but more often it is the case.
And don’t laugh, you might be in that state too. I know, I was there too.
And thank God we didn’t built SlickAccount software on that rule. We always hated to show something that deters people from investing. And that’s the common thing accounting softwares do. We instead focus on incomes and cash in hand. It’s OK to invest. But can you get this much in this amount of time?
This thing is so subtle. But you can see it everywhere around SlickAccount. And it’s a biggest secrete in making SlickAccount work for a lot of small businesses.
So invest on stuffs that can make it easy for you to reach your goal fast and buy you time. But don’t spend on stuffs that’s independent of this relationship. You can do that later.
Why most small business owners are unprofitable?
1. They don’t know at which price point to sell.
2. They don’t know who to sell and why.
3. They don’t understand marketing is more strategy, positioning, messaging and customer segment than tools to reach more people.
4. Good books on Sells are lesser read. They read more books on marketing.
5. Most are fearful when approaching to a client. They fear about if they’ll lose the sells, even before understanding whether they are his target or not. They don’t know how to say NO.
6. Basically most are not confident about their business.
7. They never really keep a track of their progress and goals.
8. They don’t give importance to the relationship between finance and their organisation.
So if any of the above defines you. You’re most likely doomed to fail.
If you are one of these then ping me with your email id to email@example.com and in one line what your business does. SlickAccount is going to send you a list of tools, books, blog links that can make you better in all the above areas on the 1st birthday of SlickAccount on 19th July, 2014. Plus you will get a free subscription to Profitability University Newsletter starting from September.
How cool it is to finish up the tidy bit projected accounting for 5 years in just 3 hours??? We made cash flow, balance sheet, P&L for next 5 years in just 3 hours yesterday.