By Ruth King, Special for US Daily Review.
There are three simple things you must do to survive in business. None of them will put you out of business immediately. However, lack of attention in these three areas causes a slow death spiral and will eventually lead to business failure. Here are the things to pay attention to:
1. Take care of your customers.
Your active customers base (those customers who have done business with you in the past 18 months) should be increasing all the time.
The only time your customers consciously think of your company is when they need your products or services. They want to know where to go when they want something specific or the unexpected happens and they need a product or service. If you’ve done your marketing properly to potential customers and taken care of your existing customers properly, your company’s name should pop into their heads.
Build up awareness so your name does pop into their heads takes time…sometimes years. Contact them when you don’t want something. This can be done through newsletters, brochures, reminder postcards, and e-mail.
When a customer calls make sure that everything happens right from the moment a customer hears the telephone answered. This means answering the telephone clearly and with a friendly voice. Don’t keep a customer on hold. Take a message or offer to help.
Every impression counts. Customers are fickle. Even if someone has been a customer for 10 years you can’t take him or her for granted. I’ve seen too many times where someone has been a customer for a long time and starts looking for another company simply because they sense “something’s changed” and they aren’t being taken care of like they were in the past. Will you ever know it? Probably not until you realize that you haven’t heard from that customer in years. By that time it’s too late.
In most areas there is so much competition that the unsatisfied customer will easily find another company to use. If that company goes out of its way to handle the customer right, you’ve lost a customer that you spent years and hundreds or maybe even thousands of dollars cultivating.
2. Take care of your employees.
A complaint I hear all the time is “I can’t find good help”. There is a shortage of qualified help in our industry. However, there are companies who have people wanting to work for them, technicians dropping off resumes in hopes of a job opening, and a stable work force. These companies are also generally busy even in mild weather when their competitors are waiting for the telephone to ring.
Keeping your employees takes work and attention. It is simply setting the standards, enforcing the standards, creating a career path, following through on the career path, listening to their wants and needs, and doing what you promised.
Everyone should know and help set the overall goals and mission of the company. If they have an interest in setting the goals, they will work harder to achieve them.
Let your employees know you appreciate their work. There are several ways in which you can do this: a note in the paychecks, notes sent home to wives and significant others, a “thank you” as you are passing someone in the hall; or a visit to the job site just to express your appreciation.
Listen to your employees. They are on the front line. They have the best knowledge of what is happening out in the field or in the office. So, when issues arise, ask for input. If you trust them, and they know that they won’t get in trouble for telling the truth, then you can find the underlying cause of the situation and resolve the issues.
When you start getting unsolicited resumes from people who want to work at your company, you know that you are on the right track.
3. Watch your cash.
Cash is the lifeblood of business. You need it to pay your employees, yourself, for the materials, equipment and overhead items you need to keep the doors open.
Obviously, for your business to survive you must generate cash. However, even if you are showing a profit you may not have cash. This is the case when you do the work, bill for your work, and don’t collect your money.
The customer writes your paycheck. He writes your salaries, your bonuses, your worker’s compensation expenses, your rent check, etc. You must profitably take care of your customers. This means understanding how much it costs to operate your business each hour. Charge the customer accordingly and provide value to the customer that exceeds the cost that he is paying. A customer must feel that he got a good value for the work performed. If not, he will use one of your competitors next time.
Bill and collect for your work. COD is easy. In addition, make sure that all goods and services are billed immediately. If there is financing involved make sure that all of the proper financing paperwork has been signed by the customer and submitted to the financing company. Take the time to call customers who have not paid within 30 days. If you don’t become the squeaky wheel then you will be put at the bottom of the list for payment.
Watch inventory. Inventory is a bet. When an employee purchases a part for the warehouse, he is betting your hard earned dollars that part will be sold. I’ve seen a lot of “bets” on warehouse shelves. Purchase only what you think that you will reasonably use in a specific period of time.
If you take care of your customers and employees and watch your cash, you’ll have a better chance of staying in business, growing profitably, and not falling into a death spiral. It’s easy to do these things. It’s easy not to do these things. The choice is yours.
Ruth King believes in helping small business owners. To receive her free 86-page manual: Keeping Score: Financial Management for Entrepreneurs, explaining, in easy to understand terms, profit and loss statements, balance sheets, cash flow, and more go to www.DivaOfTheDollars.com. Ruth holds Bachelor’s and Master’s Degrees in Chemical Engineering from Tufts University and University of Pennsylvania, respectively. She also holds an MBA in finance from Georgia State University.Ruth King is a seasoned, serial entrepreneur owning or having owned 7 businesses since 1981. She still owns her first business, Business Ventures Corporation, and travels throughout the United States coaching, training, and helping small businesses achieve the business goals they want to achieve.