Guest blog by James Blackman
Managing Director at Cocoonfxmedia Ltd.
See also: How to Prepare a Sales Plan: 8 Strategic Questions- http://blog.cx.com/business-tips/how-to-prepare-a-sales-plan-eight-strategic-questions/
Your Business Plan: 6 Major Oversights- http://blog.cx.com/business-tips/your-business-plan-6-major-oversights/
A small business starting in an economic downturn needs to be agile and flexible and adapt to any given scenario. Often, businesses set up their business plans and mission statements but often fail to set a goal and the end game. Frequently, day-to-day business makes them too busy, and they often become distracted.
A key phrase for businesses to remember is, “Always keep the end game goal in mind.” Where do you want to be at the end of it? Do you want to build the business and then sell it? If so, when, and what is the tipping point to do this? Or, do you want to make it a lifestyle? For example, “I want, a certain time, to have X amount of employees and have a nice car and house and live comfortably.”
With this in mind, here are some steps to make your small business profitable, focused and efficient. Along the way, you will make some pretty poor decisions, which you need to learn from. At Cocoonfxmedia Ltd., we have certainly made some bad judgment calls, and we are sure we will make some more, but in a decreasing fashion, as long we document what went wrong.
Documentations and Processes
So, we have our business plan and our goal, but how do we make sure we stay focused? We have some simple tips to help the process. We’ve used these processes in our business after finding that we were getting very busy, but not making as much profit as we wanted. It is key to start documenting and measuring key areas in a business. You have to set up some key performance indicators, or KPI.
Costs
It is imperative to get a grip on costs, particularly if you don’t have physical products. Remember, time costs money. Create a spreadsheet, and make sure you have calculated every fixed cost, and ensure you keep this updated.
KPI Management
Setting up some KPI will definitely help you to focus and manage your business. They don’t need to be complex, and KPI is not necessary for everything. When we first started, we became busy very quickly and ended up not tracking conversion rates on quotes or checking profitability. Also forgotten was who to target. Any type of business was taken on. We were profitable but out of our comfort zone.
To remedy these shortfalls, we set up spreadsheets to track quotations, costs, selling price, profit, and percentage profit. These created a pipeline for us to work with. When business was won, a simple yes was added. From this, it was easy to calculate our percentage conversion, and at a glance, we could see how much profit was being made overall.
We then thought, OK, we’re making some profit, but is there a type of client we can target to make more money for less effort? So, we started to profile our clients. We looked at who our ideal client (Type A) was, who they traded with, and what their circles of influence were, such as who they were friends with, who they mentioned in Tweets, etc.
Once we established this, we then looked at our client base and found that much of our work was low end (not a bad thing.) We noticed referrals were mainly from this “low end,” clients who had a small budget to design a website, whereas Type A clients had a budget 10 times that size. If we got more Type A clients on board, chances were we would naturally get the bigger clients, but less of them. So, effectively if we got three Type A clients, we would get more revenue for less work. Of course, we would never refuse to work for those with lesser budgets, but we needed to be more selective. Without the conversion spreadsheet, we would find this difficult to measure.
Customer contact is a very important element for any business, simply because they are already buying from you, but how many of them actually know all of your services? Also, when did you last contact them? This is again something very simple to start and measure. We created a spreadsheet listing all our clients and products. For each product purchased, we colored a cell green. We colored cells amber for products under discussion, blue for those they were unaware of, and, finally, red for no interest or if the product was not applicable. You would be amazed how much extra revenue can be achieved by doing this. You can also enter the last time you spoke to each person. This is a very basic way to measure your Customer Relationship Management (CRM). It could increase your overall turnover by 10-20 percent with very little effort.
Productivity and Technology
A small business must keep abreast of new technology. The world is getting more reliant on mobile technology and the Internet. As web design/SEO experts, we are in the fortunate position to understand how technology works. We’re not afraid to use new software and technology, as we know it will make us faster and more productive. However, many small businesses don’t take the time or make an effort to understand and learn how to use technology to their advantages. Here are some quick steps to make you more technically-savvy.
1. If you don’t understand how a computer or the Internet works, get yourself on a course without delay. Clients today use e-mail, whether they’re painters, decorators or a retail outlets. They expect you to provide quotes in Microsoft Word or Excel. You should also learn the basics of the Internet, such as social media, SEO and digital marketing best practices. The web is awash with tips and guides to help you understand.
2. When it comes to productivity software, you don’t actually need MS Office to create Word documents, Excel spreadsheets and PowerPoint presentations. Google provides an office suite from which you can create everything MS Office offers, and the best thing is, it’s free. Another point is, you don’t need to take your laptop anywhere. Your documents can be accessed securely online from any PC/Mac or tablet. You can also open MS Office files.
3. Always make sure you have backup for your business’ data, such as CX for Business cloud storage. If your business encounters a hard drive failure, the costs to recover that data may cripple your business.
4. Move away from Internet Explorer (IE) as soon as possible. Use Google Chrome, Safari or Firefox. We’re mentioning this because IE has a hidden development tool which defaults to an old version. Everything will be slow and look differently if this application is switched on. If you’re using IE8, upgrade immediately, or change. If you’re using IE9/IE10, press F12 and make sure your view in IE9/IE10 is standard view.
Marketing
If you don’t market yourself and your business, you will not make any money — period! Competition out there is fierce, and unless you’re in a very unique niche, you need to market your company. These days, marketing has evolved completely from traditional methods such as print advertisements or billboards. Marketing can be seen as quite complex, but in reality, it’s much easier to measure and manage. Online marketing, in particular, can be easily measured through Google Analytics — which is a free statistical tracking tool. This allows you to track and measure your marketing activities.
If your business doesn’t have a website, then you should get one. Remember, a website is your digital shop window and should reflect the services you provide. You should work hard on your website, as it is the most powerful marketing tool you will have. However, you need to understand that a website, once it’s live, will not automatically bring you business. You’re competing with many other websites, so you need to make sure you have a budget to market the site to drive people to it. This is called search engine optimization, and it’s a long process. However, once you get the foundations in place, you will find the website will make you money.
Don’t be afraid of social media. It is a gold mine and one of the best methods to get your products to a large audience very economically. I am not going to say it is free, as it does require time, which costs money, but think about social media in this way: If you Tweet a link to a product, it will get global coverage instantly. You can also use Twitter as a marketing resource because you can see in real time what is happening in your market.
RSS (Really Simple Syndication) feeds are not necessary for every business, but certainly are for most. You can find many sites with latest news or links to subscribe to their news feeds. These are valuable marketing tools — if you subscribe to an industry-related magazine and their feed, you will automatically receive updates on any new trends or processes, which can help you develop your business. Again, you can even have this data piped into your website to provide useful up-to-date information for your users.
Conclusion
In conclusion, a small business needs to get the basics right, by having clear and defined goals with processes in place, to allow the business to be agile and meet the growing demands of the market. The key elements for growth in a small business are:
-Good cost control, which is measured and documented
-Sales and marketing processes which are easy to track and monitor
-A good understanding of how technology is evolving
-An understanding of changes in the way clients interact with their suppliers
-A clear idea of how to market your business to a global audience
As a small business owner, I constantly change and adapt my approach, but I remain firmly fixed on the overall goal I have set for my business.
What business processes have you found to be most effective for your small business? Let us know in the comments.
Cocoonfxmedia Ltd. is a UK-based web design and search engine optimization company, specializing in all online activity, from web design to pay per keyword.
