Tag: planning

Thoughts on Marketing

~ C.O.R.E. Beliefs ~ Leave a comment

Happy Wednesday.  You know, I am typically not much for working out in the evening – I prefer reading and drinking wine – but it does help me sleep much better.  Still a little sore from last night’s routine, but I slept like a rock!

Kubae and I were talking this morning about a restaurant that started and died a few blocks away.  It lasted about 2 months before the doors were closed.  she wondered what they might have been thinking and what lessons we could learn from this.

I think there are several important lessons for anyone starting a business in this story.

First, the old adage, “If you build it, they will come” is no longer valid.  I am not certain there ever was a time you could open business and customers would flock to your doors, but it definitely won’t work today.  Today, your potential customers have a huge array of choices so a small business owner must find a way to get to “top of mind”.  This means marketing.

Second, as I discussed in a prior post, the saying, “Location, location, location” is extremely important for certain types of small businesses, especially restaurants.  In this instance, this restaurant might have had the best Chinese cuisine in the Pacific Northwest.  It wouldn’t matter as it was sandwiched between two other restaurants and on a side street.

Third, whatever you think is the bare minimum you can spend to get the word out, triple it.  That’s right, plan on spending 3 times as much on marketing than you originally anticipated.  Your potential customers are bombarded with thousands of choices a day and your small business competes with those other messages.  Whether you choose to spend money or time, a conservative approach is to plan for more messaging.  A lot more.

Fourth, when in doubt, spend more on marketing.  A good friend of mine, Mike Leitch of VSource Systems, used to joke that the biggest problem he would like to see is having more work than he has time to do it.  With a growing business you can hire to handle the extra work; but if your business never gets going, you will be hard pressed to pay yourself.

Fifth, change your marketing channels.  The first thing you need to do is ask yourself how anyone is going to find out about you.  If you are a restaurant, you need to find out how to get listed on Yelp and Google Maps and any of the other dozen websites that cater to restaurant reviews.  If you are an accounting business you will need to find out how your potential customers look for new accountants.  And then, ask yourself, what other ways can I get the word out.  Experiment with channels, track their effectiveness and if after a few months it isn’t working, discard it for now and try something else.

Starting a business is risky.  If you are ready to take the plunge, then I strongly suggest you create a marketing plan to help you build excitement about your Company.  And if you are looking to expand your business, I strongly suggest you create a marketing plan to help you build excitement about your Company.  Getting more potential customers than you have time to work on is a great problem to have.

If starting a business is in your future, I encourage you to reach out to your accounting professional and create a business plan and budget to help you get through the first 3 years.  If you are looking for an accountant who can help you plan your startup or would like another opinion, feel free to contact me for  your free no obligation consultation and lets see what we can do to help make your dream come true.

Have an awesome Wednesday.

 

Thoughts on Weekends

~ C.O.R.E. Beliefs ~ Leave a comment

Good morning and Happy Monday!

I hope everyone had a fun and memorable 4th of July weekend.  Attached are some pictures of the fireworks display held at the Fort of Vancouver.  This is from our condo downtown Vancouver.  We always have an incredible view and it is one of the things we love about living downtown.    The pictures are a little blurry as we were sitting inside (it was a cool 63 degrees out there) and I was using my Samsung phone which is really not suited for night photography.  But we still had an awesome viewing experience.

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Are you a small business owner who ended up working all weekend?  I imagine most of your efforts involved paperwork.  From emailing quotes to entering bills, you likely have forgotten why you wanted to work for yourself in the first place.  If your business is consuming all of your time, perhaps you should rethink your efforts.

Working harder in your business doesn’t really save you anything – not time, not money, not effort.  But what exactly do I mean by that?  Well, first thing is doing a job you have hired people to do.  You have a customer call on Friday for special work for delivery on Monday and what do you do?  You don’t want an employee to do it because it is A) the weekend and B) it will cost you overtime so you spend your weekend doing the work.  Why did it happen this way?  Inertia.

You are used to being the chief problem solver.  Whether you have 2 employees or 20, you cannot get over the inertia of you starting your business and trying to do everything.  The problem with you being the only solution is that your Company doesn’t grow, even as you add new employees.  Think about it… has your workload increased or decreased when you added new employees?  I bet your workload increased didn’t it?

The one thing your business needs is you.  No, it doesn’t need you doing the technical work that you hired competent employees to do – your business needs you to think clearly about how to grow, how to succeed.  How are you going to land that new contract?  Who is our target customer next year?  These are the things your business needs you to work on.

If you hired good employees and you have given them effective written instructions, you will get a good result. But hiring well and not having effective written instructions leads to poor results.  You don’t even want to think about the mess that happens when you combine hiring the wrong people along with not having written instructions.  Sadly, we have seen all too many of these situations.

So, set a priority to take weekends off.  This means work on your business, not in it.  Rethink how people work to reduce the paperwork and emails and questions.  Spend your time creating the “How we do it here” manual so that you can eliminate most of the verbal instructions that go on.  Start simply and let your employees finish the rest of the manual. I bet that in no time you are actually able to enjoy a Saturday off and not feel buried when you come back in Monday.

I strongly encourage you to talk with someone who can help you create effective work processing documents and checklists.  Believe it or not, your accountant actually follows many checklists in doing their work so start there.  If you do not have an accountant or are looking for a second opinion, feel free to contact me to schedule your free no obligation consultation about how you can once again enjoy the weekend.

Have a great week.

 

Budgeting

~ C.O.R.E. Beliefs ~ Leave a comment

Happy Thursday and Mid Year!  It is almost the 4th of July weekend and we are so excited the boys are coming tomorrow to play Xbox and enjoy our homemade individual pizzas.  It is always a great time.

Kubae and I went shopping last night.  This in and of itself is nothing extraordinary, but it is the first time we went shopping based upon a budget.  Why a budget you ask?  It seems she reads my blog and felt that we should plan for the things we want.

Since we are like almost everyone else in the world (especially like most small businesses) we have limited resources – meaning that we cannot have everything we want.  So we sat down over the weekend and did some strategic planning.  She wants to take a trip out of the country next year.  This was our primary goal.

Now, the fun part became, how do we get there from here?  This is where budgeting comes in.  A budget is the plan to get from where you are to where you want to be.

First thing you have to do is have a good idea of where you are.  So, I downloaded 3 years of bank information, dumped it into Excel and started categorizing.  I actually use 4 overhead categories for our personal finances, similar to what I use for small business – Facility, Food, Entertainment and General.  After 3 hours, I had a good idea of how we spent money.  From here I crafted a few alternative budgets for our upcoming discussion.

Tuesday night we had our “Board Meeting” to review our expenditures and our plan.  It was very enlightening and Kubae immediately dug into the details.  Part of the historical review is that it really puts somethings in perspective, such as $500 a month on eating out.  Having the history made it much easier for us to ask questions like:

  • Why do we spend money on this category?
  • Is there an alternative?
  • Do we impact our quality of life if we redirect the funds to another purpose?
  • How does this spending get us to our goal?

Based on this conversation, we were able to move into the various budget proposals.  We reviewed each category, moved money from one area to another and made a commitment to the plan.  Which led us to last nights shopping trip.

We spent a few minutes creating the list and a rough idea of what we would spend.  We allotted ourselves $60 for last night’s shopping.  We completed the list and added a few things we had forgotten and the total came to $68.  Victory!

I know, you are thinking, but you exceeded your budget so how is this a victory?  The answer is, we typically would walk out with over $130 of food and goodies.  We were able to cut our typical shopping experience in half.  Besides, the $60 was a guess and a pretty accurate one if I say so myself.  This was, after all, our first shopping trip in a month’s worth of shopping.  I will let you know how well we did for July at our next “Budget Review Meeting” the first of August.

Budgeting is part of your planning.  If you want to grow your small business, then you need a goal which requires a plan to reach it.  Budgeting is your financial commitment to your plan.  so ask yourself where you want your small business to go and then plan how you are going to get there.

If you need help with budgeting and reviewing your past inflows and outflows, talk with your accounting professional and ask his help in understanding what is happening.  If you do not have an accounting professional or are looking for a new alternative, feel free to contact me to set up a free no obligation consultation.  I am here to help your small business meet your goals and dreams.

Have a great Thursday.

 

Owning versus Renting Continued

~ C.O.R.E. Beliefs ~ Leave a comment

Good morning and happy Monday!  I hope everyone had a great weekend.  Mine was filled with time in the gym, laundry and a walk around the Fort.  Plus lots of reading and the occasional show on Netflix.  A very nice weekend indeed.

For small business owners, there is one part of the own versus rent conversation that concerns them; and it has to do with their business property.  I share their concern.  On the one hand, it can be cheaper than leasing and you build equity, on the other, it potentially ties up a huge chunk of liquidity.  Lets dig into this a little bit.

On the use of the property, most business owners swear they use the property 24×7.  But do they really?  Even if your hours are 6am to 6pm M-S, that is only 72 hours a week out of a possible 168.  I know, the business parks the fleet there, has tools, etc. in the building that need to be protected 24×7.  It doesn’t really meet the 80% test, but it does fall squarely into the lease category.  If you still feel it best to consider buying the property, there are other things to be aware of.

The bigger concern is how to pay for the purchase of the property.  With a lease/rental situation, you may have to leave a deposit, perhaps first and last months rent plus $1,000.  For this conversation, lets say the rent is $5,000 per month so your initial out-of-pocket to move in is $10,000.  Coming up with $10,000 is not a real challenge for most small businesses looking for property.

To buy that same property though, you may need a lot more than $10,000.  Let’s say the building is worth $500,000.  If you are fortunate, you may be able to put a down-payment of 3% (assuming you qualify for some sort of SBA guaranteed loan).  Most typically, plan for a 10% down payment.  That is $50,000 of liquidity you must have available to buy the property.  It is also liquidity you can’t get back quickly or easily.

But you cannot forget the other costs of ownership.  Remember, you still have property taxes which say runs about 1.5% of the value of the property.  And don’t forget, now that you own the building, you are responsible for its upkeep and maintenance.

If you have talked to some professionals about this (which I very strongly encourage), you set the building up in an LLC and are now renting it to your business.  Your business rents from you  at $5,000 per month, which is what you were going to pay in rents to begin with.

I know that there are tax benefits from the ability to take depreciation, but your business doesn’t see that, you do.  Don’t get me wrong, you may have other forms of income where having rental losses can be very helpful.  But if you are a typical small business owner, you have your income from the business and that is pretty much it.

I also realize that there is the potential for the gain on the investment.  But the net gain after realtor fees, lawyers and taxes might not be as great as you imagined.

There is nothing wrong with owning your business property and renting it to your business.  Remember though, it can suck down your liquidity and possibly slow your business growth.  Really analyze your current and future cash position and ask yourself if tying up your cash in real estate is the right investment.  If you need help or want to understand the impact of owning versus renting commercial property, talk with your accounting professional and ask her advice.  If you are not working with an accounting professional or are interested in a second opinion, feel free to contact me and enjoy a free no obligation consultation.