Posts Tagged ‘Small Business Owner’
What Are Budgets and Forecasts?
They are predictions of future income and expenses and cash flow. They also predict future performance with financial forecasts and projections and with financial models.
Why Budget and Forecast?
Budgets and forecasts provide a feasibility analysis. They can help develop a business model, review your key assumptions, and identify resource and capital needs. Budgets and forecasts can be used to find funding. They demonstrate the potential of your business to investors and lenders. Budgets and forecasts can also be used as a management tool. They can help you establish milestones and require accountability for accomplishing the milestones. They can help identify risks and show benchmarks. This will help the small business owner make the necessary adjustments to avoid the risks, to reach the milestones, and to measure up to benchmarks.
Why Are Forecast Important?
A forecast can establish measurements to guide management, to facilitate planning, and to facilitate goal-setting.
What Areas Do You Need to Forecast?
It is critical that you forecast your start-up costs so that you know how much it will cost to open your doors. You need to prepare estimated start-up financial statements and estimated short and long-term revenue forecasts. As part of your forecasts, you will review key concepts and issues that will make a difference in your company’s survival. You also need to forecast the resources you will need and set up a schedule for using and replenishing your resources.
Do Investors Want to See Forecasts?
Yes, your forecasts will show investors that you know your business, that you are likely to succeed, and that you will make wise use of their money. You must have at least a five-year forecast that shows significant profit by year five, significant net income by year two, and that investors will earn approximately 10% return on their investment.
Do Lenders Want to See Forecasts?
Yes, your forecasts will show lenders that you know your business and the you will be able to repay the loan. Be sure you forecast for the entire period of the loan and use conservative financial ratios, because the lenders will. Also, you will need to collateralize and personally guarantee the loan.
The investors and lenders will want to see forecasts of your profit and loss and revenue. They will also want to see what drives income in your industry; for example, sales, distribution, advertising, internet search engines, referrals, location, price, or coupons or other discounts. You also must forecast the revenue cycle for your target customer. How much time will you need to start production, and how quickly will your product or service be accepted in the market?
What Other Forecasts Are Needed?
Another important forecast is the total personnel required to support your desired revenue. If your revenues result from sales, you should start with the desired revenue in year 5. From year 5 subtract 40% from each prior year. On the basis of your research, estimate the number of sales each sales person will make each year. From that you can calculate number of salespeople required.
After you make your forecasts, you should complete a sensitivity analysis by adjusting each major item estimated by 10% plus or minus. Examine the impact on revenues, profit, and cash needs. Remember that most operating expenses are roughly proportional to personnel headcount. These are your variable expenses such as salaries, benefits, employment taxes, furniture, computers, rent, supplies, utilities, training, travel, meals, training, and dues. Other non-variable expenses may or may not be proportional such as professional services, subcontractors, advertising, and trade shows.
Use your forecasts to compare yourself to others in your industry by such things as revenue per employee, revenue per salesperson, gross margin, expense categories as a percentage of revenues, financial ratios, and inventory control. It is critical that you know your industry’s benchmarks and metrics and that your business forecasts are within these benchmarks and metrics. You can find this information by researching your industry.
Should You Hire a Business Consultant to Prepare Your Forecasts and Research Your Industry?
Yes! Unless you have a very strong finance and accounting background, you cannot create financials that will be acceptable to investors and lenders. You cannot do an acceptable business plan with a spreadsheet, and it will be difficult for your to be objective in developing your business model. Also, you are the entrepreneur and your efforts are better spent building and developing your business which is what you do best.
Jo Ann Joy, CEO, Indigo Business Solutions
JoAnnJoy@IndigoBusinessSolutions.net, Phone: (602) 663-7007
The future of your business starts here.
For more information about these and other important topics and for legal consultation, please visit our website at http://IndigoBusinessSolutions.net Copyright 2006. Indigo Business Solutions is a registered trade name.
Small business owners often come to us looking for help using Twitter as a way to find new leads and build relationships with existing clients. The question is often a skeptical “So, what can Twitter do for me?”
Well here are 6 succinct ways a small business owner can use Twitter to build and market their business. Just like last time, hit print.
1. Build Credibility
Twitter is a great forum to answer common customer questions, share insight or opinions and pass on interesting links. To build your credibility on Twitter, tweet links showing your company featured on other Web sites or mainstream media and share high quality content that is relevant to your customers’ needs. Also, tweet often to keep your brand in your customers’ minds.
You can also tweet links to Slideshare presentations or videos of speaking engagements, promote upcoming occasions, mention awards you’ve won or accreditation you’ve earned and livetweet events.
Be the one to break the news in your industry. That positions you as the leader, expert and go to profile on Twitter.
2. Market Your Business
Twitter is a great site to talk about your company culture and values. You can put a human face to your company and broadcast your values. You can also offer discounts, coupons or special offers to customers using Twitter or announce the events you will be having.
Businesses have used Twitter to hold contests, highlight employees and share with the world when they do something cool. Some businesses share interesting reviews people have left about their site, particularly when the news inspires, motivates or entertains readers. Others have used Twitter to apologize for flubs and neutralize the impact. Let people know who you are, what you’re doing and why you do what you do.
Twitter is also a great forum to get blog subscribers, direct traffic to your site, find or offer referrals and connect with other vendors.
3. Listen
Twitter can be used to track conversations about your brand for online reputation management, monitor important keywords and facilitate subscriptions to RSS feeds. The social site gives you a great way to listen in on conversations about your industry, do free market research to see what people do or don’t want and learn about what’s working or not working for your competitors.
With Twitter you can track conversation patterns in your industry to determine when people are most active online, identify trends or hot topics and find ways to connect what you do with what your customers need, quickly. The real time aspect enables you to ask people for their opinions and listen.
Twitter also enables you to connect more personally with contacts from other social networks. Instead of cold calling or broadcasting your message you can use the relationship aspect of Twitter to get committed clients and build trust for better leads. Twitter allows you to connect with your customer base and activate your advocates, hence harness the power of free word of mouth marketing.
4. Grow Your Online Network
Twellow, Listorious and We Follow make it easy for people to find you and enable you to find people with common interests on Twitter. You can also find guest bloggers for your blog and guest blogging opportunities yourself. In addition, Twitter enables you to meet influencers in your industry.
With Twitter search you can find relevant conversations to jump into, mend fences with angry tweeters and offer help where feasible.
Services like bit.ly allow you to see how people are interacting with your content while events like Follow Friday enable you to meet new people. You can also connect your Twitter account to LinkedIn, your Facebook Page and your Web site to make your message more viral.
5. Grow Your Offline Network
Using the Advanced Search you can track down local conversations and find new customers. With Twitter Search you can track when potential customers mention you competitors so you can reach out to them.
Tweets about new products, special offers or an exciting launch will get customers through the door. Send out tweets to encourage community members to make purchases in store.
Twitter is also a great forum to find employees, connect with new clients or ask loyal customers to leave testimonials on your site.
6. Have Fun
Twitter is engaging because it is entertaining. Don’t be all about business. Share content that makes you laugh and stories that inspire or motivate you. Use the site to learn new things, regardless of whether they are related to your industry and make friendships, not just professional relationships. Create in jokes with community members and find new blog topic ideas. This hot bed of activity is free and can be creative space. Get out of your marketing shell and be yourself.
Some people who work from home use Twitter as an office water cooler. Others have made it into a co-working space. Either way you use it, make sure you are having fun. All work, no play definitely makes Jack or Jane very dull and that will hurt you on Twitter.
Customer complaints are never easy for small businesses. Many small businesses are run from a staff of five or less, which means a lot of heart, soul, and pure sweat goes into every order or service. So how can small businesses handle customer complaints without taking them personally?
The first step towards dealing with customer complaints is to acknowledge how the complaints make you feel. Once those feelings are acknowledged, it will be easier to look at the customer complaints from an objective standpoint. After all, customer complaints immediately put you, the small business owner, on the defense which makes it difficult to be objective. Customer complaints can also make you feel as though you have failed in some way. And finally, customer complaints can leave you feeling quite frustrated.
Since customer satisfaction is key to building customer loyalty and repeat sales, it’s important for you to make sure your customers not only feel, but believe, that their complaints are being taken seriously. When they feel as though you respect them, regardless of how petty their complaints may or may not be, they’re more apt to return to do business with you again and to praise your company instead of dragging it through the mud.
With that in mind, here are a few tips to help every small business owner handle customer complaints in a productive and non-offending way.
For online businesses:
You’ve just opened your business email and you’re confronted with a customer complaint, how do you handle it?
1. Let the initial shock take place as you read the email.
2. Once you’ve read the email, take a deep breathe and tell yourself, “Okay, there’s a problem here that needs to be addressed, but first I am going to step away from the computer for ten minutes and let the problem sink in. Then I’ll come back and look at it from an objective point of view.”
3. Walk away from the computer for at least ten minutes.
4. Go back to the email and re-read it again. Then ask yourself, “What exactly is the problem? How can it be handled? What would satisfy the customer without hurting my pocket-book or the company’s reputation?”
5. Write your thoughts down in a word document, check for grammar and spelling and then let it sit there for a few minutes while you read and answer a few more emails.
6. After you’ve give your response a cooling off period go back to the email and ask yourself, “How does it sound? Am I short-tempered with my words or was I apologetic? Did I offer a reasonable solution to the problem?” If you’re not sure, ask a business associate or friend to read it over for you.
7. Once you feel the email is ready to be sent, send it out.
8. Give the customer one day or two to read over your email and respond. If your customer has not replied, give him a call. Let your customer know that his (or her) satisfaction is very important to you.
For storefront businesses:
1. When a customer comes in with a complaint, always keep eye contact and nod from time to time-as if to say, “I hear you.” It’s important that your customer knows you are actually listening to his concerns.
2. Once the customer finishes telling you about his problem, apologize-even if you did nothing wrong. Apologizing for the inconvenience the customer feels lets your customer know you care and want to make him happy.
3. Resolve the problem as soon as possible.
o Can you handle the situation on the spot?
o Can you offer a refund?
o Can you offer a replacement item?
o Can you offer a partial refund (or store credit) if the item cannot be returned?
4. No immediate resolution in sight? Ask for the customer’s home and work phone number, first and last name, and best time to contact him. Let the customer know you will investigate the problem and get back to him within 24 hours. If you need more time, call the customer within that first 24 hours to let him know what you’re doing to resolve the situation.
Finally, notice patterns in customer complaints. If you constantly receive the same complaint from several of your customers, it’s time to re-evaluate the way you do things. By listening to repeat customer complaints, you can solve a problem that is ultimately costing you hundreds of dollars in sales thus increasing your business profits and ending repeat complaints for the same problem!
In the end it’s your customers who can make or break your business so treat them well. And remember, the time, effort, and cost put into serving repeat customers is minimal in comparison to the cost of finding new customers so take the time to listen to their complaints and then offer reasonable solutions for both parties.