How To Know When You Should Fire A Client

Not all clients are created equally. So how do you know when you should fire a client or hold on to them for dear life? I hate to be the bearer of bad news, but have you looked at your numbers lately?

Your numbers tell you more than if you are failing or succeeding; numbers tell the story of your business. Behind every business decision made should be the numbers telling you why. If you don’t know your cost per acquisition, how do you know the lifetime value of a customer? If you don’t know the lifetime value of a customer, how do you properly make marketing, sales, product development, and customer support decisions? These are the numbers that will dictate your company’s future.

Knowing these two simple numbers will help you make better and smarter decisions about your company. Understanding the value of a customer will help you to know how much you should spend on marketing to acquire a customer; how much you should spend to serve and keep a customer; which customers you should focus on; and how to offer tailored services to your customers.

Cost Per Acquisition (CPA)
Cost per acquisition isn’t the most “friendly” word, but all it is saying is how much you are currently spending on making someone your customer. Your CPA is the most brutally honest metric for return on investment. Clicks and views are great, but ROI is where the money is at. And we all want to be where the money is.

To calculate this you would take the total cost of sales, marketing, salaries, and any other headcount related experiences within a chosen period (for ease, let’s use quarter one) then divide it by how many new customers you received during that same period.

Total cost of sales, marketing, salaries, etc. in Q1/Number of customers that you acquire in Q1

People always ask, “How much should I spend to get a new client?” Well, it depends. What is the average revenue from each client? Or in other words, what is the lifetime value of that client?

Lifetime Value of a Customer (LTV)
Lifetime value of a customer is essentially predicting the future with your client. It is the prediction of total net profit throughout your relationship with the customer. If their net profit is lower than their cost per acquisition, then it is not a client you should work with. If their net profit is more than their cost per acquisition, then they are a client you want to hurry and get signed. To calculate LTV, subtract the amount you spent serving them (include acquisition, installation, and support, etc.) by their total revenue. And if you want to use an even simpler way, use this easy estimate calculator.

Revenue from Customer A – Money Spent on Customer A

Maybe it is a client that just keeps on taking or maybe it is an irreplaceable employee. Either way, if you know your numbers, you will know the right decision to make.

The Two Most Important Words In Business

The two most important words in business could well be the two most important words in life. This time of year is the one time when it is normal to set aside the money talk and really focus on why we got into this business in the first place: the people. But how can we create a consistent, year-round gratitude in business?

William Ward wrote, “Gratitude can transform common days into thanksgivings, turn routine jobs into joy, and change ordinary opportunities into blessings.” We can literally make every day a day of thanksgiving. Of all of the gratitude that is needed in business, the most vital is appreciation for employees. Genuine appreciation, especially from employers, inspires employees to be more engaged and efficient.

So what does it take to build an environment of appreciation? Raises and trophies are great, but if you plan to tie someone’s personal value to the dollar amount on the check, you are going to go out of business real fast (that is if you have good employees). What it comes down to is saying thank you.

According to a study by Tim Askew, saying thank you is an emotional act. It acknowledges their effort, kindness, intent, action, and them as an overall person. It sets the tone for discussion…a winning tone. Two simple but important words… “thank you” is contagious and will begin to grow around the office.

Why should we care about this? Because isn’t our goal world peace? And it starts household by household and business by business.

 

‘Tis the season. #amiright

4 Of The Most Important Things To Keep In Mind When Starting A Marketing Campaign

It’s not as hard as you might think to start a marketing campaign. But… when starting a marketing campaign, you’ve got to keep these 4 important things in the front of your mind.

Marketing is everywhere. You pick up your Apple iPhone to turn your alarm off. You use your Colgate toothbrush to brush your teeth. You put on your North Face jacket, drink your Starbucks coffee, get in your beat-up Buick, and drive past an average of 23 billboards before you get to the office. And that’s just your first hour.

First of all, congratulations on being one of the few that realizes the great effect marketing can have on a business. Second of all, what the heck do you do from here?! It’s not like you have the budget of Coca-Cola…

1. Just Get Started

“The secret of getting ahead is getting started.” Mark Twain

You don’t have to unite two countries in order to have good marketing. Starting a marketing campaign has everything to do with well… starting a marketing campaign. It all begins with getting started. Too many people talk about getting started, but never do. Start with the best practices and go from there. Have you set up all of your social media accounts? Have you began creating content? Are you engaging with your audience? Do you know who your audience is? It can seem intimidating at first, but consistently put yourself out there and you will see results. Need some help getting started? Check out Woodrow Studio’s blog on Facebook business tips.

2. Tell Good Stories

“Marketing is no longer about the stuff you make, but about the stories you tell.” Seth Godin

Your product may be great, but do you have an engaging story to tell? That may sound absurd, but have you ever thought, “Wow, I could definitely use something to raise my feet while I use the bathroom.” Chances are, no. Because you are a normal human. However, Squatty Potty told a story that made people realize that they do need their product. If nothing but to laugh about it.

3. Don’t Quit Too Early

“Stopping advertising to save money is like stopping your watch to save time.” Henry Ford

When times are tough the first thing to go is physical education, music, and of course, marketing. There will always be a reason to cut back on marketing spend, but you should really be fighting for a larger budget. As a general rule of thumb, companies should spend around 5 percent of their total revenue on marketing to maintain their current position. That’s right, you have to spend 5% just to stay where you are at! Companies looking to grow or gain greater market share should budget a higher percentage.

4. Always Measure Results

“Marketing without data is like driving with your eyes closed.” – Dan Zarrella

You need data. It is as simple as that. If you run a promotion company specializing in shirts, pens, and chapstick, it is important to know the profit of each one. Knowing the profitability of each product helps you know which products to focus your marketing efforts on. To figure out the profitability of a product you would subtract the cost of goods sold from the price the item is being sold for.

Product Profitability = Price of Product X – Cost of Product X
Marketing can be scarier than when you started your company, but you’ve made it this far…

Does A Business Plan Even Matter Anymore?

Some companies have a 100 page business plan while others have a simple few sentences. What is the right business plan for you? And do you even need one at all? Really… do you need to go through the trouble and does a business plan even matter anymore?

Yes. The answer is yes! A business plan is intended to define what your business is/wants to be. When it comes to knowing who you are, even a few sentences are better than none. Business plans should have three sections: business concept, marketplace, and financials.

Business Concept

Knowing your purpose and direction allows you to understand what you need to do to get there. Clarify what it is that your business does, what you sell, and who you sell it to. Once you know where you are at, always update your plan with where you are going. Update it with what you want to see in the future.

Marketplace

Your business plan will show the organizational structure of your company. It acts like a management tool to ensure that your company is on course. Business plans aren’t just for you though. In fact, they can be a great sales tool to bring in better partners, secure clients, attract investors, etc. This is your chance to show people the potential of your business without having the giant office space to schmooze them in.

Financials

First things first, know your numbers. Too many entrepreneurs are unsure of what their true numbers are. *Startegy can help soothe this problem btw* So do yourself a favor and know your metrics. And according to the Small Business Administration, ‘The development of a comprehensive business plan shows whether or not a business has the potential to make a profit.’ Having statistics and facts in writing has a greater chance of attracting investors.

Things are always changing, but that doesn’t mean you can’t have a good plan in place. Companies are constantly facing the challenges of new regulations, increased competition, advanced technology, and company growth. It is how you deal with those events that will set you apart. So have a good strategist, learn to adapt, keep a good savings on hand, and always update your business plan.

How To Cut Costs When Money Gets Tight

No one ever said that running a business would be easy. In fact, I would imagine that you’ve had the majority of your gray hairs come in since establishing your company. One of the most pressing questions comes when you are considering how to cut costs when money gets tight.

One of the most humbling moments is when you look at your team (however small or large they are) and realize that they all depend on you for their food, housing, and overall financial support. You can feel the gray hair forming. Then you realize that it goes both ways; you rely on them to keep your business alive.

So when things become tight, how do you make those tough decisions regarding the people you rely on? Well, in Michael Janda’s book, Burn Your Portfolio, he discusses his time as a small business owner and how an employer should be examining their employees.

Cost
How much does your employee cost? Is it less than how much money their efforts bring in? The more profitable an employee is to the business, the longer they will be retained through all but the most grievous circumstances.

Redundancies
Let’s say your company has three members of the marketing team and one IT member. Even if the IT member is involved in a project gone wrong, a member of the marketing team has a higher chance of being eliminated when the finances require it. Redundancies will be the first to go.

Attitude and Fit
When the 2009 recession hit, Janda said had to make some tough decisions. “We had plenty of redundancies, and cost versus contribution was pretty much equal across many of our team members. That left us to judge each employee’s attitude and cultural fit within our organization.” When all the cards are on the table, you will need to see who fits best with your company and will keep morale and business going.

No one wants to be a part of these hard decisions, but you Mr/Ms Entrepreneur, this is what you have signed up for. Few people want to think about how to cut costs. It is these hard decisions that keep you on track to reaching your business goals and keeping your team working together.

How To Figure Out If You’re Profitable Or Not

Your first goal as a new business may be to change the world, but let’s be real, you have to turn a profit in order for your business to survive. At the core of it, profit will always be sales minus costs. But could it be more than that? How do you truly figure out if you’re profitable or not?

Profit = Sales – Costs. Right?

Profitability is the truth of business. It is the answer to “How much money did we make this month” or “how many more employees can we employ?” There is more to profitability though. Just because your overall business may be profitable, doesn’t mean you aren’t losing money somewhere.

Employee Profitability
If an accounting firm bills hourly (and we all know they do) based on the performance of its employees, that would be profitability by employee. It is also a great incentive for the business owner to know the exact profitability of their staff. When the owner reviews the monthly profit, they would simply calculate the revenue that was brought in based on each employee, then subtract the cost of each employee (salary, bonuses, workers compensation, taxes, etc.). This will tell the owner which employees truly are most profitable.

Employee Profitability = Employee X Revenue – Cost of Employee X

Product Profitability
If you are a grocery store manager, it is important to know the profit of each product. Knowing the profitability of an apple and an orange helps you know which one to focus your marketing efforts on, raise prices, focus labor on, etc. To figure out the profitability of a product you would subtract the cost of goods sold from the price the item is being sold for.

Product Profitability = Price of Product X – Cost of Product X

Client Profitability
Sales don’t always happen by a particular person or from a particular product. If you are a service based company, then you would need to calculate profitability a bit differently. Service based companies can figure out profitability by client. Let’s say you own a digital design agency. You have several clients in different industries such as automotive, technology, and IT software. You’ve noticed a slight decline in your company’s profit and want to know where it is coming from, or better yet, which client is causing it. You first collect all of their paid invoices and calculate the revenue from them in the past year. You then subtract from that all of the costs directly associated with that client (labor, travel, shipping, etc.). It seems crazy, but some clients actually cause a business to lose money. Doing this simple calculation will help you know which clients you should keep, get rid of, increase rates, etc.

Client Profitability = Revenue from Client X – Costs of Client X

Your business can look profitable, but always take a deeper look to see if you are completely profitable in all areas. Your numbers may be positive, but never underestimate the power of employee, product, and client profitability.

Surviving Life As An Entrepreneur

So how do you survive the life as an entrepreneur?A day in the life of an entrepreneur isn’t always consistent…and it is never easy. Some days are sales calls and marketing meetings; some are filled with development, IT changes, and financial forecasting; and some are filled with angry investors. Needless to say, an entrepreneur wears all of the hats necessary to improve the business…and the weight adds up. The long hours, the longer nights, and the never-ending deadlines. Where do you breathe?!

Well, Entrepreneur described it best…

No one said that it would be easy. In fact, you were warned by everyone you met, but you know that it will be worth it and that you’d kick yourself later on if you didn’t just try. That’s the first step of survival: recognize what you are doing. You are living your dream and trying to change the world. It is those difficult days that allow you to call yourself an entrepreneur. More than anything else, what makes an entrepreneur is the things they do every single day.

This road you have chosen has built in roller coasters, but sit down and remember:

  1. It is normal to have highs and lows
  2. It will not always be like this
  3. There will be tricky times in the long and short-term
  4. Discuss your roller coasters with others, and most importantly…
  5. “Overnight success” is a myth

You’ve made it this far, and you can make it a little further.

How To Stay Motivated When You’re Starting A Business

When you are working for a company, it is easy to get into a daily routine; coffee, commute, work, commute, sleep. But what happens when you start your own company? Sleep in, go to the home office, hear screaming kids, give up, repeat. It wasn’t always like that though, so how do you regain your motivation? Many of us ask ourselves how to stay motivated when you’re starting and running a business.

Set A New Routine
First step is always getting started. Get started by creating a daily, weekly, and monthly routine for yourself. Creating a morning routine can help you focus your mind, alert your body, and build better habits. Make sure to include looking at your schedule and day planner as part of your routine. Setting aside personal time during your day (whether it is meditating, exercising, or simply hearing yourself think) can be a lifesaver. When you take a moment to slow down, you will find that it is much easier to stay focused.

Plan It Out
Your business has a plan (I hope!) so you should too! Have you ever stopped to think what your personal mission statement is? Knowing what you stand for can help re-motivate you in what you already are passionate about. Writing down these statements and goals will help you achieve it and see your progression as you set new goals. As you plan out your days and weeks, consider using time management apps. These help you realize where your time actually goes…even the embarrassing Facebook time.

Tag Team
You don’t always have to go it alone. Trusting someone with your goals can be intimidating, but it can be just the right push that you need. Having someone on your side will help encourage, support, and challenge you to fulfill your goals. On the other hand, if everything goes downhill, you will have a shoulder to cry on. We all need a good support system.

Dream A Little
Sit back and ask yourself, “What does my perfect day look like?” If you can’t answer that, then what are you aiming for? Just like Alice in Wonderland, “If you don’t know where you’re going, any road will take you there.” Pursue the life that you want and take the road that will get you there.

Treat Yourself
You’ve been working hard and don’t let anyone else tell you differently. Find motivation through things that have already inspired you. Watch an old favorite movie, listen to a well-composed song, or even relive your past successes. Taking these trips down memory lane can revitalize your passion.

Follow these quick tips and you will find your motivation along the way. The you can help other figure out how to stay motivated. What else have you done to regain your motivation in business?

3 Ways To Keep Your Customers Happy

We all want more customers and repeat business, right? Of course you do! The real question is: how do we get it? The name of the game revolves around your ability to keep your customers happy.

Jeff Hirsch, in A Data-Driven Approach to Customer Retention, recognizes that “hypercompetition has eroded traditional product and service advantages, making customer experience the new competitive battlefield.”

This is the daily struggle of winning the customer’s experience. And the struggle is real. So how do you win them over? How do you keep your customers happy and faithfully by your side? Here are some of the wonderful things we learned from Mr. Hirsch,

1.Technology is your friend–use it.

Data management platforms (DMP) can help harness and analyze customer and third-party data more effectively and efficiently. And we love efficency. Did you know that Startegy is ideal for that? Startegy analyzes your numbers, your brother’s numbers, your dog’s numbers, and let’s you know if it is a good move or not. Whether that is hiring a new employee, acquiring a local company, or beginning a startup, Startegy software is the technology you need to put you ahead of the competition.

 

2. Personalize and prioritize the customer experience.

Don’t aim for people like your consumer, aim directly for your consumer! Make sure to always be developing consistent customer journeys across all of your digital platforms. That customer journey will keep customers engaged and demonstrates your commitment to their satisfaction.

 

3. Consumers can go elsewhere in the blink of an eye.

Some consumers are swayed with the thought of a printable coupon, while others would never dare stray from their lifelong brand. Well, what’s the difference? It is like purchasing a gallon of ice cream at the store versus visiting the local creamery where they hand you your personalized, chocolate bursting, frozen dairy creation. It is all about the experience. That’s why it’s important to build your brand and focus on the experience versus fighting to be the lowest dollar. Remember, coupons expire, but an experience lasts a lifetime.

When you are willing to take the time to read the data, understand the customers, and make the necessary adjustments, you’ll be able to make better decisions with your time and money. How has data helped you create lasting customer relationships?

An Entrepreneur’s List Of 22 Critical Tools for Startups

We’ve done hours of research in order to provide a comprehensive list of 22 important tools for startups. Check out these five tools to help jumpstart your startup. You can thank us later.

Creating Your Website
Pictures or it didn’t happen and website or it isn’t real. There are several ways to prepare and set up your own website domain. You could learn HTML, CSS, Java, C++, Elvish, and all things difficult to understand. Why would you do that to yourself when we live in the age of simplicity? We have online, open source website creation tools at our fingertips. Here are a few of the simplest and most powerful blogging and website content management systems (CMS):

Project Management Systems
You and your teammates aren’t always in the same space, let alone the same time zone. Using a project management system helps you reach your company goals without having to constantly coordinate. Small businesses are in luck when it comes to project management platforms because there are millions out there ready to help your company. Check out some of the following:

Legal Help
It takes more than a good idea to launch a product or service. In order to form your business, name your business, get your business license and permits, etc. you’ll need to get in touch with an attorney. It doesn’t have to be as scary as that sounds though. In fact, there are companies built around making the law less intimidating (but still intimidating enough for you not to do it completely yourself). Check out a few of these companies that specialize in simplifying the law process for you:

Accounting Software
Not sure if you’ve heard, but apparently numbers are important. Weird. The only problem is that not everyone is, or can afford, a Certified Public Accountant (CPA). There are several companies out there that help you get your numbers in order and walk you through the process of your company’s accounting issues. Most cloud based accounting software programs will help you create estimates and quotes, send invoices to clients, accept credit cards on invoices, manage and pay bills, and even complete payroll functions. A few of these software programs include:

Business Forecasting Assistance
Using business forecasting analytics will help you figure out if your business will be profitable or not. But what happens if the analytics show that your idea is not profitable? Do you just throw it all away? No! You worked too hard. A good business forecasting software will tell you what aspects of your business need to change in order to become profitable. Check out the business forecasting software programs below. You may be wondering why there is only one, but just keep in mind that we only post the best.