What I learned this summer

This summer, I spent a great deal of time contemplating my own business and how to make it more successful. I was fortunate that I had the time to actually do this. This got me thinking, I wonder how many other business owners actually take the time when things slow down to work ON their business. As an entrepreneur, I understand that it is very easy to work in my business year round, however, all business owners need to set some time aside to really take a holistic view of their business and see if they are still meeting their goals and objectives.

Every entrepreneur needs to take time to see the proverbial forest from the trees. Taking a strategic look at your business can be a very daunting task, but a necessary one for the long term profitability of your company. Here are a few steps that entrepreneurs can take:

Step one: Create an organization chart for your company as it exists. Is this what you had envisioned when you started the business? Next create an organization chart of how the business should function. Ignore for the time being the people in each role. Once you have the ideal org chart now plot in your people according to their strengths and weaknesses. If you have any people or square left over, you will need to make some decisions on whether current staff can be retrained to fill the empty squares or do you need to bring in outside expertise.

Step two: Create a flow chart of your sales process. Another words, create a chart following the money that comes in and out of your company. Once you have drawn all the steps in your flow chart, take a close look at how you can improve the overall efficiency of your company. Can you merge or eliminate some of the steps? Are you missing any critical steps?

More more ideas or help email me: dr.harj@gmail.com

Fire that customer

We have been told for a long time that customers should be treated like a king. I totally agree with this statement, except when the customer treats you and your employees badly. Some customer demand services and discounts that actually make it unprofitable to service them. Yet most business gladly serve these customers mistakenly thinking they are some how adding value to their business.

Everybody has heard the 80/20 rule: that is 80% of your sales and profits come from 20% of your customers. What would happen to your business if you stop servicing the other 80% of the business that only generates 20% of the profit?

As business we have to step back and take a really hard look at who are customers are and how much real value they create for us. The value they create isn't always measured in profit dollars. Some customers may create value by helping to build your resume so you can attract other more profitable clients. Others may add value by buying large volume of products or services that allow you to gain economies of scale for a the rest of your business. It is critical to fully understand the full value that each of your clients brings to your business. Once you have, then you are ready to trim your customer rolls and keep only the valuable customers.

Once you are certain you understand the value of each client, now you need to take a look at the clients that are creating negative value and fire them. How do you fire a customer? One easy way is to assess the cost of servicing that client and then charging them enough to cover your costs and leave you a profit. Another is to prioritize your best clients so they get the service they need.

For more strategies on learning the value of your clients and firing unprofitable clients contact me: dr.harj@gmail.com

First Tip of the day

One fundamental mistake that most business people make is that they are working in their business and not working on their business. By this I mean that entrepreneurs are so busy running the business they don't step back often enough and take a strategic view of where there business is going, who they customers should be, and who their customers have really become.

Most businesses are spending a great deal of time servicing clients that either don't make them any money or don't make their employees who are servicing the clients happy. I will talk about firing bad customers next. Stay tuned...