Mine Your Own Business

Can't Buy Me Love?

Apparently the Beatles had it right all the way back in 1964.  (That's right, baby boomers, it's been forty-seven years since "Can't Buy Me Love" was released.)  "Money can't buy me love."

Mark Ramsey writes about radio programming and strategy on the Hear 2.0 blog.  The message is directed to radio stations, but the message applies to any of us in business. 

"Loyalty is earned.  It's not solicited."
"Loyalty is a two-way street.  To get it you have to give it."
"And giving loyalty means delivering what listeners (customers) want the way they want it."

This doesn't mean that loyalty programs, or frequent buyer clubs, or other promotions are wrong.  On the contrary, they're important and valid ways to build business.  But, in spite of the name, a loyalty program won't build loyalty.  Repeat business....yes.  Loyalty....no. 

I may come into your store to get my card punched, or to enter your contest.  That's not loyalty.  Loyalty  means that I won't go to your competitor's store to get a card punched or to enter a contest.  Big difference.

Analogies are usually flawed, but Ramsey uses a great one to make his point.  Your dog isn't loyal because you ask her to be or because you enter her into a contest where she has a slim chance of winning a doggie treat.  Dogs are loyal to you because they love you.

Can you say the same about your customers?

What Not to Do

Tim Ferriss has an interesting twist on something most of us do every day.  He calls it his Not-to-Do list:  9 habits to stop now.  According to Ferriss, "what you don't do determines what you can do."  By eliminating these nine time-wasting habits, you can increase the time that you have for doing the good stuff.

Here's the list:

1. Don't answer calls from unrecognized numbers.  Caller ID may be the greatest invention of the 21st Century.
2. Don't email first thing in the morning or the last thing at night.
3. Don't agree to meetings or calls with no clear agenda or end time.
4. Don't let people ramble.
5. Don't check email constantly.  Have set times to check it daily.
6. Don't over-communicate with low-profit, high-maintenance customers.
7. Don't focus on doing more--focus on doing what's important.
8. Don't carry a cell phone or "Crackberry" 24/7.
9. Don't expect work to fill a void that non-work relationships and activities should fill.  Take time to smell the roses.

Check out Tim's blog for more detail and have a great weekend!

Freebies

From the Bootstrapper blog, here's a listing of 100 free resources called the Poor Entrepreneur's Toolset.  The list includes productivity software, office software, accounting software, print and web design, marketing and sales, communication, instruction and management, customer service, and networking applications that you may find useful.

MYOB can't personally vouch form most of them, but we have used a few and they're quite good, especially for the price.  Keep in mind that there is no such thing as a free lunch, even on the Internet.  At the very least, most of these "freebies" will make you look at some ads.  Some may require free registration which may, or may not, get you on somebody's mailing list.  Personally, we don't have a problem with ad supported free tools, but you may.  If so, tread lightly.

BizPlan3--We're big believers in having a detailed business plan.  This software will help you do that.  It installs Word templates on your computer which cover all the details of writing a plan along with a how-to manual.  You do have to register to get the unlock code, but BizPlan says "you won't be added to any mailing list."

The "toolkit" includes several varieties of  office software.  Some, like OpenOffice and ThinkFree Office, are complete office suites.  Others, like Google Apps, are web based and not nearly as comprehensive.  On the other hand, Google Apps doesn't take up any hard drive space on your computer and is fine for simple word processing and spreadsheet use.

In the category of print and web design, Nvu is a decent web design software, especially considering the price ($0.00).  MYOB has used the Avery Labels and Cards Kit for years and it is a very handy tool. 

Microsoft Live Office Basics is Redmond's entry in the free web hosting and email arena.  You get free domain registration for any URL you choose, free email, 500  mb of web storage, and a pretty good web design tool.  The catch is that you're much married to Microsoft.   When you fill up the 500 mb of storage, you can buy more but if you decide you want to use another provider, switching your domain name can be a hassle.

One other link that you might want to check out is number 82.  I'll bet you didn't know that the Postal Service will send you free shipping cartons.  All you have to do is ask.  Any time you can get something "free"  from the government, I say say "go ahead."

If you find any of these links particularly helpful, or if you know of other freebies that you'd like to share, let us know.

Clueless Customers?

Bnet.com's Sales Machine asks the question, "Is your customer clueless?"  While the article is directed at business-to-business sales, the same principles apply to retail as well.

You know the drill.  For whatever reason, the customer is convinced she needs a particular item.  Either she's been influenced by advertising, or word-of-mouth, but she knows what she needs even though you, the professional, know better.

Let me illustrate with an example.  To stay industry-neutral, let's say you're running a bakery.  The customer is planning a hamburger cook-out.  She asks for three dozen hot dog buns.  Her good friend, who she considers a gourmet cook, has told her that hot dog buns are the best way to go.  Nothing you say can convince her otherwise.  What are your choices?

1.  Bite your tongue and sell her the hot dog buns.  You assume that if she's so bun-illiterate, chances are there will be other problems with the meal and no one will blame you when the patties hang out over the edge of the bun.   Meanwhile, you'll make your weekly bun quota.

2.  Continue to try to convince her that your recommendation will work out for the best.   If you're a strong enough sales person, you might eventually win the day.  Or you might just waste a lot of time.

3.  Pass on the sale.  To quote Bnet, "Why waste your time with customers who, even if they buy, are destined to fail?"  You'll sleep better knowing you didn't contribute to a party that's likely to be a disaster anyway.  Of course, you may lose the customer's future business as well.  Obviously this is a silly example, but surely you've been in similar situations.  Most of us have.

Of course, number 3 is the hardest choice.  We're sales people.   For us, turning down a sale is like a cat turning down a saucer of milk.  It just ain't natural! But, at the end of the day, we have to be able to look at ourselves in the mirror and see a person with integrity.  While we're called sales people, our job is really to be problem solvers.  If we haven't solved the problem, or heaven forbid, we've made it worse, we haven't done our jobs at all.

OK, Maybe Duct Tape Has Its Limitations

To follow up on yesterday's post where we said "If you can't solve the problem with WD-40 and/or a roll of duct tape, you need to call for outside help.", apparently it's not so good for armed robbery. 

Here's a great video of a guy who tried to hold up a liquor store wearing a mask made of duct tape.  Obviously this didn't turn out to be a good idea.  He was caught immediately, with his sticky mask still in place, but swears that the police have the wrong guy.  Good luck with that.

Be Prepared

Our MYOB mission statement says that "this blog is about you; your problems, your concerns, the things that keep you up at night and the things that make you get up in the morning."  Our main focus is on helping you work on your business.  But you can't do that if you can't get to work.

Today AOL offers some good suggestions on an emergency kit to keep in your car in case of a breakdown.  The advise is good and I'm heading over to the hardware store after work to buy three of each (one for Mrs. B, one for my daughter, and one for myself). 

Here are the seven items that AOL suggests, plus two of my own.

• Socket-style screwdriver with driver and multiple buts in various Phillips and standard-style sizes.
• A roll of duct tape/electrical tape.  (Really two things.  You should have both.)
• A pair of medium-size vise-grip pliers.
• Pen magnet.
• Pry bar.
• Mini-compressor.
• Emergency cell phone.

My additions, and I really can't believe that they aren't on AOL's list are:

A can of WD-40.  Forget the American Express Card, you should never leave home without a roll of duct tape and a can of WD-40.  If you can't solve the problem with WD-40 and/or a roll of duct tape, you need to call for outside help.

A flashlight.  I know, AOL suggests an air compressor with a built-in light, but a flashlight (with extra batteries) also belongs in your emergency kit.

You may never use any of this stuff, but the peace-of-mind of having it available is well worth the small cost. 

More on the Bottom Line

The other day we talked about the value of saving a dollar in expenses.  We pointed out that an additional dollar of sales only drives pennies to the bottom line where a dollar of expenses saved, drives a dollar to the bottom line.

Here's another way to make a big difference in what you take home (or reinvest) at the end of the day.  A single point increase in your average gross profit can increase your after tax profits by ten, fifteen, or even twenty percent!

How can that be?  How can one single point of gross profit translate into such a big increase in net profit?  The best way to explain is to give an example.  For the sake of simplicity (the concept, not the vacuum cleaners or the sewing machines), we'll use round numbers.

Let's say you now do $100,000 in sales at an average gross profit of 40% and your net, after tax profit is 8%.  Here's how that would look:

Sales	$100,000
Gross Profit (40%)	40,000
Expenses and Taxes	32,000
Net Profit	8,000

Now, let's increase gross profit just one point to 41%.  Here's how that looks with everything else being the same:

Sales	$100,000
Gross Profit (41%)	41,000
Expenses and Taxes	32,000
Net Profit	9,000

 

That's an increase of $1,000 or 12.5% in net, bottom line profit.  Put it another way, like expense reductions, an increase in gross profit, unless it's offset by an added expense, goes right to the bottom line. 

Are You Negative and Don't Know It?

Thanks to my lovely bride for pointing me to an article in the current "Sam's Club Source" magazine.  I know, we don't normally have much kind to say about the big box stores, but "Stop Starting with 'No', 'But', or 'However'" is quite interesting and we believe in giving credit where credit is due.

Michael Goldsmith, the author of the article, is an executive coach. He happens to have a new book out called "What Got You Here Won't Get You There".  (Which is available from Sam's, of course.)

He tells the story of an executive he coached a few years ago.   The executive had a reputation for being inflexible though he didn't think the reputation was deserved.   Goldsmith told him that each time he started a sentence with either  "no",  "but", or  "however"  he would owe  Goldsmith $20.00.  Within  one hour he was out $420.00. 

Taking Goldsmith's advise, the executive went on to bigger and better things and gives Goldsmith credit for the change in his personality. 

He writes, "When I later asked him which of my coaching suggestions helped him the most, he smiled and replied, 'Before you speak-stop, take a breath, and ask yourself: 'Is it worth it?'"

"One inexpensive, surefire way to monitor our competitive makeup is to have our co-workers, friends, and family members pay attention to the number of times we begin sentences with 'no,' 'but', or 'however.'  Most of my clients are shocked to realize how often they begin sentences with these words-without even hearing themselves-and how easy it can be to inadvertently discourage others from sharing their ideas."

The Bottom Line

Sometimes we make things more complicated than they need to be.  After all, business is really just a series of simple things.  Profitable business is a series of simple things done well, every single day.  I was reminded the other day of one of those simple things that we may forget.

One dollar of expenses saved equals one dollar of bottom-line profit.  One dollar of sales equals a much smaller amount of profit.

Let's do the math.  Take your net profit for the year.  Divide it by your gross sales.  Most likely you'll get a single-digit figure.  If you're really good, you might hit ten or eleven percent.  If we take the high figure that means that for every dollar you sell, you end up with ten or eleven cents profit.

On the other hand, if you find a way to save a dollar on expenses, that dollar is all yours.  That is, as long as you don't cut something that causes you to lose sales.  For instance, advertising should always be considered an investment rather than an expense.  But, if you can cut energy costs, or cleaning costs, or if you can negotiate a better lease for your store, those dollars saved go right to the bottom line.

"A penny saved is a penny earned" isn't just something that our mothers told us when we were kids, it should be a mantra for every successful business.

Truth in Advertising

There aren't a lot of lodging choices in Cassville, MO (pop. 35,599) but The Cassville Motor Inn doesn't mince words in explaining their business model to potential customers.

Sometimes it's best to just get right to the point.