Every business has customers, and while they all are important, most entrepreneurs will agree that some customers value your business more than others. This may be due to the amount of revenue they bring in, their ability to refer new customers to you, the interesting challenges of the business, or another factor. It makes sense to identify these people so you can spend more time with them or at least acknowledge them in some way.

How do you find out which customers have generated the most revenue with you? If you store data in your accounting system, you can run a report to generate the data you need.  In QuickBooks, the report is called the Income by Customer Summary Report.  In Xero, it’s called Income by Contact. If you do not store data in your accounting system, you may be able to generate a report from your billing system, shopping cart, or point-of-sale system.

The reports look like this: each row holds the customer name and the Income column holds total revenue. If your system allows you to sort the revenue field, do this in descending order. If not, you can export the data to Excel and then sort it.

Once you’ve sorted the data, the answer is right in front of you.  Your top customers based on revenue will show in order. These are the people you may want to consider spending more time with. Schedule periodic lunches with them, give them a call on a regular basis, and send them a gift or handwritten thank you note once in a while.  The report helps you organize your connection points so you don’t miss an opportunity to reach out to an important customer.

Run this report on a regular basis so that you’re focused on nurturing the most important relationships in your business. You can also look at trends to see if you’re losing revenue over time or gaining revenue with new customers. You can reach out to customers who are spending less with you to try to save the relationship before it’s too late.  And you can get to know new customers who are growing with you so that you can acquire even more business.

Make this report a regular activity in your business to stay close to what your customers are doing with you.

Having repeat customers is essential to many businesses, and the key to keep customers coming back is to provide them with great service. Here are five ideas to rate your business’s savvy when it comes to serving customers well.

1. Make a great first impression.

When customers make a purchase from you, make them feel great about it by sending them a series of welcoming and onboarding emails. Congratulate them on the purchase, let them know how to get the most out of their new purchase, and encourage them to connect with you on social media and your mailing list. Thank them for their business.

1. Measure response time.

How fast do you answer prospect and customer questions? Social media has changed the game. Customers who reach out via social media platforms, their phones, chat, or messaging apps expect an immediate answer.  Facebook even gives a badge to businesses who respond quickly and consistently.

Not only do businesses need to monitor messages coming in from a record number of places – email, phone, web forms, chat, social media, and more – they need to respond faster than ever.

Without measuring your response time, it’s hard to know how you’re doing, so putting measures in place is the first step to improving this customer service metric.

1. Publish clear policies.

Good service starts with setting clear expectations. Before a customer buys from you, they should be able to know what your return policy is in case something goes wrong. Some of the policies that should clearly be published online as well as at all customer-facing business locations include:

• Returns policy: If the product or service is not as expected, can the customer obtain a refund? Is there a re-stocking fee?  What about shipping?  Cash back vs. store credit?
• Shipping policy: Most people expect free shipping these days. They will want to know what it costs and how long will it take to get the item.
• Terms of service: Are there any limitations to the product? Or legal items that need to be communicated?
• Privacy policy: All customers will be giving you private data. They will want to know if it’s secure, if you share it with anyone, and if you are compliant with laws like GDPR (Europe), the CAN-SPAM act (US), or CASL (Canada).

1. Encourage feedback.

Your best ideas for new products and services can come from your existing customers. Ask for feedback by sending satisfaction surveys and requests for testimonials and reviews. Read what they have to say about your service so that you can make improvements as needed. Respond and thank them for the feedback

1. Check your ego at the door.

As small business owners, sometimes we need to be humble, especially when things go wrong. Be generous with apologies; it will go a long way toward improving relations. If you’re at fault, admit it and make it right.  Even if you’re “right,” find a way to explain so that they feel good about you and your business.

Delivering great customer service can be a huge competitive advantage for your business. How does your business stack up against these five ideas?  Try them, and watch your business grow.

Can you believe that half of 2019 is gone already? That means it’s a great time to take stock of how your business has done for the first half of 2019 so that you can meet your financial goals for the entire year.

On Track for Sales

Are you on track to reach your 2019 revenue and profit numbers?  The first step is to check your 2019 budget numbers for total revenue. (Don’t have a budget? – Check with us; we’d be delighted to discuss planning with you.)

Next, get your Income Statement for June 2019 Year-to-Date and check the revenue figure. Are you on track with your budget, or are you halfway there revenue-wise, accounting for seasonality? If so, pat yourself on the back!  If not, what promotions will you put in place to boost your growth for the rest of 2019?

On Track for Profit

Looking at the same Income Statement, check your net income figure. Are you on track with what you planned?  If so, great!  If not, the reason is simple: it will be either lower sales than expected or higher expenses than expected.

If your expenses are too high, you’ll need to drill down into each of your expense accounts, including cost of goods sold, to see which ones are higher than expected. Were there some unanticipated costs?  Does your pricing need adjusting? Do you need more volume to cover your costs? Do you need to get your costs under control? This is where we can help you with an analysis of where your opportunities are to increase profit.

On Track for Cash

One more place to look is your cash balance. It can be uncomfortable when you are running short of cash for your business. If your balance is lower than you’d like it to be, it could be because of some of the factors mentioned above.  It could also be because you just purchased an asset like a truck.  If you need help with improving your cash flow, that’s another thing we can help you with.

Mid-Year Review

This mid-year review can help you head off any small problems before they grow into big ones throughout the rest of the year. And it can keep you on track so you can meet your 2019 business goals.

Do you remember the days when you got a report card from school? Now that you have a business, your business has grades as well.  It’s up to you to calculate them.  Here are some grades or key performance indicators that you can compute for your business to give it a report card of its own.

Financial Grades

How successful is your business from a financial standpoint? These financial ratios can help you give yourself a grade.

Working Capital

This is the difference between current assets like cash, receivables and inventory and its current liabilities such as accounts payable and credit card debt. It measures the organizations ability to meet its current obligations.  A 2 to 1 ratio will get you an A+.

Return on equity

This ratio measures profitability as it relates to the investment or money you have tied up in your business. The formula is net income / average equity. An ROE of 15 percent or more is an “A” for your business report card.

Return on assets

This ratio measures profitability as it relates to your business assets. The formula is net income / total assets. An ROA of five percent or more is an “A” for your business report card.

Asset turnover

This ratio measures efficient use of your business assets. The formula is sales / total assets. This number should be high for low margin businesses and low for high margin businesses.

Profitability Grades

How profitable is your business?  You might know your bottom line number, but there’s more to it.

Gross profit margin

This ratio measures the financial health of a company as it relates to how much of every revenue dollar is available to cover overhead. Calculate it as follows: (revenue – cost of goods sold) / revenue. The value will be different depending on what industry you’re in, but some say a range of 25 to 35 percent is normal for small business.

Net profit margin

Net profit margin measures how profitable your business is in relation to the amount of sales you have. As an example, a business that can make $50K in profits on $500,000 in revenue is more healthy than one that can make $50K profits on $3 million in revenue. The formula is net income / total sales, and although it depends on the industry, a net profit margin over 10 percent is considered an “A.”

Report cards were important in school, and they’re even more important in business.  If you’d like us to set up one for your business with specific metrics for your industry, let us know.

Do you know if your marketing efforts are paying off? More importantly, do you know which marketing campaigns and channels are profitable and which are losing money?

Marketing is one of the toughest areas to calculate return on investment, and one of the reasons is because customers may have had contact with your company in multiple ways before they make a purchase. Other reasons such as a lack of systems are more easily solved and can give you valuable information that you can make smart decisions with.

One main goal of marketing is to acquire leads that will hopefully turn into buying customers and even repeat customers. To start measuring your marketing efforts, we need to find out where those leads are coming from and measure which ones became your customers. That means we need to develop a system that tracks a customer from lead source to sale.

The hard part is that some of this needs to be done outside the accounting system.  The good news is that there are many tools and analytics available to help in this process.

One of the first things to do if you don’t already have it set up is to record the lead when they enter your sales process. Enter basic information about them in your CRM (customer relationship management system), and be sure to ask them how they found out about you.  This will help you track the lead back to the campaign or channel that they came in on. Once they’ve made a purchase, you can connect the lead to the customer record and track revenue by marketing source.

If your leads come in digitally, there are many automated tags you can set up to track where they originated, whether it was from the web site, a particular web page, a social media account or a link from an email you sent.

An important statistic for businesses is cost per lead, how much it costs to generate one lead for your business. The cost will vary by channel or marketing source. For example, someone coming from your website will cost less than someone coming from social media in most cases.

Once you know how many leads to generate to make a sale, you can start calculating what your marketing budget should look like.  More importantly, you’ll be able to forecast your revenue more accurately, too.

While numbers are probably the last thing you think about when you’re doing your marketing, they can be very effective for your bottom line.  There are many metrics beyond cost per lead that would be valuable to measure as well.  Here are just a few of them:

• Number of leads (in total or per channel)
• Number of press mentions
• Number of direct mail pieces sent out
• Number of email subscribers
• Number of social media connections per platform
• Number of posts sent, number of shares, number of comments
• Total web visitors, new and returning
• Google rankings for keywords
• Number of customer reviews per site, ratio of positive to negative reviews

And as always, if you want help developing these processes and metrics, please reach out.

Many people in their retirement years have regrets about not saving more during their earning years, but you don’t have to be one of them. All you need to do is be realistic and proactive about saving. It’s all about paying your future self.

Circumstances can arise that can erode savings you hoped would be there for retirement. Some of those events include not being able to work due to poor health or a bad job market, unanticipated hospital bills, a divorce, overestimating Social Security benefits, bad investments, procrastination, and simply not realizing how much you need to live on.

The good news is you can prevent future regrets by making a strong savings plan now. As a small business owner, you may not have a retirement plan, so it’s essential that you create one for yourself. You earn an income today. Put some of that income toward paying your future self, and pay that “bill” first, every month or with each paycheck.

To be proactive and build as much savings as possible, take these steps:

1. Increase your financial skills by learning how to fund your retirement.
2. Take care to manage your investment risk and be realistic about investment returns.
3. In good markets, purchase rather than rent or lease so you are building an asset.
4. Put as much aside as you can, and live beneath your means.
5. If you have periods when work is slow, live frugally until your income is back to normal.
6. Optimize your business profits and apply some of them to your savings plan.
7. Minimize taxes where possible so you can keep more of what you make.
8. Make everything work twice as hard for you:
   1. Get credit cards with loyalty programs.
   2. Sign up for frequent customer programs to earn points.
   3. Make sure your bank is giving you the best deal on interest.
9. Sell unused belongings on eBay and put the money into savings.
10. Cancel subscriptions and memberships and move the saved money into savings.
11. Periodically reach out to vendors to get a better deal on the expenses you incur. This could be for phone plans, utilities, and any other routine expense. Put the difference saved into savings.
12. Select cars and trucks with good gas mileage and also high resale value. Consider that using Lyft or Uber may be cheaper than maintaining a car, depending on how much you drive. Put the difference in savings.

There are hundreds more ways to save more. These will get you started in the right direction for 2019.

The start of a new year also means that it’s the perfect time to revisit old business strategies from last year so that you can maximize your revenue for 2019. If your financial numbers were fantastic last year, that’s great! Keep the strategies that worked for you and cut the ones that didn’t.

If your financial numbers weren’t amazing last year, or maybe you’re just interested to see how you can increase your revenue, we have you covered. Here are 10 ways that you can boost your revenue this year:

1. Revisit your current prices and make adjustments as necessary.

Many people will tell you that increasing your prices will increase your profits, but that’s not necessarily true. Increasing your prices by a small amount might increase your profits without turning away existing customers, but make sure you research your value and your competitors’ prices and adjust based on what makes sense in your market.

2. Bundle your services or products together.

Make your products or services more attractive by bundling them together and pricing them at a better deal than purchasing the services or products separately. Customers who only want one particular product or service should still be able to purchase the product or service à la carte, but offering different packages of increasing value makes it much easier to upsell to customers and increase your business revenue.

3. Offer free gift with purchase.

Tacking on a complimentary or free service to your products or services could be the small push needed to close sales. Even better, you could add a complimentary or free service to your highest-quality bundle. As an example, the cosmetics industry has been doing this for decades.

4. Start a new product or service line.

If you’re limited to just a few products or services, it’s time to expand. If you mow lawns, offer a leaf collection or snow removal service. If you sell shoes, add socks. If you manage a restaurant, consider offering adult beverages. Expanding the scope of what you’re selling will provide you with additional revenue.

5. Expand your geographic reach.

If you’re still only offering services and products locally, consider expanding your reach, especially because the internet is so readily available nowadays. Think about which services you can offer virtually; some may require you to invest in cloud-based delivery systems. If you only sell products at a physical location, ecommerce is a huge industry and you could definitely increase revenue by having a storefront online.

6. Learn to say “no” to bad clients.

This may seem counterintuitive, but learning to turn away bad clients is really important. When customers are unresponsive, ungrateful, unreasonable and just take up too many of your resources, you have to realize that they are unprofitable. By turning them away, you can devote more of your attention to building relationships with your best customers and creating new, profitable opportunities.

7. Make your online presence known.

Everyone uses search engines and social media to find the right business to serve their needs, so make sure you can be found online. Create a website for your business and make sure you have business pages on social media platforms like Facebook, LinkedIn and Twitter. You’ll have to develop some marketing strategies and optimize your site to rank high, but, when done right, these channels can drastically impact the amount of revenue you receive.

8. Manage your online reputation.

When you have many good reviews, your credibility goes up and your business is more appealing to potential customers. If your clients leave you an amazing testimonial, it’s a good idea to ask them to post it online as well—especially on Trip Advisor, Yelp, your Facebook Business Page, and Google Reviews. On the other hand, negative reviews will look bad to potential customers and can negatively impact your revenue, so make sure you respond appropriately to the review and show potential consumers that you care about getting things right.

9. Encourage customers to sign up for a continuity program.

Do you have loyal customers? Reward them by offering a membership or continuity program with VIP benefits. Retail, restaurants, and service businesses can set up privileges like faster service, discounted prices, and frequent purchase rewards that many consumers will pay a small monthly fee for.

10. Encourage customer referrals by building and nurturing relationships.

Connect with customers and build strong relationships through effective communication, providing exceptional service, getting feedback, addressing concerns, and showing appreciation. Doing so can increase repeat customers, customer referrals and your business revenue.

If you’re looking to boost your business revenue this year, definitely give these strategies a try.  If you would like specific suggestions for your business, please reach out.

One of the biggest challenges for small businesses is managing cash flow. There never seems to be enough cash to meet all of the obligations, so it makes sense to speed up cash inflows when you can. Here are five tips you can use to get your cash faster or slow down the outflow.

1. Stay on top of cash account balances.

If you’re collecting money in more than one bank account, be sure to move your money on a regular basis when your balances get high. One example is your PayPal account.  If money is coming in faster than you’re spending it, transfer the money to your main operating account so the money is not just sitting there.

2. Invoice faster or more frequently.

The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances.  Or consider changing your payroll schedule to bi-weekly.

Take a look at how long it takes you to invoice for your work after it’s been completed.  If it’s longer than a few days, consider changing your invoicing process by shortening the time it takes to send out invoices. Email invoices to your customers with a payment link.  That way, you’ll get paid sooner.

3. Collect faster.

Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment.  Unless you have a compelling business reason, there is no need to extend 30 days to pay you.  Change your payment terms to Net 7, 10 or 15 days.

Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced your bill. Be aggressive about following up when the bill is past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid.

4. Pay off debt.

As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have.

Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense.

5. Reduce spending.

You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:

• What did you spend that was a really great investment for your business?
• What did you spend that was a colossal mistake or waste of money?
• What do you take for granted that you can cut? What services are not being used?
• Where could you re-negotiate contracts to save a little?
• Where could you tighten up if you need to?

Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier.  If you would like us to help with specific suggestions for your business, please reach out.