All businesses love growing their business and increasing turnover and profits at the year-end. The phrases ‘The customer is always right’ and ‘customer is king’ are used all too often, but are there times when you just have to say ‘No’ to your customer?

 

Whilst you will bend over backwards to meet your customer’s requirements at some stage it wont make good business sense to continue bowing to their demands. They may be buying more stock from you, but if you are having to lower your selling price and margins to make those sales, coupled with the extra administrative and staff costs you will incur, are you actually going to be making any money on the sales?

For service based businesses the customer will always try to get the lowest price they can and often say ‘well it can’t be that big a job’. Let them try it themselves and see how big a job it soon becomes to put right. I read this great blog last week, these are prime examples of when to consider saying ‘no’ to a customer and taking a firm stance with them.

 

It’s a very competitive market place for all businesses, but don’t be afraid to stand your ground. If you start to give in to your customers’ demands too easily you may get a reputation for it and then all new customers may expect the same from you.

Whilst major business are struggling and failing in the tough economic climate, many small businesses are experiencing the opposite and are thriving. It’s never been easier to start your own business and become self-employed. If you are thinking of making that step and turning your talent into a business, take a few minutes to watch this inspirational video that I have found…

Good luck in your next venture

 

Over the last 30 days I have been taking part in the Ultimate Blog Challenge, where the challenge is to make an average of 1 post per day over the course of the month. As far as I can tell I completed the challenge and learnt a lot of new tips along the way about blogging.

Image: vichie81 / FreeDigitalPhotos.net

Below are 5 of the most popular posts from the last 30 days:

• You Are What You Tweet
• How Much Money Do I Need to Start My Own Business?
• 5 People You Should Be Following on Twitter
• 7 Tips to Balance Your Personal and Professional Life
• 5 Social Media Pet Peeves

Thank you to everyone who has viewed/commented on my blogs over the last 30 days. I hope that you continue to come back and read the blog (hint: subscribe to the RSS feed )

If you’ve missed any of the blog posts this week catch up on the 3 most popular by view count.

1. 5 People You Should Be Following on Twitter
2. 10 Reasons for Starting a Home Internet Business
3. Company Vans – Avoiding a Benefit in Kind

When you have read these posts take time to view some of the other blogs which give free small business tips and advice, which can be easily done be scrolling to the bottom of this post and clicking on the pop-up at the bottom left of your screen.

More and more people are becoming self-employed during the current economic downturn. There can be a variety of factors for this ranging from unemployment to wanting an extra income to top up your salary.

If you are thinking about working for yourself here are 7 great reasons to become self-employed:

• Turn a skill/talent into a profit making business.
• Freedom to work where you want, when you want and wear what you want whilst working.
• Job satisfaction. The satisfaction you get from earning money doing something that you love is fantastic.
• Meet new people. How many new people do you meet each day in your current job? Working for yourself will bring you into contact with lots of new faces, some of which may even be able to help your business grow
• You keep all the profits (that’s an easy one!)
• Independence. This is closely related to freedom, but you are able to make the decision you want in your business without having to go through any office politics.
• Family. If you have a young family working from home will allow you to see them grow up during the early years of their life. For some people this is one of the most important aspects of becoming self-employed.

So there you have it, 7 reasons to become self-employed. Have you got any more?

Every business has started from the same place: one person with an idea/vision/talent. It’s safe to say that everyone has an opinion on how something can be done better or improved, but before any successful finished product/service is shown to the public the person/people behind the finished article will have all done one thing: Research. Without research how will they know if they have a viable product?

Image: scottchan / FreeDigitalPhotos.net

The same can be said for small businesses. Whilst the idea of working for yourself is appealing you should always research your market before taking the plunge. If you don’t it could end up being a costly mistake.

A short time ago I wrote a review about the book ‘Turn Your Talent into a Business‘ which will arm you with all the background knowledge and steps which you will need to take in order to start making money from your idea/talent. It will take a few hours to read through and digest all the information, but it is time well spent and will give you an idea of what you need to do to turn your talent into a profitable business.

Taking a few more days/weeks researching your market and how your small business will function will pay off in the long-term. The extra time spent will give you a clear indication as to whether your vision is achievable.

Your Turn…

What is your small business and how did you research your market prior to commencing trade?

If you’ve successfully sold your product/service to a new customer you will need to think about how much credit, if any, to extend to them. Even though you may be dealing with a large reputable business, you must conduct your own research into them to decide the level or risk which you expose yourself to.

What can you do to find out more about your customer?

1. Gather trade references from other suppliers which the customer deals with
2. Conduct a credit search if your budget allows
3. Ask for your customer to sign a bank status enquiry form for you to submit to their bank
4. Search Google’s News feature to find anything about them in the press

When all this has been done, think about what level of trade you will be carrying out with them. If the customer has fantastic trade references and credit checks, but their turnover will only be £1,000 per month, it’s pointless giving them a £10,000 credit limit. You run the risk of the new customer loading up their account to the £10k limit and then struggling to get paid. Make sure that the credit limit is realistic. Bear in mind that you will still be expected to pay your suppliers on time even if you are not being paid to terms by your customers.

Payment terms will always be an issue; you want to be paid quickly and your new customer will want to extend the credit for as long as possible. Most businesses operate on 30 days from invoice date, or end of month following (which will average at about 45 days credit). Again you need to decide the level of risk you wish to be exposed to. If you offer a customer 60 days credit, it could be 90 days before you find out that they are not going to pay you. This will only happen in the minority of cases but it will still be annoying when it happens and have a serious impact on your business. What-ever payment terms you set make a note to contact the customer a week before the first invoice is due to check that it has been passed for payment.

If you are experiencing late payments do not be afraid to put the customer’s account on ‘stop’ until the payment has been received. Doing this will no doubt upset the customer, but are they really a customer if they aren’t paying to terms and causing you problems? Start as you mean to go on.

Regularly review the credit limits to ensure that they are still realistic for the customer. If your product sells well you may need to increase the customer’s credit limit to enable more trade with them.

If you and your customer know where you each stand from the first time you trade together, it will help to maintain a happy working relationship.

Most of us at some point in our working lives will have taken a short break from work and come back to hundreds of emails, we then check through these emails and get behind on our work. I’ve found a few techniques that really help when trying to balance a heavy workload with a heavy inbox.

Scheduling

Set aside some time during the day just to check your emails. I usually do 15 minutes in the morning, 15 minutes at dinner time and then a quick check before I finish for the day. I find that this is far more productive than checking every single time and email arrives.

Don’t respond until you have to

If you have been cc’d in on an email that is going back-and-forth a lot, just wait until the first few responses have been made before replying. One of your questions/points may be made by someone else, meaning that you don’t need to do anything. If one of the questions in the email is directed at you, reply during your scheduled time.

Time Zones

If you’ve been sent an email from someone at the other side of the world, the chances are that they won’t be at their PC when you are at yours. Save replying to this email until one of your later scheduled times.

Auto responders

If you are going away for a few days, make sure enable your out-of-office message, along with a note to say when you are returning. Hopefully people will take notice and not send a lot of emails for you to go through when you get back.

Prioritise

Create folders within your email for different priority levels. If you receive an email about a night out in a month’s time, that’s fairly low priority – file it away until you have more spare time to go though it. Leave the very high priority e-mails on your home-screen so you can deal with them during a scheduled time.

Un-Subscribe

Most of us will get newsletters and other circulars that come through to us regularly. If they are not of mega importance unsubscribe from them and bookmark the relevant website in your browser to check when you are online.

 

How do you keep on top of the email overload?

 

 

I came across this article today which states that most small businesses fail within the first 5 years – the article is based on US statistics but these statistics are likely to be the same for other countries.

One of the comments lists two things the reader believes indicate that the business has been a success:

• Pays a living wage comparable to the national average to it’s employees and/or owner
• Makes a profit

photo credit: thinboyfatter

I agree and disagree with the first statement. With the global economy in such a mess at the moment many people are starting up businesses in their spare time outside of their main jobs because a) they need extra money b) they have a skill/hobby/service that they feel is in demand.

If you are a Twitter user, take a look at your followers and the accounts that you follow, a large majority of these are probably ‘ordinary’ people who are using Twitter to engage with other businesses and to promote their own. Social Media is a great leveller and is a massive help for smaller businesses to compete against larger organisations. It also helps businesses talk directly to other businesses that they may never have interacted with before.

How do I think that you can define success? Like most things it’s all relative as each and every business is different. Below are a few ideas:

• Does your business get repeat business?
• Is it making a profit?
• Is your product/service/skill still in demand?
• Are you seeing sales growth?

Most importantly, is your business achieving what it set out to do?

If a business set out with the sole aim of increasing the owner’s income by an extra £500 a month to meet the day to day bills and it is providing that amount (plus enough to cover year end taxes), then the business owner will consider it a success.

photo credit: Regina Hackenberg

One of the major factors behind businesses failing (small and large) is that the business sets unrealistic goals. If you make hand made chocolates, don’t set out with the aim of competing with Cadbury’s in your first year of trading. Be realistic about it. Use the mnemonic SMARTER:

• S – Specific targets
• M – Meausreable targets
• A – Attainable targets
• R – Relevant targets
• T – Time orientated targets
• E – Targets which can be evaluated
• R- targets which can be re-evaluated

photo credit: alexmcc1986

A very tough ask in the current economic climate. Larger businesses are tighening their credit policy to protect themselves, but how can you grow your business if you cannot buy anything on credit? Read on for a few ideas.Firstly I would say always be prepared to trade on a pro-forma basis initially.Your supplier has no knowledge of your payment habits so may be slightly cautious when trading commences. After your first 3 or 4 orders have been placed and paid for raise the question about applying for a credit account with them.If you are refused an account at this stage try to find out the reasons why. If you are certain that you have the available funds to pay the invoices when they fall due offer to pay an inflated standard price, but negotiate some discount for on-time payment. If payment is not made on time you are penalising your company by having to pay more than you should have, plus damaging your customer-supplier relationship. This may not work, but it will show your supplier that you are serious about trading with them.Your supplier may ask for some trade references to contact to gather some more information: How long have they traded with you, monthly credit limit, payment terms etc.. One question that is commonly asked is ‘Does this customer regularly use you are a trade reference?’. The answer your new supplier is hoping for is ‘No’. The reason being that if you have 20 suppliers but only use the same 2 or 3 for trade references, these could be the only ones that are paid on time. Vary your trade references and if possible pick ones from a similar industry to your new supplier.Make sure that the credit limit you are asking for is realistic. If your forcast for sales of product x is only £10,000 per year, don’t ask for a credit limit of £10,000. Base your requested credit limit on 2 orders per month. If the business then grows beyond your expectations re-negotiate terms with the supplier. However, do not ask for such a low credit limit that it is not worth your supplier trading with you; they may direct you to a cash & carry or wholesaler. Find you their minimum order requirements first.When your first few orders are falling due for payment, don’t be surprised if you receive a call from your supplier to check that the invoice is OK for payment. As described in an earlier post (What is a customer?) your supplier is only keeping on top of their credit control. If the invoice is OK for payment, tell them when it will be paid and if it will be by cheque of bank transfer (bank transfer is more favourable). If you do pay by cheque don’t delay things any further by sending it 2nd class!

I hope that this post has given you some insight into trading successfully using a credit account. If you have any further questions please get in touch…