S3.amazonaws.com



What Small Business Owners Should STOP Doing to Stay Sane Thank you so much, Alexa. Welcome, everybody. I am so thrilled to be here. The title of the webinar, "What Small Business Owners Should STOP Doing to Stay Sane", implies something very important. No one ever tells small as this owner what they should stop doing. Of your notice? Everybody tells you to do more. To more social media, work harder, work longer hours. What if there was somebody in the crazy crush of running a small business who actually said there are five things you can stop doing and it will free up some capacity. It will save your sanity and actually double your profitability. Is it worth listening to? The answer is of course, yes. I just want to thank two of the sponsors today, particularly FedEx. These are amazing people. The small business organization within FedEx are your advocates. FedEx has a spectacular ground game, in case you did not know that. And they do an amazing job of shipping internationally. You really need to make FedEx a strategic partner, particularly if you have, for example, products that are perishable, these guys have a special packaging lab to get your products from your warehouse to your customers in perfect shape. They do amazing things, half of which most of us don't even know. Get to know the FedEx organization and the SCORE organization. We will talk more about what is available to you at the end of this webinar. I want to thank them very much, because they are the ones to give me the license to get to know you a lot better. Who is Dawn Fotopulos , the crazy Greek last name? I am on a mission. The mission is to double small business survival rate. If you have your phone on or your door open, closure phone, close your door. I have saved 500 businesses in the last four years alone. If you are listening to this webinar, you have an opportunity to double or triple your profitability in a short time and I am not blowing smoke. I have been in the trenches about 20 years. If you look at the slide in the lower right-hand corner, the women in those beautiful faces in that photograph with me are engineers, bridge builders, amazing people. That was at the intercity capital connections conference here in New York. In the middle of the slide, all the webinars published permanently on the SCORE website. I will give you a link so you can have access to them. The last time we got together on a call like this we did the power pricing which was a very content rich webinar. The purpose of which was to show business owners, like you, how to price your products and services with so much money on the table. Accounting board the numberphobic is an award-winning book, won Best business book of 2015. It teaches you all the basics you should have known before you opened a business but never learned. And it is a funny book. Illustrated by a Disney artists . If you've ever been intimidated about the numbers this is a great book for you. Let's talk about the problem and then we will talk about the five-point solution. I want to show you an illustration. This is the Doom Loop. It took me 17 years to clarify this in my head but this is what I have seeing at large. I have spoken to, face-to-face to less than 10,000 small business owners in the time I have been doing this work. This is what I see them do we. Of profits are down, all of them say I want to grow my business. If you did a search online for grow my business you get like 650 million answers to that. Because everybody wants to grow their business. The way they do that is a discount prices because they are so hyper about trying to get new customers because they think that is where new revenues are going to come from, so they discount price, close more business and when they do that it destroys Gross Margin, which is right here. Gross Margin is what you run your business on by the way. We will talk about this in detail in a second. It destroys Net Income, what is Net Income? Profitability. You are in business for the Bottom Line. Doesn't matter what your cells are, what matters is your what your Bottom Line is. And what ends up happening, is you end up working a whole lot harder with a whole lot less to show for it. It is a Doom Loop because you are doubling down on that strategy. What we want to do in this presentation is show you how to stop the madness, reverse the Doom Loop so you can work half as hard and make twice as much money. Sounds good? Talk about the five-point solution. So if we can convince you to do these five things , even if you do only one of these five, it will transform your business , it will transform your mindset and it will transform the risk profile of the future of your business. Let's start with defining reality. You have to stop ignoring your financial statements. I did a survey among 4000 accounting professionals over a period of four years, because I am a speaker at the scaling new heights conference and asked how many reconcile statements for your clients, people just like you, every single month? All the hands went up. I said how many of your clients actually read the statements that you send them and the laughing started. And how many understand, those who open them up, how many understanding make better business decisions as a result? No hands went up. So I'll argue with you , not so much read your financial statements by yourself, first you have to understand them and I will show you how to do that. If you can get up to speed in 48 hours that's a pretty good investment of your time. And how to use your account as a strategic partner , and your SCORE mentor as strategic partners to help you understand what is really going on in your business, not what do you think is going on in your business. That is what we mean by define reality. Your accountant is a great unsung hero of your business and stop treating them like an expense instead of the investment they are. We will give you tips on how to do that. They want to be that role for you by the way. And I will show you how to get maximum return on investment for your accountant's expertise. They are geniuses and we don't listen to them the way we should. If we did it would transform the future of our business. Product line. Everybody has a product line. You have to stop offering loss leader products or services . I will define what that is but basically this kind of thinking. Well, I lose money on every sample but I will make it up in volume or, I lose money on that particular product, I will bundle it with other products and make a lot of money and that is going to help me close more business. That is false thinking and it is draining you of profitability and I will show you how to avoid that and actually close more business. Is it possible? Yes . I have done it thousands of times. You got a stop over servicing unprofitable customers. But the key to this is you have to be able to identify who is profitable and who is not. Most small business owners think a large customer is a profitable customer, which is not necessarily the case. The flip side to that is .5, existing comforters . You have to stop ignoring your existing customer base. Don't take them for granted. I will show you how a very powerful -- when you nurture relationships with existing customers. It is the absolute killer app . If you want to improve profitable sales, this is the way you do it. So let's get to it. Defining reality, stop ignoring your financial statements. And really, your financial statements answer three questions. This is really as complicated as it gets. Most people look at their financial statements like oh, yeah I know it's good for me but awful going down. Let me simplify it for you. Every time , anytime anybody runs a business you have to answer three questions and really only three. On you making money? And the answer you will find on your profit and loss statement . Do you have enough cash to pay the bills for three months. The means can you cover your operating expenses for three months, at least one quarter. Your cash flow statement will answer that question. And know you creating or destroying wealth? Your Balance Sheet will answer that question. So, your financial statements, you know what they are? They are your spouse. I know it sounds crazy, but they really are. They are always speaking to you, but can you hear them? Are you listening to them? Your financial dashboard, the Three Musketeers, your Net Income Statement, your cash flow statement and your Balance Sheet are a lot like the dashboard on your automobile. Your Net Income Statement, we use the metaphor that your Net Income Statement is a lot like your speedometer. Your speedometer doesn't tell you that you are driving over the speed limit, you have to know with the speed limit is an over the calibration is on your speedometer. Same thing with your Net Income Statement from you need to know if you're generating enough profit or not and what to do about it. This illustration, by the way, is taken from numberphobics, illustrated by a Disney artist, a very funny man. Were trying to find something everybody knows and connected to something . Cash flow is a lot like your gas gauge. Your cascade doesn't tell you to go by gas, is up to you to figure out if your calibration is on "E" for Empty, better get some gas you will be in trouble if you don't. Your cash flow statement will tell you if you have enough cash and if you don't have to think about things you should do to fix that, otherwise you will go bankrupt. Let's figure that out before, good idea. Your Balance Sheet is very important. Captures everything that's happening in your business from the beginning to today and your Balance Sheet , frankly, helps value your business. Are you just creating a job for yourself? Or do you have an asset that you can sell? We won't get into the cash flow and Balance Sheet on this particular call, but you should see that the Net Income Statement as part of the bigger picture. Let's take a look at the Net Income Statement. What you see here, is you see a whole lot of piles of money. What your Net Income Statement really is a great big pile of money which is your Net Revenues , your sales and it decrements. We have to pay a whole bunch of bills. Have to pay suppliers, cost of goods, and then we are left with Gross Margin. Remember he said earlier you run your business on Gross Margin, you don't run on revenues. You don't run on sales. They are correlated, but really your Gross Margin is going to determine how easy or difficult it's going to be to pay your fixed expenses, variable expenses and earnings before taxes is what you have left to pay the various governmental agencies in partnership with you, whether we like it or not. The Net Income, the tiny pile down here, is why you are in business. If you are running a grocery store, for every dollar of sales you bring in you have about a penny and a half on the Bottom Line and I am not joking. If your accountant or bookkeeper were to print out your Net Income Statement, this is what it would look like. This is exactly the same as this, but we just put some values to it so your cells , for our purposes, is 90 K. If to pay suppliers, labor, direct materials, 70,000 is what you have to run the business, fixed and variable expenses, earnings before taxes in this example is 16 K, taxes or eight came we have left over is $8000. In this case Net Income over year sales, for every dollar in cells dropped to Bottom Line is about 9%. And would tell you something no one will ever tell you. This number down here needs to be about 15% in order for you to have a viable business. No one ever talks about this stuff. but until you get to 15% you're not out of the woods. Will give you ideas on how to do that. So let's get to it. This is your cash flow statement, nothing more than a leaky bucket. You have starting cash, cash comes in as clients pay you, cash goes out as you pay expenses and you have ending cash. Again numberphobic will take you through this in greater detail and how to collect from customers that owe you money. I had a lady in Canada, I took her advice, she was able to collect on a $100,000 debt outstanding for two years. Able to collect on it in one week's time. At any rate it is in the book and you can read it for yourself. This is actually a member for for your Balance Sheet. Your ankle picture Balance Sheet under a microscope to see if in fact there is a lot of risk in your business, not so much. That is important because most of us have to have a credit line. There are times of on the slope here is where we have to draw on that credit line to keep the business afloat. On the Balance Sheet will help answer the questions the bankers are always going to have. By the way investors are also going to care a lot about what your Balance Sheet says about the risk profile of your business. Again, numberphobic will take you to the details. Let's look at your product line. And the big argument we want to present to you is stop offering loss leader products or services. These are basically products or services that have a negative Gross Margin. What it basically is, this is Wikipedia which is not always my framework for definitions but I thought they had a good one. A product sold at a loss to attract customers. Again, the Doom Loop mentality. I need more customers. Never mind the quality of those customers, I just need a lot of them. That is the thinking in the Doom Loop and I want to change your thinking about it. The first thing you have to do is look at every single product or service that you offer in your business, and it needs to work just as hard for your business as you do. Every time you bring a cash register and sell product 8, product 8 has to earn the business at least a 30% Gross Margin in order for that product to be worth offering. And if it doesn't , and there is some business were frankly the Gross Margin needs to be higher than that, the only business where you can get away with a lower Gross Margin is if you turn your product line very, very quickly. Like if you are selling ice cream. You probably can get away with a slightly lower Gross Margin because it is a cash business, especially in the summertime you sell tons of it. As a rule of thumb, every time you ring the cash register and sell product 8, B, C, it should jump that 30% Gross Margin rate. If you don't know if that is happening, your accountant or bookkeeper can tell you. The second thing is are you discounting your products and services to attract a price sensitive customer? What is a price sensitive customer? A customer who doesn't care about anything but what they are paying for what they are getting. And most of us do not buy only on price. Do we have good servicing? Our strategic partners really knowledgeable? There are 100 reasons why we don't buy from the cheapest resource, so don't get into that Doom Loop thinking that you have got to discount in order to attract a customer. But be very careful . If you attract a price sensitive customer because you are discounting, they will never buy from you at full price and you can't run a business by simply discounting all the time. We went through this in the power pricing, which is a webinar we did before this one. It is -- the recording is published on the SCORE website. You need to watch it because there is great alternatives to discounting. Gives you ideas on how to promote your products and services without putting your profitability on life support. And if you drop your lowest margin product or service, what would happen to your business? I encourage you to think about doing this because if a product does not meet the 30% Gross Margin hurdle, you either have to change your pricing strategy , your discounting strategy or drop it altogether or do a better job of communicating the value to your target audience. One way or another you should not keep that product at that low Gross Margin in your product line without doing something. If you did drop some of your low Gross Margin product, it is entirely possible that you might reduce revenues a little bit, did you can actually drive up profitability. I know that is very counterintuitive to a lot of folks. Let me give you a real-life example of what that looks like. This is a landscaping business. In the landscaping business they sell all kinds of products. Crushed rock, paving stones, plants . Sod is alive product and I want you to see some dynamics. We are all biased towards those products that generate the most in sales. We just are naturally. So we look at those products that generate the most in sales and we want to protect those because we think that is generating the most profitability. But I am here to show you a real-life example where it is exactly the opposite. Paving stones only generate 20% of revenue, but it has a Gross Margin of 40% which jumps that 30% hurdle. Crushed rock is about 30% of our revenue and generates 35% Gross Margin and plants 50% Gross Margin holy cow what is this mean? Every time you sell a plant, you are pocketing basically 50% of the retail price of that plant as Gross Margin, which means it contributes that much more to your ability to pay your bills. If we had a choice to promote paving stones excuse me crushed rock or plants, if we had a choice to promote sod or plants, you would promote plants because every plant you sell is going to generate almost actually more than four times the amount of money , almost five times the amount of money that sod will. In this case did 20% of revenue, and only generated 9% Gross Margin. Sod is a commodity . Can we be honest, it is. It also goes bad really quickly. It is extremely expensive inventory, it is heavy, bulky, takes up a lot of warehouse space. In this particular example, what we recommended to the landscaper in the Texas region is is, what would happen if you just dropped sod from your product line? They said the truth of the matter is we don't do enough is in us for it to be worth our while, we are going to drop it and when they did that, they freed up a ton of capacity to start promoting plants and paving stones and they doubled their profitability in record time. The the second item, unprofitable customers. Stop over serving unprofitable customers. The challenge here you've got to know who is unprofitable and who isn't. The first thing you have to do is you have to look at your customer base by Gross Margin. That is not easy to do. You typically have to have your bookkeeper or accountant pull the information for you. I don't know a single small business that looks at their customers by Gross Margin. But if you do that, it will give you a lot of visibility. Does each sale by each customer Trump that Gross Margin hurdle? I want you to think about your customer base the same way you think about your investment portfolio. Every single customer represents a revenue stream for your business. You have to ask your bookkeeper or CPA to pull the account and what you will see is you are going to see some customers generate a lot in sales have very low Gross Margin on a percentage basis and the flipside is also true. You will find customers that you really haven't focused on sales wise that have enormous Gross Margin potential. The first thing you have to remember is, just looking at revenue by customer is going to give you small cues. Remember you don't want to sales. You don't want to just grow sales, you want loyal, profitable sales and loyal, profitable customers. Things like subscriptions, referrals, very powerful when you have a profitable customer and they referred other people to your business. Enormously profitable. You want High Gross Margin sales. That will drive your profitability in the long haul. Let me give you an example of what this looks like. This is a real-life example. This is an ETSY seller. But we looked at just the topic. Customer A generated 50% of revenues for the average Gross Margin was really low only 20%. Customer B only generate 20% of revenue, based on their current sales rate and their average Gross Margin is really high, same with customer B. Even lower in revenue but a hiring Gross Margin and why it had to do with what they were actually buying from this ETSY seller. Where should your sales focus be? This is the question. Once you get this information, which relationships should you be nurturing. Once you get this relationship on your product line which product should you be promoting? And what would happen to the income if you actually did this? I'm just telling you Net Income you have to be aware of a series of traps. The first is very large customers who know they generate a lot in revenue for your business will require large discount, customize service and all of that means there is a high likelihood your gross margins going to get squeezed. When you do business with a large customer one thing you have to make absolutely sure that regardless where your pricing falls they have to meet that Gross Margin hurdle rate after the discount not before you have to look at customers who purchase high Gross Margin products , look at those small customers they may be very high potential for you you are just ignoring them and we will talk about that in a minute. You have to look at your repeat customers. The people to buy from you over again they may not by a lot , average sales may be relatively low but they are loyal. And they see you as-to resource. Even if they are small they could still be high potential. The most important thing to remember too is that growth is not what you are after, you have to be careful getting into that growth Doom Loop because what you don't want to do is grow any faster than what you can deliver with excellence. That comes from my hero, Peter Drucker. So one of the things you can do, actually two things you can do that will help you is work with the FedEx organization and work with a SCORE mentor to help you scale profitably. One of the things I have seeing FedEx to , face-to-face when they talk to entrepreneurs and advisory board members, we will talk about this wonderful small business grant award contest, as they help them drive down the cost of doing business and it is brilliant. SCORE mentors can help you run the business for more profitability. If you want to know, how to think about your customer base, this is a 2x2 matrix that comes to us from the good people at Boston Consulting Group. A group that has done a lot of work with Harvard. You basically have two characteristics. Gross Margin per purchase and hard or easy to close and service. What we are doing is we are mapping your client base against these two characteristics. This nice, green bar is where we want all your clients to be. Every single one of them. They want to be High Gross Margin, high Gross Margin products or services and easy to close and service. Over here, low Gross Margin and hard to close, please stop servicing these guys again. You have to identify them. And this , these guys in here, you should hand them on a silver platter. But your competition deal with the aggravation. These two are really interesting quadrants quadrants. Over here you have low Gross Margin, but they are easy to do business with. The challenge here is we have to increase Gross Margin for every sale and there are lots of different ways to do that. You pricing a discounting strategy is key. If you don't know how to do that watch the power pricing webinar we did with SCORE and FedEx. I will give you those links at the end of the webinar. Over here we have exactly the opposite problem. These are customers that are buying your High Gross Margin products and services , but they are a little challenge to closer service. This is an eternal efficiency challenge. If you can improve and smooth out the processes of doing business in your back office, these guys could be highly profitable. People like FedEx and SCORE can help you think that through. Bottom Line , we've got to protect the people, clients in this quadrant, and look to see who is high potential over here working with your strategic partners. Who is high potential over here by watching the power of pricing webinar and start making some shifts with your existing client base, to help you improve profitability. You've got to stop ignoring your existing, profitable customers. A lot of times, we treat our existing customers is that they are always going to be there, and you can't take them for granted. So how do you double your profitability with your existing client base? I call them the three R's. You want clients that repeat purchases. You are not after the first purchase . In the Doom Loop everybody is after putting out tripwires to get a sale. You don't want to sell, you want a profitable sale. The way you get that is through repeat purchases. Was to the time where we do business with clients, we don't make money on that sale until they have bought from us at least three times. Remember, it costs money to acquire customer and they need to buy from us over and over again before they become profitable. It is super important that we nurture those relationship so we can retain our profitable customers . And we've got to know who those profitable customers are so we can be very proactive about understanding what is important to them, where there pressure points are and how relieving the burden from their shoulders can help them be more successful. Was those profitable customers are so excited about doing business with us, and what referrals from those existing customers. That is the holy grail, that is how you get leverage, that is why it becomes so incredibly valuable. We are looking for repeat purchases, we acquire them once, we get an annuity, a predictable revenue stream. After the first 30 days, we want retention. But the way you get that is by temperature and checking those customers after they buy from you the first time in that first 30 day window after they buy from you. This is mission-critical. If you did nothing else but put 10% of your marketing budget and reached out to your branding clients and said how is it working, does it make sense, is it something we can do to make it better, more effective, whatever for you and let us tell you different ways other customers are using our products and what benefit they gave, you build a real relationship, don't wait for the new client to call you, you reach out to them. And referrals, you want to over service your profitable customers because guess what they become when they get excited about which you do? They become your free salesforce. So there is a reading called putting the service profit chain to work. It is like an NBA in 12 pages. I am on the stump about this because taking an hour of your time to read this is so worth it. It is a Harvard Business Review article reprints, that is the link for it, also in the resource links at the end of this webinar. But, it shows you that a 5% improvement, just 5% is a tiny improvement in retention of a profitable customer can improve your profitability anywhere from 25%-85%. And that is what I call leverage and instead of running out there in the big broad world and trying to close more business with people you have never met, do a deep dive on your existing customer base, nurture those relationships because your Bottom Line can improve, almost increase by 100% if you do this. Please treat existing customers like you want to marry them and not like ATM machines. Here are some takeaways for you. Your financials hold the key to your future. You've got to stop ignoring them. Accounting for the Numberphobic makes it super easy. It is me talking over your shoulder , simple language. Not intimidating. What this really is is a book on strategy. It takes to do than the income statement, cash flow statement and Balance Sheet and gives you measurements that if your income statement is off, here are the five things you can do to maybe fix that. If your cash flow statement is having problems, here are the five things you can do to fix that. In one weekend you can learn the basics and frankly you can beat the odds of failure rates of small businesses in the United States. So astronomically high, that FedEx and SCORE and I we have linked arms because we don't want you to become a statistic. You've worked too hard, you've made too many sacrifices, too many sleepless nights. It is time to get a return on investment and we want you to get out of the Doom Loop and do it fast. Winston Churchill, during the bombing of London in World War II says facts are better than dreams and we want to hand those to you in a really simple way. And we want you are accounting professional to become your strategic partner . How do you do that? The most important thing, the most important bridge to your accountant is unique , you need to sit down with that account every month and go through your financial statements. Here is the recommendation. First, read accounting for the Numberphobic, first four chapters, sit down with your account and review your Net Income Statement. It will take longer than an hour, and put a three-point action plan together. This is what I encourage you to do. I want you to sit down with your accountant and say to them, I want to double my profit in the next six months. Give me three ways to do that and lay the gauntlet of their feet. You want to know something? They know the answer. In many cases because I've heard the accounting professionals say this, we give really good advice to small business owners but they never take that advice. If you read accounting for the Numberphobic, not because I wrote the book, but because it will change your life, and you sit down with your accountant it will open up the future for you and in a 60 minute conversation you can increase your profit ability 10%, 20%, 50% if you are focused on the right things. Your account is there to help you understand reality. Your financial statements capture what already happened. You can't change the past but you can certainly understand it better and then you can say knowing what I know now if I make better decisions today it's going to change the future. Sit down with your accountant and make them your advisor. They want to see you succeed too. You are not just paying them for their hands and feet to do tax preparation at this time of year everybody is doing, you want them to improve profitability and cash flow and they have the answer. Learn the basics, that will build a bridge with your accounting professional. The book is very funny and designed to be. That it is not boring. Also very pointed and hard-hitting. We don't give you any fluff and if you take two days out of your life to do this it will save the next 20 years of struggling. Link is there so you can purchase this . If you do purchase it please let me know because I want to know. There are a couple of things. A lot of people have said that they have been confused by everything there accountant has ever shown them. A lot of people have also said they weren't even halfway through this book and they can see exactly where they are going wrong in terms of their product line, how they manage their customer base and manage pricing. Because it is simple and well explained. Someone actually said I hated County but I love this book. More importantly, really breaks my heart if you have said, I really wish I had this book 20 years ago it would've saved me so much pain. If you don't have a bookkeeper, I gain no benefit by the way by telling you this, but you should know this exists. Into it has a really great website called binder Pro advisor .com. These are Pro advisors who have -- - who have gone through training. These are expert at what they do. If you put in your ZIP Code it's like Angie's List for bookkeepers. Put in your ZIP Code and look for somebody who has industry experience that you are operating right now. They are brilliant people . Less expensive than CPAs and it's not that you don't need a CPA but what they will do is you can have the same relationship with them. They will put your statement together , they will reconcile your bank statement, cash flow statement, income statement and Balance Sheet every month and when it comes time to actually do your tax preparation, they can save you a lot of money with your CPA. I actually have a bookkeeper who does that for my business. I encourage you to consider that. You've got to review your dashboard monthly and put a plan together based on what that dashboard is telling you. You are going to be shocked at how quickly your profitability can rise with half the effort, in record time. Make your accountant and bookkeeper your strategic partner and don't just hire your CPA for tax, they are very smart people. You are hiring them , humans will get access to their brain sales too which means all their experience. Review your product line every time you ring the cash register, that sale must jump that Gross Margin hurdle rate of 30% or greater. If a product is not generating this for you, first find out if it is, if it isn't, you actually have to either raise the price, raise value and then raise price because you can't raise price in a vacuum. Here is a statistic, nine out of ten small business owners are charging enough for what they do. Watch the Power of Pricing webinar. Raise the price, change your target audience, you don't want a price-sensitive target audience, or partner with a FedEx organization to help you reduce some of your internal costs . Partner with the SCORE mentor who can help look at your back office and see where you are wasting time or where you got too much expense to produce that product actually serves your client. Your client base. Or drop the product from your line. But don't ignore your High Gross Margin product either. You have to align your sales efforts with your High Gross Margin product. That is called leverage. Review your client base. Not every client is created equal and not all large clients generate a lot in sales revenues are your most profitable dollar for dollar. Every time you sell a product to a customer, the price you charge has to jump the 30% Gross Margin hurdle rate even after promotions and discount. Don't assume a high revenue producing client produces High Gross Margin. You have to align your customer relationship efforts , customer relationship management efforts with your High Gross Margin clients. That is the way you generate more in Gross Margin and earnings before taxes and ultimately Bottom Line. Next steps, what do you do. This all sounds great , how do I operationalize this. The power pricing webinar you can find on the SCORE .org website. It is absolutely worth an hour of your time, just like this webinar, take up accounting for the Numberphobic, read the first four chapters it will save you so much pain. It is on Amazon. You can buy it on Kindle by the way for half of what the hard copy is. I actually like hard copies, I'm teacher I like to circle things and dogear pages but that is up to you. Is also on audible. You can also reach out to me, that is my e-mail. And believe it or not I actually answer my e-mail. Dfotopulos@. You will get a copy of this presentation, the e-book transcript, the Numberphobic study guide and worksheet. Let's talk about what SCORE has available to you. Free, expert advice. I will say that one more time because it sounds too good to be true. Free, expert advice. These are people that have been on the journey longer than you, they have made their mistakes and they are very successful. They are volunteering their efforts, because they care about your future and they are a 350 SCORE offices in the United States. Probably one near you. Are you dreaming? The answer is no. This is where you find them behind the SCORE .org link and when you hit that link, that is an illustration of what you are going to see. You can work with them remotely or face to face. You are out of your mind if you don't find a great SCORE mentor. By the way if you work with someone that doesn't seem to be quite working for you, you need somebody with different expertise, find somebody else, but this is no money. You have accountability, you are not in the desert by yourself. A lot of entrepreneurs are and this is just a spectacular resource you should take advantage of. Drumroll please. March 25th a date you should put in your calendar . That is the deadline for you to apply for the FedEx small business grant contest. There is real money behind this. You can win as much as $50,000 as a grant if your business wins in this contest. You put your business in the running , for a share of almost a quarter million dollars in grants and prizes. What does this mean? This is not a loan, this is investment FedEx is making in your business. I have met so many people that have been winners of the contest and they are amazing. You become an alumnus of the program. FedEx extends the red carpet for you. You get access to the brain trust inside FedEx. Everybody you know, including you, should be signing up for this because you have absolutely nothing to lose and everything to gain. You don't have to pay this back, this is an investment FedEx is making in you. FedEx .com/grant contest. That is the link that will get you here. March 25th is the deadline. You have 20 days to get it done but don't wait because it will take a little bit of time to provide all your data. Save time and effort you bet. This is what you get when you hit that link. There is something that we are calling the business owner stopped doing e-book. A transcript of everything I talked about on this webinar. You are also going to get a copy of the PDF slides, a copy of the Numberphobic study guide. That is my gift to you whether or not you buy the book. It will help you get the most out of Numberphobic principles which we talked about here and in addition to this a worksheet which is basically a great guide when you sit down with your accounting professional and it talks about what your next steps are. It will help you build an action plan month after month. Again, reach out to me at dfotopulos@. All you have to do is sign up and I want to you thank you so much for joining me, Faleminderit means thank you in Albanian believe it or not. We are now going to go to questions and answers. If we don't get to it I will answer it after the call. We are there, Ms. Alexa. What kind of questions you have for us? Sounds great. Let's get to the Q&A portion of the webinar. We are going to use the remaining time to address just as many questions as we possibly can. Please note that we typically have more questions than time allows us to answer. If we do not get a chance to address your question, we encourage you, as Dawn was mentioned earlier, to contact a SCORE mentor if you are not already working with one, a SCORE mentor can assist you further with your business needs, help you apply these strategies that Dawn has been talking about today. The slide deck has the contact information for Dawn and FedEx, too, to reach out for further assistance. You can download the slide deck from within the webinar platform. We are also going to be e-mailing all participants a copy of the slide deck , along with the recording, that will go out here in just a little bit. Moving into the Q&A segment, the first thing I want to quickly address was several folks trying to click the FedEx link to the grant contest. Looks like the link was not working. We will be sure to double check the link before we send out the slide deck. It could potentially be so many folks trying to hit it at once. Sometimes that will happen. Try it again in just a little bit and we will double check that link for you. We will jump in here to the first question which comes to us from Josh Josh is asking as a new business with no clients, how do you introduce your service or services? And their pricing? Great question and a question every single new business owner needs to answer. I will take your question and turn it 180 degrees. I want you to make believe that you are a potential client who's going to buy from you. The first thing you have to do is answer the question why your target audience should buy from you instead of your competition . The first thing you are going to do is you are going to answer the question, what problem are you solving or how do you intend to bless your target audience . You need to be really clear on who your target audience is. What is that all about? It is about articulating the value you bring to the world and then you set price. I mentioned it earlier in the webinar, but pricing doesn't happen in a vacuum. It has to be connected to the value that you are offering. And if you haven't watched the power pricing webinar, I encourage you to do that. We do a deep dive on pricing. Just as a quick hors d'oeuvre, there are three benchmarks for pricing. The first is a cost plus basis, which is your minimum clearing price. Whatever it cost you to make that product or deliver that service, plus a premium of 45%. If you can get that in the marketplace, something has got to give. The median price is what your customers are charging, but I give you a way to compete with them even if you are a new business. The power pricing webinar goes to that. And the holy grail is to price the true economic value which makes your internal cost and your competitor's irrelevant. And you have got to watch it because it will answer a lot of the questions that you have. Is a new business you have to articulate your value first, the super clear on how your target audience is and answer the question why they should buy from you and then you can figure out what you should be pricing at . Just as a rule of thumb, remember, most small business owners, 80%, under price what they do because they don't know what is in the Power of Pricing webinar. We have had several folks submitting questions regarding the service industry. Do these concepts apply, if so, how do they apply , is it similar having a service based business as it is to having a product based business? That is an excellent question, Alexa. Of course service businesses are just different because you don't have something tangible you are offering, the services are very important. In fact they drive about 70% of U.S. economy. The challenge with the service business is you've got to be super clear on what your direct labor expenses are because what are you selling? You are selling your capabilities. You are not just selling your time but your capabilities. What I have seeing is in a lot of service businesses they really don't know what it costs them to deliver a particular service. Let me give you a quick example of that. A colleague of mine is an interior designer and she did two things in your. She created interior design plans but also general contracting. To take those plans and make them real. What we discovered when we finally went through her Net Income Statement, sort of like we did here on the call, is she was not accurately representing how much time and effort she was investing in each one of her clients' projects. So it looked like she had gross margins of 90%, when we finally loaded up all the time that she was investing in each one of these projects, we put a Gross Margin together by project. So in the situation of a service business, you look at it by project or by client, we figured out the gross margins on developing the plans was actually fairly high, but it was very, very low and she was acting as a general contractor. If anybody knows anything about general contracting, it's very heavy lifting, a lot of time, a lot of aggravation, managing a lot of moving parts. She actually got out of the general contracting business, freed up time for her to do more interior design planning which had much higher Gross Margin for her and she ended up making a ton of money and getting eight hours of sleep. But in the service business it is exactly the same concept except you have got to work with your bookkeeper and your accountant to do a better job of job costing because that is where the problems are. You have got to get your job costing right because that tells you how much it cost you to actually deliver a particular service. Your accountant and bookkeeper will keep you honest . The good ones will know how to do this. Next question comes from Mike. Asking if you support offering an incentive to loyal, existing customers for a referral that closes? Yes, absolutely. A great idea. Let me give you an example of what that might look like. So I had a boutique owner here in New York and she had a few very loyal clients. In fact some were keeping her business. She said I want to bless these clients is a great how do you do that she says I'm going to offer them a 20% discount and I almost said what are you doing, where you committing financial suicide? I said you don't have to do that, are they asking for discounts? She said no. I said this is what you are going to do and I encourage you to do this, Mike. Give them very high touch, exclusive access to you in your expertise. In her particular case, close the boutique and open at an hour that's convenient for your best clients, get wine and cheese and have some very special items that are just made available for them . You will put out outfits together for them, there will be music, create an environment that is very exclusive and wonderful and bridge building . At the end, when they do by whatever they buy, you will take a scarf, a belts, something that is memorable and give it to them as a gift because it costs you $50 but represents $100 value to them. That is called leverage. And remember something, a discount is remembered in the mind for about 5 minutes. Gift is remembered in the heart forever. What you can do with your really high value customers is due a -- you what Dell Computer did. Create of platinum council. By them breakfast once a year, once a quarter, and say I love doing business with you. You can do this in a zoom meeting by the way. I love doing business with you, how can we do a better job service and you, who else should we reach out to make them your strategic partner. Yes, you can offer them a gift certificate to Amazon or who knows what you can do. There is a way you can blast them without it costing you so much money that it really hurts your Bottom Line. Find out things that are important to them and find a way to bless them in those things that really matter. That would be my recommendation. Try and let us know how it goes. Spent the next question is asking -- let's say your numbers are showing that the business is no longer profitable. For example there is a change in the market. What would you say would be the best step or process to reset without throwing away everything that has been invested? Such a good question. I have to tell you you're not the only one that has this problem. When you go to the doctor , what does the doctor do? The doctor checks your vital signs. The doctor looks in your eyeballs in your ears and your poles but those tests don't tell the doctor if you have cancer or not. What you really have to do is you have to go to a diagnostic to see what is still viable so if the business is not profitable, you have to ask the why question. In most cases, what is valuable in the business is the client base. It takes years to build a loyal client base. And then you have to take a look at what you are offering and say is a differentiated enough. Do we give people a good enough reason to come to us instead of the competition. Of the answer is no, then you have to reposition the business. It is entirely possible something like a change in technology is completely dis- intermediated what you are doing now. Case in point, artificial intelligence is dis- intermediated eating a lot of the traditional efforts that CPAs used to do but a lot is keystrokes. 's of artificial intelligence can take care of keystrokes than the real value add for a CPA is the analytics. And acting like a doctor not just like a glorified secretary. Those are some of the diagnostic questions you have to ask. Look at your P&L, look at your cash flow statement, your client base, look at your product and service offering, you your privacy and your competitive framework. Because your competition has changed. I have been around a long time and I can tell you online competition is very different than off-line competition. Of whatever it is you are offering is not just geographically focused but now online, that is going to change your competitive frame. And it is very easy for somebody to come in and take your market share online if they know what they are doing marketing wise. I don't have quite enough information to give you more than that, but those are some of the diagnostics you will have to go through. Take a look at your client base. If you are not sure, find out who the loyal clients are. Frankly, ask them what you can do to offer new, high-value products or services , who else are they buying from, where is your competition falling down on the job. Sometimes it's not just what you do but how you do it that's going to be your source of competitive advantage. Those are some of the questions I would ask. At the end of the day, as you answer those questions, you might say to yourself, it's not worth it for me too stay in business and that actually is a real, real answer. Better to close the business than to keep the business afloat through loans and going into a deeper debt hold than it is to say, the business has had a great run and it is time for me too think about something else. As hard a decision as that is to me, it is better to make that decision and start fresh than it is to try to keep something alive that is not viable. All right. Dawn, those are all the questions we have time for today during this live webinar session. Folks, if we did not have a chance to address your question during this particular live session, we encourage you to connect with the SCORE mentor who can assist you further with your business needs. As a reminder, we will be sending out a link to the slide deck and the recording. The slide deck does contain contact information for Dawn and FedEx and a number of wonderful resources to access after this session today to assist you further as well. On behalf of SCORE and FedEx , I would like to thank you all for attending today and give a very big thank you to Dawn Fotopulos for presenting with us as well. Dawn, thank you so much for him it was so great to be here with you, Alexa. . Amended thank you so much for doing a great job producing this. Again thanks to FedEx and the SCORE organization. We hope you can join us for the next live national webinar being held next week on March 14th. Create a powerful and practical PR strategy for your small business. This impactful session will teach you three , easy to implement methods for getting into local, national papers, online sites, TV, radio and podcasts. We hope you will sign up and join us. Thanks again, everyone. We look forward to seeing you next time. Take care. [ Event Concluded ] ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download