$8,000+ In Net Profit After Sending 97 Letters

Direct mail is a beautiful thing once you have a well-crafted letter written in our style of marketing.

Our client, Brad Podmore of Coffee & Tea Supplies WA, sent 97 copies of the letter we wrote for him and picked up a new client worth more than $8,000 in net profit per year!

Brad’s Giovanni blend coffee is so good that he retains cafe and restaurant clients for many years – hence the Lifetime PROFIT Value of that new client would easily be $32,000 over 4 years.

To read other marketing success case-studies, click here.

FREEING UP YOUR TIME – why use video?

These days, most business owners use computers and technology. For example, you would have a computerised bookkeeping system in your business. Now we know that you will have say some very specific instructions for a certain bookkeeping process. Or, for that matter, ANY SOFTWARE PROGRAM your staff may be using.

Wouldn’t it be great to avoid those ‘pesky’ questions from staff about HOW to do something on the computer. Or, perhaps your existing staff know how to do something – but if they left your employment, would you know to train the replacement?

SOLUTION: Record a number of very short videos (less than 5 minutes).

Though – don’t record how to use your business software. e.g. how to add a contact, etc. Those videos will already exist on Youtube and on the software developer’s websites.

What you want to do is – only record a SPECIFIC procedure unique to your business. For example, a special way your staff create an invoice, or use MS Outlook for a particular task, or use your in-house production software, etc. Also you don’t want to record dozens of videos for seldom performed tasks either – just the most common daily or weekly functions in your business.

Video is simply just another documentation tool that can be used to free up your time as the business owner. Use it well.

Building Your Business Asset – How Much Is Your Business Worth?

Bumped into one of my colleagues in the business broking industry – John Denton from Performance Business Sales.

It’s always good to chat to John as he has the ‘finger on the pulse’ regarding the business sales market goes.

One particular statistic that I’m always interested in – is the ROI multiples for particular industries. John and I know that, for example, newsagencies and Australia Post agencies have a high multiple of 3 – that is the listing ‘value’ will be 3 times the net profit.

However, John Denton mentioned that as the trend is away from people buying newspapers and magazines – that these business will be worth less – but, at the moment people are still willing to buy newsagencies and Australia Post agencies at FULL PRICE – unaware of the trend – ahhhh, very interesting.

So – benefit for you? Well, it’s aways good to know HOW much your type of business is worth if you were to sell it – it’s worth contacting a business broker to find out!

Article published from our head office – Balcatta, Perth, Western Australia.

How To Get More Customers Using The Internet And Social Media Marketing…

Maximising your online presence using a keyword bank

How do you search for suppliers on the internet? How do potential customers find you?

It’s a different process… rather than open the index page of the Yellow Pages or thumb through the local newspaper, consumers find services and products by the use of keywords and keyphrases. Unless your website contains these keywords and keyphrases – you won’t get people coming to your website.

A keyword bank is the most valuable resource for your online presence!

What is a keyword bank? It’s a list of keywords and keyphrases that are related to your business.

The image on above illustrates sample keywords for an accounting firm.

Sure, your website designer or your Internet advertising company may have used some of the popular terms (keywords) on your website or in your internet advertisements, but you, as business owner, should know WHAT the popular search terms ARE to ensure that your website contains articles and information USING those keywords.

Now this ‘keyword research’ is easy – you don’t need to pay someone thousands of dollars to do it. In fact, Google have a FREE search tool to assist you with your ‘keyword research’. Check it out…

Google Keyword Research Tool – click here

Mobile/Internet Shopping – How Will It Affect Retailing?

What do you think about the above article from the Wall St Journal? It’s an important shopping trend not only for US consumers but for Australian shoppers as well.

Retailers, resellers, wholesalers, manufacturers and anyone that sells a ‘product’ will be affected by the growing trend towards researching and even purchasing online. Once wary and shy consumers are now experienced online consumers by the use of ebay, Google, Gumtree and even Facebook.

Whilst many traditional brick’s'morter retailers look at online shopping as a possible way to reduce their overheads (offering more stock without increasing floor space and reducing staff costs) it means they are now competing even more.

This means that the retail experience for the customer has to be even better so that consumers WANT to make the trip to a retail store. Retailers who don’t improve the customer experience and customer service will struggle to maintain revenue and will ultimately go out-of-business.

Corporate Business Finally Uses Some Good Marketing

Ahhh, so refreshing to see a corporate business use some good marketing and a bit of fun.

Traditional Corporate Marketing – oh, so, so boring!

Isn’t it amazing that almost all the marketing we see as consumers (and business owners) from the corporate world is so dry and boring. This includes the thousands of corporate and big business web sites out there.

Corporate businesses want to be seen as ‘Professional’, but professional doesn’t mean they have to put us to sleep!

Most of us respond to interesting news, we want to be entertained and have a little fun. Adding a bit of humour and personality in marketing goes a long way to CUTTING through the ordinary.

How can you use personality in your business marketing?

The main ‘trick’ is to use ordinary language and write like you are speaking to a person. Tell stories and explain why you are having a sale, or why you created a particular product, etc. Get excited about your product and service BENEFITS. Use emotional wording.

For example.

Treat yourself and your taste spuds to our tender, juicy and mouth watering MEX beef steak – cooked to perfection with your choice of tantalising sauces. If you don’t think our MEX is the best steak you’ve ever had – you won’t have to pay for it. In fact, we’ll give you a $30 voucher to use towards another main meal of your choice FREE!

So much better than…

Porterhouse steak $32.00.

Business Saves $1,177 Annually In 5 Minutes!

One important area of improving your profit margins is to reduce your costs. Sometimes you can reduce your costs without a reduction in the quality of service you receive from a supplier, sometimes you’ll see lower quality – cheaper isn’t always better. However…

I saved a client $1,177 in 5 minutes. Without mentioning the name of the client, I can say the business is located in Perth. For illustration purposes, let’s call my client – Mary.

Area saved #1 : Mary sent me an email saying that she was still paying $77 per month on her Sensis bill for a CitySearch web site.

CitySearch was one of the many online directories that popped up during the dotcom boom in 1997-2000. It was bought out by Sensis. Back in the 1997-2000 period many businesses were called with an offer of a new website for only $77 per month.

What many businesses didn’t realise is that this monthly fee went on forever. Sensis never contacted Mary to say “Hey we’re billing you $924 per annum for a web site we built 10 years ago, we can now update your website for free if you like.”

Mary’s website was replaced over a year ago (not by CitySearch), so I knew that the $77 per month was a totally unnecessary expense. I got Mary to cancel the CitySearch service. I only wish Mary brought it to my attention sooner. She could have saved over $1,000 in the past year.

STRATEGY FOR YOU : Check all your supplier’s invoices and question any unnecessary services.

Area saved #2 : Do you have a website? If you do you’ll be paying an annual fee for domain name renewal. Did you know however that I use Netregistry (an Australian company) – their annual fee for renewal is $44.95. If you’re paying any more than that you are paying too much.

STRATEGY FOR YOU : Check the bill from your domain name supplier.

Area saved #3 : Unnecessary domain name registration. Mary had a website ending with .net.au. DotnetDotau domains are really not needed. If you want to secure another domain for your business, register the Dotcom name as well as your DotcomDotau address.

STRATEGY FOR YOU : Don’t register or renew a DotnetDotau domain (.net.au). Save the money instead.

Mary’s savings per annum : $984 for CitySearch, $140 for (.net.au) and $113 for using Netregistry to renew her DotcomDotau address. Total saving $1,177.

(Actually it took less time for me to save my client $1,177 than to write this email. But I thought you’d appreciate this information.)

The lesson : Charges from suppliers for unnecessary or excessive fees is commmon. It’s worthwhile to periodically check all your invoices and question any charges you don’t know about or feel are overpriced. This is an easy way to improve your profit margins.

What’s Basketball Got To Do With Marketing?

A quote from Michael Jordan : "I have missed more than 9,000 shots in my career. I have lost almost 300 games. On 26 occasions I have been entrusted to take the game winning shot, and I missed. I have failed over and over and over again in my life. And that is precisely why I succeed." What a great attitude and what a great man! Isn’t fascinating that every great person has this type of winning attitude and ‘mindset’. After all, in sports and in business – no game or venture (or even every marketing campaign) succeeds every time.

Even successful business leaders like Steve Jobs, Bill Gates and Donald Trump have failed with certain ventures (read their biographies to find out what they were). But, these successful business people know that one or two ‘home-runs’ can outweigh ten or more failures and make them very rich.

If something doesn’t work, try and try again. If all possible, seek mentors or experts to achieve goals faster. Our expertise here at Kinetic is ‘Great Business Marketing‘. Whether it’s business-to-business marketing (B2B) or business-to-consumer (B2C) we aim to bring in quality leads (enquiries) into a business at the lowest cost possible.

When it comes to business attitude, we found that the wealthiest business owners have a strong ‘marketing mindset’. They understand that they need to ‘invest’ in order to achieve a ROI. For example, a business owner spends $1,000 on advertising, and brings in sales of $5,000 with a profit of $2,000.

Question is – How often would you run that advertisement? I hope you answered – "As often as possible."

How Are Businesses Valued?

Business valuation can be a difficult figure to obtain because there are so many variables. Business valuation models (methods) have been developed to make the process easier and more accurate. Some of the methods include :

• Return on Investment (ROI) method
• Market value
• Asset value going concern
• Asset value liquidation
• Net present value

The most appropriate method of valuing the majority of small businesses (up to $1 Million) is through the ROI method. The technique measures the return (i.e. profit before owner’s salary) received from an investment (i.e. purchase price) and is calculated by the following formula:

Price = net annual profit x ROI % (for that industry)

For example: if a business is making $50,000 profit and the accepted ROI for that industry is 30% then the price equals $166,667.

Here are example ROI’s for different industries (information provided by GMO Business Brokers – September 2009):

• Book Stores 20% to 25%
• Boutiques 75% to 80%
• Florists 70% to 100%
• Liquor Stores 22% to 28%
• Lotto Kiosks 22% to 28%
• Newsagencies 25% to 30%
• Restaurants (Fine Dining) 70% to 80%
• Lunch Bars 50% to 75%
• Manufacturing 25% to 38%
• Wholesale 27% to 35%

27 Vital Questions You Should Ask Before Buying A Business

I met the husband and wife owners of a small retail shop recently. The business was running at a $65,000 (approx) annual loss. They had purchased the business over 12 months ago and had been steadily losing money. I looked briefly at their books and realised they had paid too much for the business. On top of that, both of them had no retail business experience and they had decided to cut out all of the advertising that the previous business owner had been running – due to cost reasons only.

I asked them how much research and due diligence had they conducted before buying the business. I was shocked by their response…

"We asked the solicitor who was performing the business settlement service if the business was a good buy."

Talk about throwing $$$ away. Needless to say, they no longer have any available capital to invest in marketing or anything else. The outcome will be to close up shop and accept the loss, and the lesson.

So how do you actually avoid this type of business disaster?

Ask yourself these questions…

1. What do I want from being in business?

• For lifestyle (to work fewer than 40 hours per week, with the freedom to go on holidays whenever you choose)?
• To make a profit by building the business up (increasing sales)?
• To generate more cash-flow than a 9-to-5 job?

If your reasons are not listed above – don’t buy the business. If you want to be involved in what the business does (manufacturing, retail, services, etc) out of personal interest, it’s much less stressful and safer to be an employee.

2. Why am I buying this particular business?

• It’s in a prime location.
• It has a massive customer database which is not being used to its full potential.
• You’ve created a specific plan to massively grow the sales revenue using knowledge you’ve accumulated from being an manager in a similar business, or from a previous business(es) owned.
• The business has ‘something’ (Intellectual property, branding, contracts, etc) that you cannot easily duplicate or purchase.
• You can buy the business at a price much lower than the market value. The vendor is highly motivated to sell.

3. What will be my exit strategy to get out of the business?

• Sell the business for a profit
• Sell the business to a major shareholder(s) and become a silent partner
• Pass the business down to a family member
• Franchise

4. What skills do I have that will make me successful in this business?

Please don’t think that all that is required to ‘improve’ the business is cosmetic – by changing some of the products, re-designing the store interior, etc. These ‘improvements’ won’t double sales.

Only very good marketing, a good sales team and good systems will increase sales significantly. Think MARKETING, SALES and DELIVERY of the product or service (using systems).

5. What skills will I have to "hire in"?

6. What cash flow do I need?

What’s my break-even cash-flow (to cover expenses, wages, etc)?

7. How much working capital do I have access to?

8. Will this business suit me i.e. hours, type of operation?

To ask the vendor who is selling the business…

9. How long has the business been operating?

10. How long have they had the business?

11. Why are they selling?

• Worn out from working long hours for little money?
• Couldn’t make the business work (perhaps in its current location)?
• Actual legitimate reasons such as retiring, moving to another state or country, or looking for another challenge in another business?

12. What is the Cash flow and Profit (Gross and Net) for the business?

13. What is the business owner paying him/herself?

14. What do the last 3 years of financial accounts show?

15. How has the business been valued?

Using the ROI method – based on ‘current’ profit of the business? Certainly not priced on what effort & money the current owner put into the business over the years. Only profit counts.

16. Who are the key customers, suppliers, staff?

17. What are the terms and length of any leases?

18. Will the current owner stay on and assist for a period of time?

Ask them to put this period in WRITING!

19. What areas of the business are systemised?

20. Is there a business plan?

21. How many hours a week does the current owner work in the business?

22. When was the last time the current owner took a holiday?

23. What are the marketing systems like? Do they make money for the business?

Review all advertising material, the customer database, the POS systems (if applicable), any loyalty programs, special promotional material, etc.

24. What facts support the "story" of the business?

25. How secure is future income i.e. contracts with customers and suppliers?

26. How dependent is the business on the current owner?

27. What will it take to grow the business so I can sell it for a profit?

Before you make an offer!

1. Get your accountant to check the financial accounts

Obtain actual lodged tax returns with the government, not the business owner’s printout or handwritten bookkeeping summary.

Your accountant will ensure that the business has cashflow and is not over-capitalised.

2. Hire a solicitor who is experienced in buying businesses like the one you are looking at.

Your solicitor will ensure that the contracts with suppliers, the landlord, etc don’t have any surprises.

3. If you are spending over $250,000 on the business, or even if you want to be extra careful, pay for a business valuation.

Pay a licenced valuer to come in and audit the business. Even if you have to spend $7,000 for the valuation, it’s still much better than paying $50,000, $100,000 or more than you should have to buy the business.

You may even be able to ‘use’ the valuation to negotiate a better price.

The lesson

Homework always pays off in business. Taking shortcuts and buying a business on emotion often lead to regrets. Don’t let this happen to you.

25 Things You Absolutely Must Do To go From Nothing To Self-Made Millionaire Within The Next 7 Years …

I came across this interesting article by Bob Bly. I have added my comments in italics.

THE 25 PRINCIPLES OF BUSINESS SUCCESS BY BOB BLY:

1. Have a definition of success.
2. Live below your means – with occasional exceptions.

A good book to read about this is the Richest Man In Babylon

3. Learn a money-making skill that will pay you at least twice the national average income.

Currently the national average wage in Australia is $65,000 (March 2010 figures). To earn double this my suggestions for well-paid skills include: Sales, marketing, copywriting, computer programming, public speaking, writing.

4. Improve your level of skill or the demand for your skill until you are paid twice as much — $200,000 a year.
5. Set a financial goal of a liquid net worth of $2 million excluding primary residence by age 50.
6. If you are going to have children, have them young.

Not so sure about this one – I’m 40 now and I enjoy spending time with my young son very much.

7. Assign a dollar value to your time and outsource everything you can, except what you are great at, to people who charge less than your hourly rate.

This is very important! Most small businesses I work with try to do everything themselves and work 60 hours (plus) per week. I usually initiate a program to delegate more low-skill level tasks to other staff (and external contractors).

8. Learn how to negotiate win-win deals.
9. Be a specialist, not a generalist; focus on core skills, markets, areas – three maximum, no more than that.
10. Micro niche
11. Become an information junkie and be sure to read in “adjacent areas”
12. Modelling

Don’t re-invent the wheel. Another word for modelling is mentor. In almost every business situation – someone has been there, done that – find out who they are and learn from them.

13. The Real McCoy Strategy

Not sure what Bob Bly is referring to about ‘The Real McCoy Strategy’ here.

14. Don’t lower price; add value
15. Do things that are important but not urgent
16. Little details count
17. Achieve balance between 4 success factors
18. Attitude of gratitude
19. Understand the best and worst investments you can make
20. Do something you love
21. Stop trading hours for dollars
22. Stop making excuses
23. Understand Robert Gibert’s success formula : SWL + SWL = SW
24. Put it in writing
25. ACTION

Lots of great ideas here – how many of them can you work towards this year?