What other accounting systems are used by Australian businesses?

Interesting question… I found this useful list:

• Business Vision 50 Accounting
• BusinessWorks
• DacEasy
• MAS 90
• MAS 200
• Microsoft Dynamics GP
• Microsoft Money
• MYOB Accounting
• MYOB Premier
• One Write Plus
• Peachtree
• Sage – Simply Accounting
• Sage PFW
• Quickbooks
• Quicken
• Timberline

Any others I’ve omitted?

WHY? Answer: A business is more valuable when it can operate profitably, survive and grow and survive without the business owner.

The business owner needs to spend a little time EACH and EVERY day (as much as possible) to work on "Entrepreneurial tasks" and not "Employee tasks". Entrepreneurial tasks like marketing planning and documenting processes (or working with a staff member to document processes) adds significantly more value to a business than $18-$22 per hour employee tasks like making deliveries, filing, bookkeeping, etc.

For more information about which business tasks are entrepreneurial – click here.

HELP – I’m a ‘lost-customer’ with money to spend!

It just goes to show you that most businesses will spend an extraordinary amount of money to attract new customers and clients, but do very little to keep in touch with past customers. Sales are lost.

The leaky bucket photo above illustrates this problem.

I believe the main reason is that customer marketing is often ‘CLUNKY’. It requires administration effort to send something to a customer.

If the business owner or salesperson don’t ask the staff to organise it – it will never happen.

We understand that the business owner (or salesperson) wants the results (i.e. the sales). That’s why we provide a number of AUTOMATED customer follow-up systems to our clients.

If you would like more information about our AUTOMATED marketing systems, click here to send us an email.

That’s great advice, unfortunately so few follow it. Many small business owners TRY to do everything which means THEY are the business and they are also the GOODWILL – it’s not a recipe for success. Being keen to find out what works and what doesn’t, I took the time to personally meet with dozens of wealthy business owners over the past five years – here’s what they had in common :

• They set business goals and targets. And targets for themselves and their staff.
• They allocate at least 2 – 8 hours per week to work ON their business not IN it.
• They take the time to improve their knowledge of marketing and business.
• They create good business systems so the systems support the staff (not the business owner).

It’s not hard to do. It’s more about mindset than anything else!

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."

So how do we achieve this goal for our clients? The answer : We start with our Kinetic Media & Marketing ‘INSTANT CASHFLOW’ checklist!

One item on the checklist is the break-down of sales process into two components : The enquiry (lead, store browser) and the conversion of that lead into a paying customer. Often most businesses get enough enquiries, but it’s their sales and follow-up processes that are lacking. It’s easy to work out which area is the problem – we ask the business owner (and staff) to record how many enquires turned into sales. This becomes a percentage – sales conversion.

Funnily enough most business owners think their conversion is around 70-80%, but when we measure it, it’s often only around 10-40%.

It’s common for us to review the sales and follow-up systems for a business and make changes to improve sales conversion. I’ll give you an example :

A building material manufacturing company we worked with had a conversion from inbound calls to sales of only 18%. By reviewing ‘what’ they said to potential customers on the phone and then improving their telephone script, the sales conversion increased to 27%. The increase in percentage doesn’t sound like much but when you apply it to a half million dollar ($500,000) turn-over business – it equates to a massive $251,000 increase in sales.

Would you say it was worth it for this business to hire our consulting services? Hmmm, dumb question.

Summary

Improving sales conversion by examining inbound phone calls is one good marketing strategy to get more customers fast. In part two I’ll reveal another – watch this space…

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.

1) Creating a daily to-do list with 3 top things to be done. Doing your best to complete those 3 tasks – usually by ‘blocking’ out time without interruptions (from staff, no phone calls, reading emails, etc). You are essentially making an appointment with yourself (or have your PA do this for you). Any uncompleted tasks are rolled over to the next day.

2) Creating a 30-day to-do list. These are tasks to be completed this month – you pull your daily top 3 from here.

3) Focusing on high leverage tasks (entrepreneurial), rather than on medium and low leverage tasks (employee).

4) Delegating, training, systemising and giving staff the authority to make decisions on their own – so your business can run without you!

Here is a list of high leverage ‘Entrepreneurial’ business tasks (this is where you should be spending most of your time)

• Strategic planning and vision for the business
• Marketing planning
• Utilising media (press releases, advertising, direct mail, etc)
• Developing business systems (admin, legal, IT, staff, service delivery, supply, marketing, sales, etc)
• Developing information material or products (every business whether wholesale, retail, service or professional services needs these)
• Looking at your products and services and keeping up with trends in your industry
• Working on business uniqueness
• Reviewing financials and ensuring a good return on investment
• Creating Joint Ventures and Strategic Alliances
• Promoting the business – developing presentations and speaking at seminars, trade shows or networking
• Reviewing staff performance, feedback and suggestions and developing staff systems for your General Manager
• Organising customer research or reviewing customer feedback
• Meetings with your ‘Mastermind Group’ – peers in business
• Meetings with your mentor(s)
• Meeting with your ‘top’ staff – financial controller, marketing, sales and general managers (these many be shared roles in a small business)
• Delegation : Staff and outsourcing

Here is a list of medium leverage business tasks

• Sales – that is, YOU making sales
• YOU supplying the services that the business sells (auto servicing, computer servicing, chiropractic care, financial planning, etc)
• YOU supplying products that the business sells (wholesale, retail)

YOUR time spent on the above tasks really isn’t that important for you as the business owner. Everyone has access to the same amount of hours in a day. Performing the above actions will limit your income.

Please note: Sales is crucial to a business – what I’m referring to is you spending a major portion of YOUR time conducting one-on-one sales for products and/or services under $10,000 (you can hire someone to do this for you).

Here is a list of low leverage ‘Employee’ business tasks

Again – you don’t want to be doing these tasks yourself – you want to systemise and hire someone to do them for you.

• Bookkeeping and Accounting
  • Data entry
  • Payroll and staff entitlement records
  • Invoicing
  • Following up outstanding payments (account receivables)
  • Tax preparation
• Inventory
  • Ordering stock
  • Receiving and inventory of stock
  • Stock rotation
• Administration
  • Staff admin
  • Opening the mail
  • Filing
  • Basic computer stuff
• Supervising and training staff (you should be working on staff systems instead)
• Answering the telephone
• Deliveries
• And so on … you get the idea…

The four time management procedures (daily list, 30 day list, high leverage, delegating/systemising) are simple to understand and easy to follow. All it takes is a bit of self-discipline initially and then it will become routine.

If you have staff there may be some resistance to change as they may be used to ‘bugging you’ every time they have a problem – but, don’t ignore them – document their frequent questions and the answers – that way they can consult training or company procedures instead. Soon you will quickly notice how much progress you have made ‘working on your business’ and not ‘in it’.