While industry associations, chambers of commerce, Rotary, and other professional groups offer opportunities to make new connections and gain knowledge, not all will give you the same bang for your buck.
Market research can help small businesses in many ways. Learn how and find out about resources that can help.
Whether you’ve just launched a startup or have been in business for years, it’s critical to control your company’s overhead costs. Overhead expenses, the fixed costs (rent, insurance, etc.) of operating your business, have a tremendous impact on your bottom line. How effectively you manage them can mean the difference between profitability and extinction.
It pays to carefully review what you’re spending on overhead and find ways to reduce those costs. Not sure where to start? Consider the following ideas:
7 Tips for Trimming the Fat From Your Small Business’s Overhead Expenses
1. Explore sharing marketing costs with complementary businesses in your local area.
Brainstorm ideas with fellow entrepreneurs about how you can cross-promote each other and get exposure through collective efforts.
For example, a bed and breakfast that serves as a wedding venue, a photographer, and a florist could all save money by splitting the bill and running an ad featuring all three businesses in the local newspaper.
2. Keep a tight rein on travel and entertainment expenses.
Have a clear policy and budget for these expenses. Under some circumstances, it might make sense to hold business meetings that involve treating clients to lunch or dinner, but be judicious in determining when that’s necessary. Wining and dining costs can add up quickly when no guidelines or boundaries are in place.
3. Reduce the need for office space by having a virtual team.
As your business grows and you need to add headcount to your team, consider allowing employees to work remotely. This can help you avoid needing to lease or buy a larger office space, and it will help you reduce the costs of office supplies and utilities, as well.
4. Be selective about the memberships and subscriptions you maintain.
Besides the challenges of finding the time to participate in multiple networking groups and professional organizations, the membership fees can put a strain on your budget. Strategically choose the organizations you join by considering whether they provide ample opportunity to build relationships with your target customers and whether they are necessary for your professional reputation.
For example, the owner of a tour company would likely benefit immensely from a membership to the local visitor bureau whereas professional organizations not focused on the travel and tourism industry might not offer as much return on investment.
5. Pay the annual fee rather than on a monthly basis for cloud-based software.
Even though the lump sum annual cost may sound like a lot of money compared to the monthly fee for online software programs, paying for a year upfront can often save an appreciable amount of dollars over time.
For example, a subscription to Evernote Plus costs $3.99 per month with the month-to-month plan and the equivalent of only $2.92 per month by paying $34.99 for the annual plan—a savings of 27 percent.* Similarly, Hootsuite offers its Professional subscription for $14.99 per month, or you can choose to pay for an annual subscription for $119.88, which is the equivalent of $9.98 per month—a 33 percent savings.*
By switching from month-to-month plans to annual subscriptions for several or all of the software solutions you’re using, you may discover you’ll cut costs considerably.
6. Collaborate by phone and email when it can be just as effective as meeting face-to-face meeting.
With the high price of gasoline, it makes good economic sense to reduce how much you drive. While some business dealings require face-to-face interaction, many collaborative efforts can be accomplished through a phone call or email. When appropriate, suggest that you talk with customers and project partners via phone or exchange information through email. You might find that they, too, would rather converse that way. Not only does cutting back on driving decrease your mileage costs, but it also saves valuable time and wear and tear on your vehicle.
7. Leverage rewards programs.
Take advantage of free rewards programs that retailers, your credit card, airlines, and other businesses offer. From office supplies to business furnishings to discounted airfare to cash back, these programs enable you to get exclusive deals, rebates, and other incentives that can save your business money.
Where to Turn for More Tips on Running a Profitable Business
For more insight into how to manage your business’s overhead costs, contact a SCORE mentor for guidance. With experience in all aspects of starting and running a small business, our mentors can help you objectively review your spending and brainstorm ways to run a more profitable company.
*According to the company’s website on 8/30/2018
Since 1964, more than 10 million entrepreneurs across the United States have launched their companies and overcome challenges with the help of SCORE’s free guidance and resources. Yet everyday, we receive calls and emails asking what we do, how to access our services, and if our services are really free (yes, they are). Read on to learn how SCORE can help you achieve your small business goals.
SCORE can help you with:
- Determining the steps that need to be taken to launch a business
- Developing a business plan
- Creating a marketing plan
- Making realistic financial projections
- Understanding the basic elements of accounting and bookkeeping
- Understanding the basics about different business entity types
- Identifying funding options to start or grow a business
- Conducting industry research
- Analyzing the competition
- Identifying a business’s target market
- Developing product pricing
- Navigating hiring and human resources challenges
- Managing vendor relationships
SCORE Maine Services and Resources – How can we help you?
The cornerstone of SCORE’s services is our free business mentoring. SCORE volunteers have experience and expertise in all aspects of starting and running a business. No matter where you are in your entrepreneurial journey, what type of industry you’re in, or what obstacles you’re facing, we have mentors who have the knowledge and connections to assist you in moving forward.
We regularly hold workshops on a variety of topics of interest to new and existing business owners. They serve as valuable, interactive opportunities to boost your business acumen and connect you with other entrepreneurs in your community.
Articles, eGuides, and More
Our library of blog posts, checklists, infographics, videos, podcasts, and other resources offer diverse ways for you to gain knowledge about business planning, marketing, sales, funding, accounting, operations, and the many other essential aspects involved in successfully launching and running a business.
We help you save time and effort by providing templates to help you as you tackle:
- Developing a business plan
- Forecasting revenue and expenses
- Settting prices for your product and services
- Writing operating agreements
Get Started. Get Growing.
Contact us for more information about how SCORE’s services and resources can help you make your entrepreneurial dreams a reality. Whether you’re just beginning to explore a business idea or have an existing company that you want to take to the next level, we’re here to offer insight and direction!
Small businesses, just like mega-corporations, need to keep a pulse on whether they’re on the trajectory toward meeting their goals. Key performance indicators (KPIs) are tools that can enable them to do that.
What are Key Performance Indicators?
KPIs are measurable values that demonstrate how effectively business activities are helping a company achieve its objectives. By measuring defined criteria, they help gauge performance. One company’s KPIs may vary significantly from another’s depending on their industry, size, where they are in their business life-cycle, their location, what they want to accomplish, and other factors.
How Can KPIs Help Your Small Business?
KPIs provide a clearly defined way of assessing the progress a business is making toward its strategic or operational goals. KPIs link to target values that determine whether an activity or area of operation is or is not meeting expectations. When reviewed on a monthly, quarterly, or semi-annual basis, KPI results can help a company identify areas of weakness and enable it to make adjustments before those shortcomings result in missing critical business objectives.
Examples of KPIs
Some examples of KPIs that a business might use to monitor its effectiveness include:
Marketing KPIs like those below can shed light on how effectively and cost-efficiently a business’s marketing and advertising efforts are contributing to reaching company goals.
- Number of unique website visitors
- Number of guest posts published on industry blogs
- Cost of new customer acquisition
- Number of new email subscribers
- Number of whitepaper downloads
A business might use various KPIs to help determine if sales efforts are meeting expectations for prospecting, closing, and upselling.
- Number of new leads
- Number of new customers
- Monthly revenue per customer
KPIs related to products can help a business monitor potential gaps in meeting target market needs, quality issues, and production inefficiencies.
- Cost per unit
- Number of customer issues or complaints
- Number of product returns
Financial KPIs can help a company track if it is growing its revenue at an acceptable rate. They can also help determine if product/service pricing and expenses are in line.
- Revenue growth rate
- Gross profit margin
- Net profit margin
- Cash flow
Customer Service KPIs
KPIs that measure customer service activities can help reveal how well and how efficiently a company is serving its customers.
- Average time per customer call
- Number of repeat customer calls
- Customer retention rate
- Customer satisfaction rating (perhaps through an online customer survey)
The list above isn’t exact nor exhaustive; a business might track different or additional KPIs based on its unique situation.
Tips for Establishing KPIs
Before a business can decide on its KPIs, it must first have clear goals—for instance, “for 2018, increase service revenue by 4 percent over 2017” or “increase net profit by $100,000 this year.”
KPIs must be:
- Relevant to the business goals
- Specific (have a target value)
- Achievable (not outside of the realm of possibility)
Fortunately, if you aren’t familiar with goal-setting or working with key performance indicators, you don’t have to go it alone. Our SCORE mentors have experience in all aspects running a small business, and they are here to help by providing guidance, input, and feedback. Contact us today to schedule a time to talk with a mentor who can help you develop your KPIs and stay on the road to success.
If you’re driving cross-country to a destination you’ve never visited before, would you want to leave home without your GPS?
However, new business owners sometimes make the mistake of accelerating at top speed to launch their companies without having a business plan to guide them.
A business plan serves as your roadmap. It describes your objectives and the strategies you’ll use to achieve them. Like a GPS, it offers assistance to help you get to where you’re going. And like a GPS’s directions—which change depending on traffic conditions, detours, and other unexpected circumstances—a business plan is a flexible tool. As you encounter market demand changes, new competitive pressures, altered regulatory requirements, and more, you can revisit your business plan and make adjustments to reset your course.
What does a good business plan cover?
What a company includes in its business plan depends on the nature of its business, whether it wants to pursue funding, and other factors. Some companies might find that a simple two-page business plan provides enough direction while others will need one that’s far more extensive and detailed.
The following elements are commonly found in business plans:
- Executive Summary
- Business Details
- Market Analysis
- Management and Organization
- Description of Products and Services
- Marketing and Sales Strategy
- Financial Projections
- Supporting Data
This section of a business plan summarizes what your company is, what it does, where it’s located, and its mission. You might decide to include an overview of your leadership team, staff, finances, and growth objectives.
This includes detailed information about your company and the problems it solves for its customers. In this section, share about your business’s competitive advantages (e.g., team expertise, use of advanced technology, etc.)
To complete this section, you’ll need to do some research to learn about your target market and industry outlook. This is where you’ll identify what your competitors are doing, the market challenges you anticipate, and how you intend to successfully compete in your market.
Management and Organization
This section explains how your company is structured and managed. Will you operate as a sole proprietor, partnership LLC, or some form of corporation? It should also share about the people who are running your company, including their level of experience, education background, and skills they bring to the table.
Products and Services
In this part of your business plan, share details about the products and services you offer. How do they benefit your customers? Are you safeguarding your intellectual property by applying for patents or copyright protection? What is your research and product development process? What is your pricing strategy?
Marketing and Sales
Describe your strategies and tactics for attracting new and retaining existing customers. How will you reach your target audience and what does your lead generation process look like?
This portion of the business plan has a two-fold purpose. It’s for your own benefit (to help you establish your financial goals and expectations) and for potential lenders who want to assess how well your business might perform financially. Within this section, businesses often include sales and income projections, an expense budget, cash flow statement, balance sheet, and break-even analysis. Graphs and charts can be particularly helpful in this section to aid understanding and highlight key information.
Having an appendix at the end of your business plan will allow you to provide supplementary documentation and information, such as credit history, resumes, patents, licenses and permits, contracts, product guides, or items specifically requested by a lender or investor.
Where to Find Help in Developing Your Business Plan
You can find many online resources that offer business plan templates. For example, the Small Business Administration has a Build Your Business Plan tool, which provides a step-by-step guide for creating a business plan. Also, SCORE has a downloadable Business Plan Template for startups. As you use these tools to get started with your business plan, consider reaching out to a SCORE mentor for guidance and feedback, too. With experience in helping business owners in nearly every industry start their companies, our mentors can offer valuable insight as you develop your business plan and use it as your company’s GPS to success.
As 2017 winds down, it’s time to think about what’s ahead for your business in 2018. The best way to start is by reflecting on what went right—and not so right—for your company over the past year, and considering where opportunities lie in the new year.
Fortunately, you don’t have to go it alone. SCORE mentors are here to serve as sounding boards and advisors as you evaluate your business and plan for the future.
Here’s a checklist of essential items a SCORE mentor can help you assess:
- Your business plan (road map)
It’s rare that a company writes a business plan that completely stays the same over time. With so many internal and external influences, your company’s procedures, goals, and objectives are bound to change. Now is the perfect time to revisit your business plan and update it, so it accurately reflects the roadmap you’re envisioning for your business in 2018.
- Your budget
Take an objective look at your financials (including comparing your actual revenues and expenses to those that you budgeted in 2017). Use that information to identify discrepancies that need further analysis and to realistically forecast your budget for 2018.
- Your marketing strategy and tactics
Consider how effective your efforts have been throughout the year. What campaigns and activities have provided the most ROI and what has fallen flat? Are you on the right social media channels to reach your target audience? Identify your successes and failures so that you can develop a solid marketing plan for the upcoming year.
- Your products and services
Will it make sense to expand or enhance the portfolio of products and services that you offer? Consider what customers have been asking for and market trends. Also, identify any products and services that are failing to sell or that sell but aren’t profitable. You may want to consider removing them from your offerings.
- Your market
Sometimes the difference between the success and failure of a product or service can lie in reaching the right prospects. Are you targeting the ideal market segments in your marketing and sales efforts? You may find you need to change your focus or extend your brand’s reach to obtain better revenue opportunities.
- Your systems and processes
Your business’s profitability can depend upon how efficiently you run your company. Are you able to keep up with sales inquiries? Are you able to fulfill the demand for your products and services? If you’re having issues with these and other aspects of running your business, you may need to implement (or fix) processes and systems that enable you to operate your business more effectively. Or you might discover you need to outsource some tasks or hire employees.
Owning a business requires an open, objective mindset and a willingness to adapt if you want to put it on a trajectory of success. SCORE mentors can help you down that path by providing insight and guidance as you review your business’s past performance and goals for growth. Mentoring is free, so there’s no reason not to take advantage of SCORE volunteers’ expertise and experience in all aspects of starting and running a business. Contact us today.
The 2017 SCORE Awards celebrates the best in small businesses from across the country and honored Corriveau and his SCORE Maine mentor, Donna LeBreux for their work in launching Corriveau's innovative business, The One Gallon Soap Company.
If you’re like many small business owners, you started out as a “solopreneur”—a one-person bands who does it all. However, as your client lists and product or service offerings grow, there comes a point where you can’t do it alone.
Some signs that may indicate it’s time to expand your team include:
- Tasks are slipping through the cracks.
- You’re missing deadlines.
- You’re making silly mistakes.
- You’re finding it difficult to stay organized.
- Customers and vendors are getting frustrated because you don’t respond promptly.
- You’re working constantly and beginning to feel burnt out.
If any combination of the above sounds familiar, consider delegating some work. Whether you decide to add employees to your payroll or work with independent contractors, by making others a part of your team you’ll be able to focus on what you do best and ensure other responsibilities don’t go undone.
So, should you hire employees or outsource work to independent contractors? Both have their advantages and potential disadvantages.
Pros Of Hiring Employees
- Because they’re part of your business, they stand to gain a stronger understanding of your business’s internal processes, needs, and expectations than an independent contractor might have. Therefore, they will know how to do their work and understand how that work fits into the big picture.
- The hourly rate you pay them will probably be less than you would pay to a contractor.
- You have more control over the work. As an employer, you establish how you want tasks done, what technology and tools to use, office hours, etc.
- When your workload increases, you have someone who is readily available to assist. Your work is their priority; they aren’t dividing their working hours between you and other clients.
- If you need to step away for a day or go on a week-long vacation, you have someone you can rely on to keep the business operating while you’re gone.
Cons Of Hiring Employees
- In addition to wages, you may also be required to provide certain benefits to employees. That can add additional cost to your bottom line.
- You add the complexity of payroll to your business. Certain paperwork is legally required and you’ll need to withhold employees’ federal, state, and local taxes; social security; and Medicare from their paychecks.
- Even if your business experiences a drop in sales or profitability, you still need to pay your employees their wages and salaries.
- If you discover an employee isn’t a good match for your business, terminating that worker might not be a simple process.
Pros Of Hiring Independent Contractors
- You don’t have to commit to paying them regular wages or a salary, nor are you required to provide benefits. So, even though you’ll likely pay them more per hour than you would employees, they could save you money overall.
- If things aren’t working out with an independent contractor, you simply don’t have to work with them anymore (after any contractual obligations are met). You don’t have a termination process to adhere to as you would with an employee.
- It brings in someone with the specialized skills you need for a particular area of your business. That may mean little to no training necessary.
- They are responsible for their own permits and professional licenses.
Cons Of Hiring Independent Contractors
- You lose some control over the work. Independent contractors typically have the autonomy to work from where they want, use the tools and technology they want, and work the hours they want.
- Independent contractors often work remotely, so it may be difficult to know exactly how work is progressing.
- Because they serve multiple clients, independent contractors may not be able to meet your deadlines as quickly as you would like.
- Unless you have an agreement with an independent contractor that explicitly states it, you may not own the copyright for works that an independent contractor creates for you.
To make sure you make the right choice for your business, consider the type of work you need help with, the amount of work you need to delegate, whether the work is recurring or sporadic, how much control over the work process you’re comfortable with, and the legal and financial impact your choice will have on your business.
A SCORE mentor can serve as a valuable sounding board and source of insight as you begin working through all of that. Contact us today to schedule free counseling from our volunteer mentors who have knowledge and experience in all aspects of starting and running a small business.
Many startups struggle with financing their small businesses. With the average cost of starting a business approximately $30,000, most entrepreneurs need to seek some source of funding beyond their own coffers. For some, borrowing money from friends and family may be their only option.
According to credit analyst and volunteer SCORE Portland mentor Matthew Buonopane, “The five Cs of credit are of primary concern to banks when lending to businesses. These C’s include: character, capacity, capital, collateral, and conditions. While character, capital, and conditions may be in place to the bank’s satisfaction, collateral and capacity, or a history of good operating performance, are often absent or difficult for small business owners to obtain.”
Using funds from relatives and friends comes with unique risks and benefits, so carefully consider the pros and cons before asking Aunt Jane to float you a loan.
- Borrowing from friends and family may give you quicker access to cash. They probably won’t demand as much documentation about feasibility and your business plan before helping you financially.
- You may have more flexibility in setting the payback arrangements so you’re not feeling strapped or overstressed as you start and grow your business.
- When friends and family invest in your business, you may find they have an abundance of enthusiasm about your endeavors. Having their moral support and encouragement can keep you motivated and optimistic.
- If your business fails or hits hard times, you risk hurting the financial security of those you love if they extended themselves to support you.
- Borrowing from loved ones may cause your relationships to become strained if your near-and-dear lenders feel—since they loaned you money—they have a right to tell you how to run your business.
How Can You Borrow To Build Your Business Without Breaking Trust
First and foremost, be upfront about the risks and challenges involved in starting a business so your friends and family know what they’re getting into.
Also, consider these other tips before you accept funding from them:
- Conduct research and do your due diligence before asking for money. Do you feel confident your business will succeed? Ask yourself, “Would I invest in this business if someone asked me to?”
- Be realistic when considering what funds your business will require. Get a good handle on the costs your business will have to cover so you’re asking for an amount of money that’s in line with your needs.
- Determine if the funding will take the form of a loan or a share in your business.
- Craft a contract and lay out a payment plan. This will ensure you and your friend or family member are on the same page and have the same expectations.
Get Help In Considering All Options
Even though you may think borrowing from friends and family is your only option, there may be other viable funding resources that you’re not aware of. By contacting SCORE and setting up a time to meet with a mentor, you might learn about alternative financing opportunities. Reach out to us today. Mentoring is free of charge, and our mentors have experience in all aspects of starting and growing a small business.