A mission statement serves as a way to differentiate your business from your competitors. It also serves as a guidepost for your business. Before you make decisions that will impact your business, evaluating your options to determine if they line up with your mission statement can help you determine the best course of action. If something doesn’t align with your mission, it’s likely it will confuse customers, derail other initiatives, or overtax your resources.
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
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.
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.
It seems there’s a special day to honor just about everything from National Grilled Cheese Day to National Hug a Drummer Day. It’s impossible to keep up with them all, but there is a particular day that small business owners should observe every day:
Get To Know Your Customers Day
Recognized on the third Thursday of each quarter (January, April, July, and October), Get to Know Your Customers Day is a day to make an effort to learn more about your customers.
In the last half of 2017, it falls on July 20 and October 19 (past dates in 2017 include January 19 and April 20).
But why only strive to get to know your customers once per quarter? Having a pulse on what your customers need, want, and will pay for is something entrepreneurs should strive for every day. Knowing your customers is critical to your business success because without doing so you cannot be sure you’re meeting your target market’s needs.
When you know your customers, you have the insight you need to:
- Adapt your products and services to meet your customers’ changing wants and needs.
- Deliver the value your customers expect.
- Build customer loyalty.
How can you get to know your customers better?
Not all customers will freely tell you about themselves, their lifestyles, what they’re looking for, or how they feel about your products and services. Fortunately, with relatively minimal effort, you can gather that information.
- Look at online customer reviews for information about their lifestyles and preferences. Besides sharing customers’ level of satisfaction, reviews can also educate you on how, where, and why customers are using your products and services. That can give you perspective on how you might improve or expand your offerings.
- Email individual customers “just because” to see what’s new with them. It’s a no-pressure way to show customers you value and care about them and to discover opportunities to serve them.
- Schedule one-on-one coffee dates or lunch meetings to catch up with them. If the nature of your business makes this feasible, consider setting aside some time to catch up face to face and learn what’s on your customers’ minds.
- Hold a customer appreciation event. This type of gathering will enable you to mix and mingle and learn more about your customers in a laid-back, friendly setting.
- Attend other organizations’ social events. Consider attending chamber of commerce mixers, non-profit golf outings, and other activities when you know your customers will be there. These occasions provide opportunities for casual conversation rather than just “talking shop.”
If you haven’t made getting to know your customers a priority in your small business, July’s Get To Know Your Customers Day is a perfect time to start.
For more ideas on ways to get to know your customers, talk with a SCORE mentor. With experience in all aspects of starting and running a business, SCORE volunteers can provide valuable guidance and feedback through every phase of your entrepreneurial journey.
Succeeding in small business requires constant attention to detail and a willingness to adapt along the way. With a new year upon us, what better time to aspire to make your small business more profitable than ever before?
How can you get there? Here are six steps to put you on the right path.
- Evaluate your processes and systems and identify which are providing efficiency and which are holding back your productivity.
Specifically consider replacing manual processes that consume a lot of time with solutions that can automate them and that integrate with the systems your business uses. Accounting, sales, marketing, etc…where can you find efficiencies?
- Take a close look at your expenses.
Go line by line on your expense report and ask yourself what’s necessary and what is not. What’s driving up your business costs but not giving you a return on your dollars? Be honest, and consider kicking “nice to have” but unnecessary expenses to the curb in the New Year.
- Assess your pricing.
If you’ve grandfathered clients into rates from years gone by, it may be time for an increase. If you decide to raise your rates, make sure you’re providing enough advance notice to your clients (review the contracts you have in place!) and provide an explanation as to why you’re increasing pricing. And of course, thank them for their understanding and for the continued opportunity to work with them.
- Remain objective.
As the year begins and moves forward, question yourself and those you work with (employees, vendors, project partners, etc.) when things aren’t progressing as you had hoped. Are your expectations too high? Do team members have too much on their plates? Are those involved not pulling their own weight? Do your products and services need improvement? These are tough questions that need to be asked and answered honestly for you to gain an understanding of what you can do better to improve your business results.
- Take action
After figuring out what changes could benefit your business’s bottom line, you’ll need to make a plan and follow through on executing it. Write it down, breaking it down into clear, actionable steps and tasks. Then, share those action items with those you’ll depend on to help you succeed.
- Take responsibility.
As the owner of your business, change starts with you. Take responsibility and set a positive example for others to follow. By demonstrating enthusiasm and dependability, you’ll facilitate a company atmosphere that has a firm foundation of cooperation and accountability.
If you need guidance in making 2016 the best year yet for your small business, contact us at Portland Maine SCORE. Our certified mentors are knowledgeable about all aspects involved in starting and running a business.
With social media, texting, and other instantaneous ways of marketing your products and services, you might be wondering if anyone really pays attention to emails anymore.
- According to eMarketer, 69.7 percent of internet users say email is their preferred method of communicating with businesses.
- And Salesforce Marketing Cloud’s 2015 State of Marketing report shows…
- Seventy-four percent of marketers believe email produces (or will produce) ROI.
- Seventy-three percent of marketers agree that email marketing is core to their business
How Could Email Marketing Help Your Small Business?
You can use email marketing to fulfill a number of objectives. For example you can…
- Introduce new products and services.
- Announce special offers, promotions, and contests.
- Provide tips to help customers use your products and services more effectively.
- Share industry news that will affect your customers.
- Share event highlights.
- Introduce new team members.
- Highlight recent awards or press coverage your business has received.
You can get the most from your email marketing efforts when you integrate them with your other online marketing strategies. For instance, you can share links to your blog posts and other pages of your website in your email marketing messages, share your email marketing message links on social media, and incorporate links to your social media accounts in your email marketing messages. All of those things will boost the visibility of each platform you’re using.
Small Business Email Marketing Platforms
Several small business email marketing solutions exist. Some are free, and some have fees (which typically start out small and increase as you increase the size of your mailing list).
As you explore the options, consider these things:
- Your budget
- The frequency at which you’ll be sending email marketing messages
- Your level of comfort in using technology tools (some platforms are more user-friendly than others)
Most importantly, know the rules and regulations set forth by the Federal Trade Commission for email marketing. There are laws in place to protect people from unwanted solicitation emails. Fail to comply with them and you could find yourself paying a hefty fine. No small business owner needs that!
If you’re considering making email marketing part of your business marketing strategy but don’t know where to begin, talk with a SCORE mentor. At SCORE, we have a team of dedicated volunteers who can help guide you in your marketing efforts and help you with all other aspects of growing your business.
Starting a business comes with a learning curve – often a steep one. There’s a lot to consider, research, and execute. It’s not surprising that new entrepreneurs make mistakes along the way.
According to Alan Shaver, a SCORE Portland Maine mentor for the past 15 years, there are five key mistakes many new startup business owners make.
If you or someone you know is starting a small business, knowing what missteps to watch for can help you avoid getting your business off on the wrong foot.
Top 5 Mistakes New Business Owners Make
1. Underestimate the time, effort, and energy required to start and run their businesses.
“They don’t realize it will be as all-consuming as it is,” explains Shaver. “They underestimate the demands it places on them, particularly how it will impact their family relationships and their financial resources.”
He says a lot of people going into business fail to estimate that accurately, so he encourages new entrepreneurs to connect with existing business owners in similar types of businesses who have gone through the process. That can serve as a helpful reality check.
- Fail to conduct sufficient research about the industry and their type of business.
Without researching the business arenas they’re entering, new entrepreneurs often don’t have an adequate understanding of what they can expect.
Shaver explains, “A lot of people don’t want to do that kind of work, but it’s necessary to understand their business and the industry in which they’ll operate.”
“SCORE counselors direct them to various resources to enable them to learn a great deal about their proposed business and its industry.”
One that Shaver regularly shares is an online resource available at the Portland Public Library, Reference USA. It offers a wealth of information to help new business owners understand the metrics, price points, margins, and more that are usual for their types of business. Reference librarians can also assist new entrepreneurs in researching their industries.
- Understand the potential limitations of their business.
Will your business be able to sell enough to meet your income needs? Does your location provide an opportunity for growth? What qualifications do your employees need?
The above are tough questions to begin to answer unless a new business owner does financial projections and talks to others in the industry to learn from their experience.
“I had worked with a client who had a successful restaurant with a strong clientele, but his location wasn’t large enough,” shares Shaver. “As a result, he couldn’t turn tables fast enough and couldn’t achieve the revenue goals he wanted to. Sadly, he closed his business. If he had done more homework about the efficiency of a venue his size, he might have chosen a different location and remained in business.”
Similarly, but fortunately with a more successful outcome, Shaver also worked with a thriving coffee shop client who decided not to open another restaurant because he did his due diligence and projected he wouldn’t turn a profit until after three years.
According to Shaver, SCORE mentors help new entrepreneurs tackle challenges like those. They can facilitate connecting new business owners with existing business owners, and they also point entrepreneurs to the Financial Projections template on the SCORE website. By taking advantage of those resources, startups can make better decisions.
- Fail to develop an adequate business plan, specifically the financial projections.
“A lot of people allow themselves to be overwhelmed about creating a business plan,” says Shaver. “At SCORE, we encourage them to do it in small steps – to tackle it in reasonable workable bites.”
According to Shaver, seriously thinking about your business finances is crucial.
Will you make the money you intend to – or need to – make? Will you be able to pay back your investors and lenders?
Only by preparing realistic financial projections can you determine the appropriate capitalization and most efficient operation of your business.
“Business plans help you measure your own progress against your goals. It’s important to remember a business plan is not cast in concrete. You can change it as you learn more, but it’s essential so you can track if you’re achieving what you set out to do. And if it isn’t working, you need to explore why isn’t it working.”
SCORE provides tools to help entrepreneurs development business plans (such as templates for the narrative portion and financial projections) and offers workshops to guide them as well.
- Neglect to review and understand the financial performance of their businesses.
When new business owners don’t obtain financial reports and pay attention to them from the outset, there can be disastrous results.
Shaver warns, “If you don’t look at financial results regularly or faithfully. You don’t really know the score. You’ll have no idea if you’re winning or losing.”
“When small businesses are not winning, they need to figure out why – before they run out of money.”
Shaver encourages new entrepreneurs to reach out for assistance from SCORE counselors to understand what their financial statements reveal about the performance of their businesses.
This doesn’t apply to all entrepreneurs, but if you’re going to have a partner in your business, Shaver recommends getting a written agreement in place from the beginning.
“It’s absolutely essential to have a written agreement that defines ownership and responsibilities. Do it upfront because waiting until there are disagreements or problems in the business relationship is too late
About Alan Shaver –
- Shaver has been a SCORE Mentor for 15 years. He leads several workshops at the SCORE Maine Chapter in Portland.
- Now retired, he was a corporate lawyer with a large law firm in New York and had a private law practice that served New York and Connecticut. For ten years, he was also a partner in a franchise auto service business in Maine.
- His areas of expertise include business planning, financial projections, and business funding.
- One of Shaver’s SCORE clients, Garbage to Garden, was nationally recognized by the SCORE organization as “2014 Outstanding Green Small Business.”
You launch your business in a growing niche market. Out of the blue, a friend tells you about a new similar product or service. After your initial shock, do you obsess about losing your edge or embrace the opportunity? At SCORE, we say “FEAR not your competition!” The right move is to transition into discovery mode. Knowledge about similar businesses may add a creative spark to your thinking or confirm that you’re bringing an authentic solution to a customer want or need at precisely the right time. Read more
Whether you are starting or growing a business, it pays to have a mentor on your side. What is a real business mentor? Someone with more experience than you…someone who offers not only knowledge and support, but also perspective and insight. A mentor should be a savvy business veteran who can help you navigate business challenges. Mentors do plenty of cheerleading, but their real value is in the objective, unvarnished advice they provide…they often tell you what you need to hear about your business (not necessarily what you want to hear). Let’s be clear, mentors aren’t parents, friends or even supportive investors…they need to be much more objective than that.
The benefits of a mentoring relationship are compelling: revelant perspective and advice, skill improvement, networking contacts and encouragement. Here’s how to find the right mentor for you: