Heather Villa » Risk

5 Things You Need to Do In Your Small Business Right Now

Heather Villa, CMA, MBA, MSM — Tue, 29 Sep 2009 15:32:50 +0000

In the past couple of weeks, we’ve been hearing more and more about the potential for imminent economic recovery. It seems that economists and financial wizards are predicting that we’ll be out a recession soon (although “soon” is loosely defined). While that doesn’t mean that our businesses will be operating at the fever pitch we were operating at before recession, it does mean that hope is on the horizon and we can all breathe just a little easier.

It also means something else: It means NOW is the time to start building your business.

Why now to build your business?
Lots of entrepreneurs (especially ones who are moonlighting) wait until the economy is good before they take the risk and market their business. They want to see some immediate return on their investment and that’s more likely to happen when money is flowing. But smart entrepreneurs will start ramping up their business right now, while we haven’t yet recovered, so that they’ll be positioned in a much better way once recovery does occur.

Don’t wait until you’re in the busy midst of a strong economy to make changes to your business. Here are 5 things you need to do in your small business right now to put yourself on the right footing.

Increase your marketing. Seriously think about doubling it if you can. Or, if that takes too much time and money, try to bump it up by at least a third. The investment you make now in your marketing will come back to you with a much higher return once the economy is better (in the same way that you might buy a house at a low price in a bad economy and sell it at a higher price in a better economy).
Develop systems and best practices to automate your workload. It’s hard to create systems and best practices when you’re in a tornado of selling and customer fulfillment. But when things are quiet, this is the best time to develop and refine those processes. Then, when things pick up, you have everything in place already. It’s much easier to make small tweaks to existing processes when you’re busy than it is to try to create those processes from scratch.
Improve your follow-up systems. New customers are great. Existing customers who come back and buy from you again are even better. They are more profitable for you. So you need to develop special programs and marketing efforts to reach out to those customers. Again, now is the time to do it when things are slow. You’ll be able to experiment with what works and what doesn’t. When things pick up, you’ll have a strong system of successful follow-up to generate more existing customer revenue.
Clean up your files. When things get busy, piles start to form around the office: There’s a pile of bills to be paid. There’s a pile of receipts. There’s a pile of scrap papers full of ideas. There’s a pile of unsorted papers (which will go into other piles, won’t they?). Now is the time to get those in order. Redevelop your filing system so it’s usable for you. (Hint: if you have stuff in piles, your filing system is not usable). This is also a good time to think about doing the same for your bookkeeping.
This is also a good time to do some product development. When things are busy, you don’t have a lot of time to put into new product development or into refining existing products. You’re too busy filling orders. So when things are slower, it’s time to increase the value of your existing products and it’s time to create new revenue generators.

If what the economists are saying is true, this is the calm before the storm. We might see a few more quiet months and then we should see some serious recovery. Take the time now to ramp up your business so that you’re ready to go when more people are buying.

The X factor

Heather Villa, CMA, MBA, MSM — Tue, 19 May 2009 15:28:41 +0000

Remember in high school math class when the teacher would write an equation on the board and then tell us to “solve for X”? To solve for X students would have to work out the entire equation with X to the side and then get to the point where it became obvious.

Example: 2X+6 = 30

(30 – 6)/2 = X/2

(24)/2 = X/2

Therefore: X = 12.

What we were learning was not just math but an engineering technique called “black box”. When an engineer is designing a project and they don’t yet know how one part of it will work, they will draw a black box around that section of their design and design everything else first. Then they can go back and address the black box later.

Both concepts – solving for X and black box – are equally relevant in the world of project management.

When you start a project, you probably won’t have all of the tasks clearly laid out in front of you. Things change, information evolves, people move from department to department. So, apply the theory of the black box or apply the theory of solving for X. Lay out the project as best as you can and identify the points on your project timeline where the tasks aren’t clear. Draw a black box or an X. Then, as the project progresses, and the work becomes clearer, those tasks will be filled in.

Knowing in advance that these giant question marks will exist, and identifying where they are, can help you get a project off the ground even if you don’t have all your ducks in a row.

Note: This can create scope creep because you might find that “X” is a huge, unwieldy addition you didn’t plan as much time or budget for. That is a risk, which is why you should do your best to keep those unknowns to a minimum in every project. But they will occur and it’s okay to work on a project with those unknowns in them as long as you’re aware that they will need to be carefully managed.

Business “best practice” in today’s economy

Heather Villa, CMA, MBA, MSM — Thu, 05 Feb 2009 11:55:32 +0000

We’re living in turbulent economic times. Economists are now predicting that most of 2009 will continue this way with a market resurrection in the end of 2009 and through 2010. Larger businesses may have the assets and borrowing power to survive. But smaller businesses do not and many of them are wondering if they’ll survive during the year.

At the risk of sounding like I’m stating the obvious, I feel that it’s important to highlight the one best practice that all businesses should be pursuing this year:

MORE SALES

Businesses need to increase revenue (assuming that they are able to earn some profit on that revenue). When economic conditions are better, businesses can tweak their processes and spend a little more on development and innovation, but in these times they need to sell more, plain and simple.

Here are some tips to help you sell more:

List all of your current customers and determine how much they buy from you in a quarter. Then find a way to get them to buy just a little bit more. It might be because of increased value, or it might be because of a promotional sale, or it might be because you’re giving them a discount on a bulk purchase… or any other number of reasons. Make it a goal to increase your per-customer revenue from each customer, even just slightly.

List all of your previous customers. Working backwards from most recent to oldest, reconnect with them and entice them back to you. See if you can determine why they no longer buy from you. Do they no longer need your product or service at all or are they buying from someone else instead? Don’t make assumptions – find out!

Explore the possibility of offering your products to a slightly different market. First, consider how your current products or services might be attractive to another market. Then, consider how you can slightly modify your products or services to a completely different market.

Approach your increased sales as a project. (Yes, I’m saying that as a project manager, because I know that this method is successful). Build an entire project around the goal of “increased sales” and work with a project manager to drive the project to a successful completion.

Big Bank Balances make Happy Entrepreneurs,

Heather Villa

The conundrum of committedness – part 2

Heather Villa, CMA, MBA, MSM — Tue, 20 Jan 2009 13:55:03 +0000

In the last blog, I talked about the first part of the conundrum of committedness: How the consultant needs to stay busy enough with commitments to earn and income but also have enough time to market in order to replenish the pipeline.

I said that the first part of the conundrum of committedness is: The more commitments you have now, the less time you have to generate new commitments. But the less time you spend on generating new commitments, the fewer you will soon have.

But there’s a second part to that conundrum and that is: your new commitments aren’t fixed. In other words, your prospects aren’t perfect. You can (and should) market to fill your pipeline but not all of those prospects will react in the same way at the same time. Some will come to market faster than others. Some might suddenly buy more at one time than anyone else. You might have one quarter where all of your prospects fall out of your pipeline and sales diminish.

Let’s talk about the consultant example again. The consultant has several clients (“commitments”) and he or she stays busy with them, carving out just a little bit of time to market because it’s important to generate new business. When all progresses well, it’s a perfect system. But then “part 2″ of the conundrum kicks in and the prospects suddenly (and unexpectedly) buy more. What should the consultant do?

It’s a tough balance. Turning some away might be the wrong answer in today’s economy. Putting in extra hours is probably a good idea. But there’s a risk to this sudden influx of new commitments: the consultant notices that he or she doesn’t deliver as quickly anymore. And some might say that he or she is working too long each day. And there’s the risk that this “overwork” will diminish the amount of time to market.

Guess what. There’s no easy answer. Every business needs to find that special state of Zen in which they have a healthy number of commitments to continue earning an income but marketing in such a way that there is and continuously full pipeline. And they need to acknowledge that new potential commitments could suddenly increase and they should be prepared for it… but not to the detriment of their business today.

So, the consultant should leave a bit of ‘wiggle room’ (but not too much) to market and perhaps a bit more (but not too much) just in case there is a sudden influx of clients. And the manufacturer should leave just a bit of excess inventory (but not too much) to manage any surprise and they should have a plan in place to produce more inventory (but not too much) if demand rises unexpectedly.

In the next blog (tommorrow), I’ll give some more ideas about what businesses can do to work with this conundrum.

Speak Soon,

Heather