As published in The Herald Sun, The Daily Telegraph, The German Finanzen100 and Accountants Melbourne News
Digital Logic’s Paul McGarity. Picture: Andy Drewitt Source: Clarie Heaney, National Features, News.com.au, January 13, 2013
THINGS are chugging along nicely. You’ve kept your head above water, maintained customers, made a profit and retained your talented staff.
But why settle for good when you can be great?
By putting your head down and making some changes, you can overhaul your business and see real benefits in six months.
Review systems, processes and products
Streamlining your operation will save time and cash, while invoicing quickly and following up late payments will raise the cash you need to grow.
Above all, business owners need to take a step back and learn to delegate.
“You’ve heard it before. Focus on working on the business rather than being totally submerged in it,” Consolid8 accounting firm director Tanya Titman suggests.
The experts say you get 80 per cent of your sales from 20 per cent of your products, so now is the time to have a good hard look at what’s flying and what’s flopping.
Do your sums “Now is a great time to re-assess business loans, consolidate credit card debts, talk to your accountant or mortgage broker, look more closely at costs associated with breaking a fixed loan and compare the potential savings over the life of the loan,” Titman says.
Getting your financial house in order will mean that you will be in better shape to approach banks for more money for expansion.
Customers are king Acorro chief executive John Downes says that too many businesses run themselves ragged looking for new customers and clients.
“If they stopped that and focused on treating existing customers like gold, they would be better off,” he says.
Consolid8’s Titman supports the Pareto principle whereby 80 per cent of your business comes from just 20 per cent of your customers.
“By getting rid of the bottom 80 per cent of clients and taking the time you spend on them and spending it on your top 20 per cent, you drastically increase profitability and cut expenses,” she says.
Discount dilemma Downes, who mentors and coaches small businesses, says that anyone can choose to discount but it is vital if you are a small player to protect your margins.
“The reality is that if you have the same product and the same service as what is available from China for half the price, your business model is doomed,” Downes warns.
But if you are 10 to 15 per cent more expensive but you are local, reliable, easy to contact and people can easily communicate with you, you should be able to compete.
Get partners If you are looking to take the next step, start looking around for some partners. It might be people who can add a skill you don’t have or others who may be silent or active investors.
Just make sure everything is documented so everyone knows where they stand.
Spike it up Downes says that businesses need to get in touch with their “hedgehog”.
It’s business speak for making sure three key drivers intersect. Do something you are passionate about. Be the best in the world at it. And, importantly, ask yourself if you can make money from it.
“If you are doing what you are passionate about, and earning money from it, you are in your sweet spot,” he says.
Finally, don’t panic.
Downes says the worst thing you can do is to make wholesale changes.
“There is no quick fix in business. Otherwise everyone would have done it.”
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LOOK AFTER YOUR EXISTING CUSTOMERS
OVER the past nine months, Paul McGarity has stopped chasing potential new customers.
Instead, his Melbourne-based multimedia company Digital-Logic has focused on looking after and servicing existing customers better.
Thanks to some handy advice from a business coach, McGarity says as a result of the strategy the business has flourished.
“It’s important to maximise the potential of your existing customers first,” he says.
“It is cheaper to grow existing customers than acquiring new ones.”
He says the existing relationship means it is easier to convert them to do more business with you if they are happy with your work.
McGarity says there are also big benefits to be gained for the customers by doing more business with the one supplier.
“There is a better customer experience as the communications are personalised to each customer. It’s just much easier to do business.”
