It's Decision Time - Do I Hire More People Now?

Do you keep the current team as is, do you hire more people, do you let some folks go and cut any fat? 

Difficult questions to answer.  But as a small business owner - you must choose a strategy!

As a small business owner - you reach an inflection point when your current team of workers/employees needs a makeover.   THERE ARE 3 CHOICES:  Option 1) You can keep things the same and let your current payroll ride along and wait and see how your revenue pans out in this rebound period?  Option 2) You can try and get rid of some fat and cut some positions and maybe look to replace those positions with more effective workers...Option 3) If you feel that your workers are being stretched, putting in extra hours, conducting needless tasks and processes then you may want to consider bringing on more people to help your business grow.  

Your decision all depends on what is happening in your business today and where you belive you will be for the balance of the year.  And if your business is growing forward and revenues are increasing during this rebound - you need to begin planning for the future since Option 3 requires a lot of time and effort to hire people in today's competitive labor market.

Read the news, the labor pool is tight, supply is narrow, good workers are hard to recruit and then hire, salaries are going up.  There are now more jobs being offered than are being applied for, many job posting are going unanswered and are being answered by highly Unqualified people.

This involves Planning, planning and more planning.  Best Wishes!

As a Small Business Owner - Should You or Could You Fire Your Customer?

Think about this, as a business owner you occasionally need to let go some employees because of their work ethic or overriding personal issues or you just can't support the needs of the staff you have. 

As a business owner, you occasionally need to take some action with customers who are not profitable for your business - yes, some customers are not making money for you!  In fact, these customers are causing you to lose money.  Think about this, every business has problematic customers, there are many types:

1- Customers who consume your time and efforts in an abundant way, only to place a small order that could have been executed in a fraction of the time.  That is time that you could have used for other tasks or to sell other items - you lose time

2- Customers who seem to place nice orders with you but continuously make returns or exchanges for other products.  This costs you time, results in product churning and costs of processing and added fees- you lose money.

3- Customers who are not customers - they seem to perpetually shop till they drop, smattering a small order here or there just to satisfy themselves that they accomplished something while over and over again consuming your time and producing no value

Should you FIRE any of these customers?  I say YES, you need to be cognizant of your business, its value and profitability.  If a customer is taking away from that value and costing you money - there is NO NEED to engage with that customer, it's a lose- lose, FIRE THEM! 

Are you a Small Business Owner? Then, here are the six non-employees you need to help you be successful

You run your own business, there is so much to do.  But you are in this business to do business, you just can't manage everything yourself, can you?

So, you need support services that you can't possibly do yourself, there is just not enough time in the day.  So get connected with these six people to help provide you with the needed services for your business, here they are:

- A Banker: find a bank that you love and then find someone at that bank that will pay attention to you and give you advice when you want and need it,

- A Bookkeeper/Accountant: you need someone to first of all do you books every month and give you a report on how much you are making, what your profit margin is and what your overhead is in order to determine your breakeven.  Then, you need someone who can do your tax returns, sales tax returns and tell you what your quarterly tax payments should be so you don't get penalized!

- A Lawyer: if you really need one to handle IP (intellectual property) issues or licensing and/or sales agreements, leases, contracts - maybe there is a friend that you know that can help.

- Insurance broker: yes, everyone needs insurance, business property and liability, use a friend that you know that can help you make decisions, determine the proper coverages

-Technology guru: someone that can help you set up the systems that you might need for your business, every business needs applications to help you make life easier, most of them today you can pay for by the month, but this person will help you set things up...

- LASTLY, you need a business advisor, someone who can help you with operational questions and process improvements to maximize your business operations and maximize your profits!  and....that's ME!

Thank you for reading this,
Jamie Corn

Cash Flow Positive? Is it Possible to Have Excess Cash in the Bank During This Pandemic ....

Yes, it's possible.  Yes, my client went from being cash flow negative (building up debt on credit cards) to having excess cash in the bank account - yes, that is called PROFITS! 

In the normal flow of business, you purchase your inventory based upon your sales of products.  You would try and predict how much you will sell in the next season or the next few months (depending upon your lead time in ordering) and then place orders for merchandise consistent with what you expect to sell in that period.

Basic Example:  you sell $5000 of merchandise each month in the Spring.  So let's say for a 4-month period you would sell $20,000 in sales.  If your profit margin is a flat 50%, that means you need to have $10,000 of merchandise being delivered to you.  That's easy right?

But, most people do not include the inventory the already have on the shelf.  So, if you already have $10,000 on the shelf (inventory hangover), then you will soon have $20,000 of inventory on the shelf (inventory on hand) and you will have sold your $20,000.  At the end of the period, you will have NO cash left in the bank.  You paid your suppliers $20,000, you took in $20,000 in sales - thus, nada left in your checking account.

Now fast forward to the Pandemic, your sales are now lower, you must thus lower your purchases proportionately and seriously consider selling down that inventory hangover - converting stuff into cash.  With some good planning, you should be cash flow positive and generate Profits.

Then again, you should always be planning your purchasing like this and always be reducing your inventory hangover.  Sales of your hangover also count towards your monthly total sales. 

Helpful Tip:  Inventory ($) on Hand should be divided by your typical monthly sales to derive the "Number of Months of Inventory".  Think of this number as the number of months of sales needed to extinguish your inventory.  If this number is too big (relative to your industry), then you need to Have a Big Sale or cut your orders!

Example: Inventory on Hand = $20,000    Monthly Average sales = $5,000

So, Number of months of Inventory = 4.  This might be equal to an entire selling season.

Small Biz Owner....Are You Buried in Paperwork and Other Non-Value Add Tasks?

 

It's that time of year...Your small business is buried in paper work, your accounting records are well...not being recorded, what do you do?

Most small business have someone who does their books and provides some information to the owners so that you as the owner can determine if you are making any money.

Then again many small  businesses don't have someone who is responsible for keeping records and reporting back to the owner whether it's one employee or someone on the outside who comes to the business once or twice a month.

The big question is: Do you close out your books every month? or even every three months? or worse...maybe once a year cause you need to get your tax return done?

It's the responsibility of every small business owner to know their business inside and out, right? Yes, you know who your customers are, You know who your suppliers are.  You know who your bank is and you certainly know who your landlord is.  BUT, do you know how much money you make, what your sales were last week, last month, this year to date?

Who is your business Doctor?

Let's chat about your issues and how you can make you business more effective and profitable without costing you an arm and a leg.  You just need a trusted adviser.

Do You Hug Your Customers?

Should you really hug your customer?

 I read this book awhile back.  It was authored by Jack Mitchell who is the CEO of Mitchell's and Marsh's, premier clothing stores on Long Island, you probably know of them or shop in them.

Jack has a great sense of instilling passion in his employees.  His key focus is to have each employee treat each customer in a special way so that their experience in the store stays with them after they leave the store.

He defines 'hugging' as a mindset, a way of thinking about your customers, of getting close to them and of truly understanding them.  He wants the entire business to be customer-centric, everything the business does has a purpose that will enhance the customer experience.

Speak to your customers, know what they do, know what they like and most importantly, show an interest in who they are and their lives.  Pretty simple.

He also advocates sending out think you notes to every customer every time they come and shop in your store, noting in the 'hand written' letter what they bought and some facts from the conversation that the salesperson had in bonding with the customer.  After all "how many letters do you receive in the mail these days?"  When you do get one, you definitely open that one first.

Think about not what the customer buys today, maybe they spent a few hundred dollars.  But, this about how much they spend in a year, how many years they may be a customer of yours and then THINK about the lifetime value of every customer as they walk in the door.  Today they spend $87.48 but their lifetime value to you may be $2,150.

That's how you build a business today for the future.

Regards,
Jamie

Do You Know How Much inventory You Have? Most people do not, but SHOULD

 Inventory is simply the total count and dollar value of all of your goods or products for sale. You purchase your inventory from vendors and provide a markup on that cost to the retail value. As you know, the difference between your cost and the sales price is your markup. Your inventory constantly changes, it changes with the season, it changes by the week, it changes very day you sell products and every time you receive new products for sale.

Every business owner must know how much inventory they have in their business as it changes. Well, its not important to know exactly what the count is on a daily or weekly basis, maybe knowing the total count on a monthly basis or every three months. Sometimes, owners do not even know their inventory count till the end of the year or conduct an inventory once each summer during the slow season.

Let's talk about this inventory count. We'll call it a physical inventory. Every item for sale in the business is counted and a cost is assigned to each item based upon the cost when the item was purchased. This physical inventory can be a simple process of counting everything in the warehouse, counting every thing on the sales floor. Your records or purchase orders might indicate what the cost of the products are. This becomes a record-keeping process and then the total can be added or extended out. Obviously, the process becomes more complex when there are multiple facilities involved and when inventory can't be easily counted (too large or too many in different sizes).

This should be a process that is Incorporated into the business' monthly, quarterly, seasonal or annual workflow.

The physical inventory is the key to verifying your ultimate gross margin. Estimating your margin from purchase orders and sales receipts is also done by every business, but knowing the exact number and being able to reconcile your gross margin at a specific point in time allows you to determine your 'true' profit.

We'll talk about this 'true' profit margin in another article.