An economic downturn, an insipid recovery, and continued uncertainty are the triple-headed monster dogging small businesses. In reaction, most business owners have already made substantial cuts in their spending and boosted efforts to sell more.
Here are ideas that focus on using resources more wisely.
Assess Customer Profitability
If you need to squeeze more out of a lean, hardworking staff, it’s time to examine your customer list. Nancy Butler, who built and sold a small business in financial planning and assets management, advises companies to look at the level of service they are providing customers. Is every customer getting the same level of service? If you said yes, that’s what you strive for, you are missing the point. Ask yourself: Does every customer provide the same amount of income to my company?
A national speaker, business coach, and writer on the topic of success in business, Butler advises business owners to group customers according to their profitability to your business. Then keep your cost to service each group in line with its profitability.
Butler grouped her own customers in three groups: A, B, and C. Her advice is particularly applicable to companies in the service industry.
“To provide the same level of service to all clients … It reached a point where I realized I had to either spend more time at work and less with my family, or hire more staff, which meant less income for my family,” she wrote in an email.
The customers who are providing the most income to your business (A customers) deserve the best service, she said: “Going above and beyond for them will also help to better assure they stay with you.”
She is not suggesting that C customers be treated badly when they call, but for the outreach your company does to existing customers, the tips and ideas and information you send out can be done in a more cost-effective way for the C customers (a quarterly newsletter, for example) and in a more personal way for the A customers. The A customers would get a “quarterly phone call to check in and see if they have any questions,” and to get the opportunity to ask how you “can be of further assistance.”
In different industries or in a B2B versus a consumer business, a company will “need to set a plan that is appropriate,” wrote Butler.
“The correct level of customer service for every client can be one key to the success of your business and provide the balance you need to more efficiently manage your time and resources while maximizing your bottom line.”
If this economic situation has you feeling out of control, try to gain mastery of your time so you can run your company. Start by streamlining tasks that require your attention—that is, they cannot be delegated—but could be done more efficiently if you had the time to think them through. Ask a friend or colleague to help you assess the task with a gimlet eye, or hire a time-management expert to help.
Also, look at the tasks you do that could just as well be done by someone else. Assigning them elsewhere will result in a more profitable company because spending your time on basic operations is not the best use of resources.
Accounting, billing, and payroll are all jobs that practically beg to be taken out of the owner’s hands. A provider of payroll solutions, like The Small Business Authority, powered by Newtek, can get you out of the rut of doing this job every two weeks.
Social media can consume huge amounts of time, and the temptation is to let it because your company should be visible on Twitter, Facebook, and Google+, among others, and you should monitor responses and tweak offers and on and on. All of that may be true, but you are only one person, so don’t try to do it all. Come up with a plan whereby you divide responsibility for monitoring, planning, and posting.
In the phrase popularized by Ben Franklin, time is money. In the current economy, small-business owners can start their own turnaround by getting a better handle on their time.