Tuesday, January 31, 2012

Small Business Stress – BAS & cash flow of course!

What causes SME owners stress? 

There was a great article by Derek Parker of The Australian late last year. The article referred to a survey conducted by credit card giant American Express examining the most common causes of business-related stress and frustration.

The major sources of stress reported by SME owners were identified as cash flow issues, along with tax compliance. However, the majority of small business owners reported that they become better at managing both cash flow and tax after a few years of operation – particularly those that said they sought guidance.

The research found that small business owners rate cash flow management and tax compliance, especially BAS and tax reporting, as bigger problems than having too few customers.

Parker notes in his article some not-so-surprising statistics from the survey, with BAS and tax reporting being rated the major burden by nearly three-quarters of small business owners, principally because of the time it takes (mentioned by 51 per cent). The key areas causing stress are the worry of not getting the information correct (39 per cent), keeping track of the receipts and invoices (38 per cent), and getting BAS and related reports in on time.

According to the survey, most SME principals choose to lodge their BAS on a quarterly basis. BAS and tax reporting is more likely to be a problem for small businesses with a turnover of more than $500,000 a year (41 per cent) and those that have only been in business for two years or less (43 per cent). Managing cash flow is also more likely to be an issue for those turning over more than $500,000 a year.

Develop a more regular routine for updating records for tax reporting

Also of interest was how much time is spent on BAS returns by small business owners. The average time spent was 8.3 hours, equivalent to more than one working day in preparing each quarterly BAS.  A much longer average time was reported when accounting packages were not being used. The best strategy for reducing the hassle of tax reporting seems to be maintain your records on a regular weekly or fortnightly basis rather than allowing them to accumulate and then becoming overwhelmed when you have to face it quarter-end

Develop a cash flow strategy

The Parker article also offered some good practical advice about the need to have a cash flow strategy in place within the business.
"Extending credit to a customer, especially a new one, should not be automatic.  Before extending credit, it can be useful to talk with other people who have dealt with the same company. If a potential client is unwilling to supply references for checking, that itself can be a warning flag. It's also important to make sure that clients have no excuse to delay or defer payment. Make a few phone calls so you understand a bit about their payment system, such as identifying the person who is the contact point for invoices. Some companies have pro forma invoices that have to be used, and have preferred payment methods.

At the same time, your own invoices should be absolutely correct, including your ABN, an accurate description of what the invoice is for, and the date by which payment should be made. If a payment is not made when it should be, the matter should then be followed up immediately. By ensuring your invoice details are fully and correctly completed, this cannot then be used as an excuse for the delay in payment"

Prevent stress

So in summary, if you are a small business owner struggling with these same issues, you may perhaps take some small solace from the fact you are not alone. However, also consider there are some relatively simple actions you can take to help prevent much of this stress. And remember the importance of maintaining a positive attitude  - you may be interested in one of our earlier posts, Your Attitude, Friend or Foe    And also Stress Management Tips offers some great advice on coping with stress

Wednesday, January 18, 2012

Customer Service - Being friendly helps, but it's not enough

Of course you care about customer service in your small business. That's a given.

Your success depends upon attracting and retaining repeat customers. But what you need to remember is that there are two crucial dimensions to consistent quality service delivery - your people and your procedures. Both of these dimensions require your attention

In previous posts we've explored how to hire the right people for customer service roles. One of several important attributes your service staff need to possess is a happy and friendly disposition - no customer wants to deal with a "sour-puss" who looks like they've been sucking on lemons.

  • Balance - personal touch and procedural efficiency
But it's all well and good to have staff who display a warm and welcoming manner with your customers, who make them feel special and can build great rapport with customers. Yes, the "feel-good" factor is important in the experience of your customer - but at least as important is that your customer gets what they expected.

It is the efficiency of your systems, processes and procedures that will so often determine whether your customer is satisfied that they received what they were promised, when they were promised it.

If you are getting some customer complaints, or if your customers are voting with their feet and you find that you are not getting repeat business from them, then go back to reviewing your business fundamentals. Where is the need for improvement .....
  1. Is the design of your product or service itself in line with the core needs of your customers. Ask for feedback from customers
  2. Are your procedures and processes enabling efficient service / product delivery? Get some input from your staff on this matter - they work with your systems every day and know what's not working. And listen to their ideas with an open mind!
  3. Are you over-promising and under-delivering?
  4. Have you trained your staff properly in the use of your systems?
  5. Are you recruiting the right people? If need be, take a look at How to conduct the job interview
  6. Are you managing your staff in a way that keeps them motivated, and brings some enthusiasm into the workplace? If need be, have a look at How to motivate employees
If your focus is solely on efficiency of processes, you risk a business culture lacking the warmth and personal touch  needed to forge enduring relationships with customers. If you focus just on your staff and making sure they are happy and that the workplace is a warm, inviting one - then you run a risk that customer deadlines and budgets may not be met.

So as the manager of your small business, try and get the balance right between a focus on both your people and your processes - and then with repeat, satisfied customers, your profits should flow!

Thursday, January 12, 2012

Management Skills - Getting the people stuff right

No matter how good a product or service your small business offers to your customers, at the end of the day you simply will not achieve sustained success unless you get the people management side of things right. So what exactly does this mean, you may ask.
  • Recruitment
Well, let's revisit some of the essentials. For a start, it means taking the time to carefully select who you recruit into your business. People who like working with others, take pride in their work and are willing to learn. The right person for the right job is what it's all about at this point. Making sure the person's skills and interests match the requirements of the job that you're seeking to fill. Avoid rushing recruitment decisions, even though you might be desperate to fill the job.  It's worth interviewing more applicants or re-advertising the vacancy, if you're not sure. Take a look at Hiring Tips for Small Business
  • Training
Then, it's about ensuring that the new employee receives a proper induction into the business, and adequate training in your systems and procedures. Be careful not to dump heaps of information too quickly at a time, in the desire to get them up to speed. Like it or not, you've got to do this training gradually. Slow and steady will allow them the opportunity to digest it all. If you overwhelm them, they'll get confused, make mistakes and lose confidence.
  • Performance management
Setting out clear expectations. The daily or weekly allocation of work and tasks to be completed. Some monitoring along the way, checking that everything is on track - but without being a "micro-manager" who controls every minute detail. If you've chosen the right people, and provided them with the right training and tools, then you've got to learn to trust them. And then make sure that you fairly recognise and reward good performance by your staff, if you want to retain them.

How you go about managing your people will determine whether your workplace is an engaging one and whether you succeed in building a motivated team. If you're looking for some more specific tips and great advice on this, have a look at Management Skills Development - offering guidance in how to conduct the job interview, how to delegate, how to motivate staff and how to manage change.

The following short video clip also offers some good simple reminders on people management......

Wednesday, January 4, 2012

Thinking of starting a small business ? .... A few quick tips

Are you thinking of starting a small business for yourself?

Well, here's some great advice from Tim Knox, the founder of several software companies. By his own admission, some of these businesses were very successful, and others were outstanding failures. In his e-book, Small Biz Success Secrets , he offers the following small business tips ...

1. Let experience be your guide

Start with what you know. If you have spent twenty years working as an accountant or you love to build wooden toy trains as a hobby, consider how you can take that experience and turn it into a successful small business.

You might also find a great business idea right under your nose. Look around your workplace. Do you see needs that are going unmet or can you think of a better way of doing something? If so, you might have the seed for a viable small business

2. Build a better mousetrap

Many first time entrepreneurs assume that they have to come up with a radical new business idea to be successful. That simply is not true. Most successful businesses are born not of innovation, but of necessity. Instead of trying to come up with an idea that changes the world, take a look at the world around you and see where there might be a void that needs filling or an existing business concept that needs improvement.

Many successful businesses have been built by taking a traditional business and making it better. Domino’s Pizza was certainly not the first to offer home delivery of pizza, but they were the first to guarantee it would be delivered piping hot to your door in 30 minutes or less. Amazon.com was not the first company to sell books, but they were one of the first that would let you buy books from the comfort of your own home while sitting in your pyjamas.

3. Define your niche

Many businesses have gone broke trying to be all things to all people. The ability to offer a gazillion products under one roof is all well and good for Wal-Mart, but not for most new small businesses. Try to identify a niche that you would enjoy working in and then think about whether there could be a business opportunity there. If you love to work outdoors, consider starting a landscaping business. If you enjoy fixing things at home, then consider a "handyman" small business

You get the idea. Focus on a niche, do what you love and become an expert in your field.

4. Consider a franchise

Many new entrepreneurs consider buying a franchise operation instead of starting a business from scratch. Franchises are a good way to jumpstart the process because they have already done much of the hard work for you. They have proven the business model, established guidelines for running the business, spent millions of dollars on establishing the brand, etc. Buying a franchise can be a quite expensive and involved process, that is beyond the scope of this article.

It is imperative that you thoroughly investigate the franchisor and the opportunity, use your own solicitor to do the deal, and read the fine print in the franchise agreement. Talk to some other frachisees and see how successful they have been with the franchise model and how they describe the level of training and support provided to them by the franchisor

For more tips on starting up and running your small business, have a look at Small Business Tips

And a great insight into the challenges faced by small business owners is the E-myth