This past Tuesday Pat and I met at Paradise Bakery and discussed a few definitions and how these relate to my business, financials, and how I may approach the decision-making process.

A couple of weeks prior, I had a small sum of money come my direction and decided to ask Pat if it was appropriate to deposit a small portion of this small sum into my business account. He said yes, and there were two ways in which to record this transaction (remember, ANYTHING affecting your financials should be recorded the day it happens, lest procrastination set in):

1. The two alternatives are to treat as a loan or as an investment. One is a liability, the other is equity. If treated as a LOAN (liability), an agreement must be created between the business and the individual, which should include the term, interest rate accrual, payment schedule, etc. Without this documentation, should the IRS decide to audit, the business could have potential issues.
2. As PAID IN CAPITAL (equity), the only way to extract money from this investment of capital is to either sell or close the business, or as a payout to the owner. This is not subject to business taxation but you still must pay taxes on the income regarding the Paid In Capital. Work with your CPA directly when setting this up and keep your CPA in the loop at all times regarding this set-up.

Even though tax season looks very far away, in retrospect it’s right around the corner. Even if you’re only paying taxes annually, you should discuss your current tax situation and financials with your CPA between October-December of the current year. Their advice can help you stay out of trouble with the IRS.

Outcomes-Based Thinking (OBT) should become a daily process. Everything from business growth to personal growth can be supported with OBT. To practice OBT, make an objective or list of objectives to accomplish, then assign tasks BUT only perform those tasks that support the objective(s)!

Making an action plan for growing business can also utilize OBT. When you make an action plan, you have Deliverables and Activities to support the Deliverables. For example, I want to grow my business by 10%. This is a Deliverable. Beneath this Deliverable I would list processes, or Activities, to help me meet this Deliverable. This becomes an accountability factor because of measured response or Activity gauged against the Deliverable. This is how OBT works!

In order to make the Deliverable possible, I have to start thinking like a business owner. We’ve all heard the expression, “it’s not personal, it’s just business”. Unfortunately, some business owners may find it very difficult to separate business from personal. This new child needs nurturing, seeding, and watering in order to grow properly; that means I have to start putting my business first (not replacing the family, mind you!). It may mean not attending a networking event in favor of meeting a new client or finishing a project. It could also mean notrenewing a membership if the ROI value was not significant in business growth (this can be measure either by revenue or educational value).

Small businesses may perceive moving toward growth as adding more people to the mix or increasing sales. Sales could be increased without additional people (i.e., target marketing, strategic networking, etc.), but each situation must gauge its own need based on a projections forecast, determining the actual underlying issue, and making an action plan for this Deliverable. If adding more people is determined to be part of the action plan, great care must be taken to not keep these people separate from the overall company objective of the desired 10% growth.

Sometimes, in order to achieve the Deliverable, a small business may begin setting up separate departments , or “silos”. These “silos” can also be known in some businesses as Finance, Sales and Marketing, Customer Service, and Computer/IT Compliance (Legal/HR). What tends to happen once these departments are established is the beginning of a breakdown in communication. Why? Let’s go back to the example above of growing my business by 10%. In order to achieve a 10% growth, each department must work together on Activities that allow the company to reach this Deliverable. If not communicated to each department clearly, they may not realize just how important their role will be in realizing this Deliverable, hence my company may fall short of the goal.

DO communicate clearly and often between departments. Empower the people in each department to fully utilize their strengths to work toward the Deliverable. Departments may not understand corporate objectives override department objectives; guiding them through this process strengthens the team and company on the whole, and takes a business owner one step closer to actualizing the Deliverable!

I’ll leave you with something to ponder: In every interaction you have three outcomes you can be, and these outcomes are determined by how you handle yourself in the midst of the interaction. Even as a business owner, you will either be memorable, regrettable, or forgettable. Which do you choose to be?

Cheers!
Lisa

Definitions:

• accountability: Obligation of an individual, firm, or institution to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.
• action plan: Steps that must be taken, or activities that must be performed well, for a strategy to succeed. An action plan has three major elements (1) Specific tasks: what will be done and by whom. (2) Time horizon: when will it be done. (3) Resource allocation: what specific funds are available for specific activities. Also called action program.

Last Thursday morning I attended Mike Leeds’ presentation of “How To Build An Effective Networking Commercial”. I’ve actually attended this presentation at least three times this year; each time I learn something new, or something I may have forgotten. While I won’t profess to know everything about making an effective networking commercial, here are some insights and tips from the presentation.

Networking commercials are not the time to sell your product or services; rather, it is designed to communicate a short message about yourself that begs the question, “Tell me more.” There is but one product/service in the United States that needs no networking commercial, no Powerpoint slide show, or any kinds of statistical data to get a near-immediate “yes” or “no” answer. That’s pretty amazing! A company with a message that needs no introduction, and you can decide on the spot “yes” or “no”! Would you like to know who that is?

You’ll have to wait a bit.

For the rest of the sales world (and if you are a business owner, yes, you ARE in sales!), a networking commercial is a way to “break the ice”, so to speak, and open a dialogue. You have to offer a small slice about what you do, get your listener actively interested, but not give the whole pie away. It’s a bit like creating a flier: you want to highlight the important parts without giving up the reason why you want someone to buy from you.

Networking commercials help establish the start of the sales cycle. I didn’t realize until this class, but sales is rather cyclic: you begin by opening a conversation, and take it to the next logical progression of establishing a meeting, presenting your product or service, establishing credibility criteria, and so on. In fact, this cycle walks its way right to the front door of “I’m ready to buy!” and knocks to get your attention. Does sales stop here with this victory? No! It must repeat itself and can do so through establishing a relationship by which the buyer will either buy from you again or become an advocate for referring your product or service.

Here’s how that relationship works: Let’s say I meet you at a networking event and we connect. When I connect with you, I’m not just connecting with you; rather, I’m connecting to everyone within your sphere of influence, or database. The average person knows as many as 250 people, and could be as high as 500 with the advent of social media! That’s a lot of contacts to touch by one connection at a networking event.

When you go to a networking event, you naturally are looking for someone with which to do business. Unfortunately, the channel of “WIIFM” (What’s In It For ME) is on, broadcasting loud and clear, not going unnoticed by the pressing throng. This is where networking can backfire if you’re not careful. Instead of entering a room blasting “WIIFM”, try this approach instead: “WIIFY”(What’s In It For You).

During my networking journey, it’s been established over and over that building credible, lasting relationships are integral to the vitality, growth and success of a business. However, if a business owner only focuses on themselves, he or she may miss out on the bigger picture. If the channel is purposely switched to thinking about helping others in their business, there’s no telling how far that question will take you. Push yourself to SOLVE problems, not sell.

How does this relate to the effective networking commercial? That takes a bit of introspection, starting with knowing your features, finding the benefits, and understanding your USP (Unique Selling Proposition).

These days websites are not much different than a newspaper. If the headline grabs your attention, you’re likely to go on and read the first paragraph. If the first paragraph grabs your attention, you’re more likely to read the article. See how that works? Pretty easy, right? Think again: we only have 5-7 seconds to grab a viewer’s attention. Networking commercials are viewed similarily. If the start of the message doesn’t grab someone’s attention, their mind has already wandered over to the food station to check out the appetizers.

A business owner should ask themselves periodically, “Why should I buy from you?” Yes, you should ask that question as if you were the customer! That should beg the next question: “What’s unique about me and my offer?” By working through these two questions, you arrive at the benefits for the features (offers) you are selling. This demonstrates to the customer what makes your offer, what makes you different from others in your industry. This is how USP (Unique Selling Proposition) is defined.

Now it’s time to put your effective networking commercial together! It’s as easy as A-B-C:

• A = Attention in 5-7 seconds. Don’t use your name at the beginning of your commercial; save it for the end.

• B = Benefit (not a feature!) This may be a good place to utilize your USP. After this step is a good place for your name and company name to be announced.
• C = Call to action. What do you want the customer to do? Here is a good place for your memory hook, or tagline.

Now you’re ready for networking! Here are some key points to remember:

1. Keep it short. Most people aren’t going to remember longer than 30 seconds’ worth of message, which is why using your commercial to sell is ineffective. Think of an advertisement, you want the customer to go deeper into the conversation with you so you can begin building a relationship.
2. Don’t sell! Remember, networking events are for making connections, not selling.
3. Follow-up is Queen! If cash is King, following up on those business cards you’ve collected is Queen. If you don’t follow-up in a timely manner, you’ve just left a potential sale on the table. Stay TOM (top of mind) with your contacts; you never know where it will lead, and the sale you start today may take time to close.
4. Don’t be a Pez-dispenser. Keep your business cards handy and ready, but don’t hand them out unless you are asked for one. Remember: your business card is your receptionist for your business. Why would you give that information to just anyone? Once asked, you know the person is genuinely interested in what you have to sell.
5. Show geniune interest in conversation. When your contact is speaking, take genuine interest in what they’re saying. Everyone likes to be heard and understood.
6. Ask open-ended questions. Remember to start your questions with one of these words: who, what, where, when, which, why, and how. These are open-ended words; meaning, it’s very difficult to answer a question with a one- or two-word answer when leading with one of these words.

And now for the answer to our question above: Girl Scout Cookies.

Happy Networking!

Cheers,
Lisa

Special thanks to Mike Leeds for giving this presentation and allowing me to post this important topic.

Jennifer Maggiore is the facilitator of the asba Social Media Exchange. Today she held a presentation on “Establishing Social Media Policy For Your Business”. Matthew Meaker of Andante Law Group of Daniel E. Carrison, PLLC, came as both her guest and presenter today.

Blogging can be as informative as it can be dangerous. Anyone blogging about a business, person, or activity should take great care in what they report. If the blog is borne out of angry resentment or jealousy, unintentional pain may be inflicted and could have both negative and long-term effects. If the blog is crafted from seeking the truth to educate the consumer, it may do well depending on your content and consistency.

Fall, 2003: Ellen Simonetti, a.k.a. Queen of Sky, started a blog, “Diary of a Flight Attendant”, to help her cope with the loss of her mother. In late 2004 she was fired for the blog because the airline, Delta, found photos taken of her on a company plane was distasteful and inappropriate.

Konop v. Hawaiian Airlines, 2002. Several employees began a password-protected website so they could post complaints and discussion of unions in a non-threatening atmosphere. Management found a way to hack in and monitor the website to see what the employees were discussing. Long story short, the 9th Circuit held that employers’ monitoring of a password-protected website could be a violation of the federal Stored Communications Act.

In this new world of instant communication, blogging, and social media, what courses of action could a new business enact to eliminate as many potential problems or threats posed by these medium?

BEGIN WITH A WRITTEN POLICY REGARDING SOCIAL MEDIA.

Wait! Written? As in pencil/paper? If it’s posted online, doesn’t that count?

Firmly, the answer must be no. As a written communication, the employer can also ask you to sign your name, signifying your understanding of the new policies and procedures regarding the use of social media in that company. If posted only online, though effective in reaching the audience, there is no way to measure if anyone has found, read, or understood the policies; without a signature, there is little to no way of holding them accountable should infractions occur.

1. Assess the company’s needs as it relates to marketing and social media.

- Do business developers/contract workers need access to your posts/social media?

- What is the policy for professionals making a name for themselves? (i.e., real estate agents, insurance agents)

- Will the company stand out as a thought leader or be the “go to” destination for certain issues?

2. Ensure policies say employees do not have a reasonable expectation of privacy when using company resources or on company time.

3. Posting IS private if it is on a password-protected site.

4. Intellectual Property – what exactly constitutes “intellectual property”? What information, if any, can be released from this property?

5. Remember the law! What’s publicly available to repeat?

6. Define “proprietary information” precisely for employees.

7. Can a background check that leads the employer to your Facebook page be used against you as part of the hiring process?

8. Posting is private if it is on a password-protected site.

9. Whether hiring or firing an employee – DOCUMENT CLEARLY AND THOROUGHLY.

What is the potential risk to being on Facebook for both employees and employers?

1. Employers cannot fire anyone through Facebook. This opens up a potential flood of lawsuit issues.

2. Employees cannot make disparaging remarks naming their workplace on Facebook. The employer can and should print out what employee writes on their Facebook wall and consult with the company HR professional.

Policies Should Consider Inter-Office Relationships.
Should employees and employers “friend” each other in Facebook? The general rule of thumb is to friend laterally or higher. Do not friend down. Consideration should also be given as to whether or not managers should accept invitations from people they supervise or non-managers.

Policies Should Consider Customer Privacy.
In 2007 a breach of suit of contract was brought against 1-800-Flowers.com because the plaintiff’s wife learned about her husband’s infidelity directly from the florist because a “thank you for your business” card was sent to their home. The wife immediately filed for divorce, and the husband filed suit against the florist.

Implementing A Social Media Policy.

1. Policy should include e-mail, internet usage, and other social media. Keep updated regularly.
2. Put filters/blocks on company’s network.
3. Counsel employees:

- Inappropriate vs. appropriate postings

4. Best judgment/common sense.
5. Counsel employees on appropriate/inappropriate use of company equipment.

Why can’t people just use common sense?
Common sense means different things to different people. This basically translates into “common sense not common” anymore. Social media should be considered as an extension of acceptable policies for office, chat, etc.

1. Policies should be well thought-out to meet the company’s various needs and/or expectations.
2. Policies should always be kept in handwriting.
3. Send periodic reminders to staff about these policies.
4. When you see violations, don’t wait! Address them right away.
5. Be consistent when enforcing company policies. 

Who should be using social Media policies?

1. The chosen employee should be knowledgeable about the company, products, and services.
2. The chosen employee must understand what is IP/confidential? (IP = intellectual property)
3. The chosen employee must have a good handle on the brand for message consistency.
4. The chosen employee must manage conflict well and engage in proactive (not reactive) thinking.
5. The chosen employee must know the final objective and have a clear plan on how to achieve it.

What can I ask my staff?

1. Do not use social media on company time or company equipment.
2. Company’s Code Of Conduct is in force (includes confidentiality) and protecting IP.
3. Do not use photos or logos of yourself, your business or employees at work in the office.
4. Use disclaimers on personal profiles/blogs if they are expressing personal opinions about happenings at work.
5. Credit the original author/artist when using someone else’s words, artwork, or images.
6. Require employees to honor the company’s privacy policy(ies) in connection with sensitive customer information.
7. Use disclaimers when opinions expressed are strictly yours and not the actual views of the company.

DO NOT ASK THE STAFF:

1. Not to use social media on personal time and personal equipment.
2. To lie.
3. To copy someone else’s work or use someone else’s words without crediting the creator, author, or without obtaining permission.
4 Pretend to be a fictitious person.
5. To be paid, to accept products or services in exchange for a positive review or endorsement. This infraction could lead to as high a judgment as $11K in fines.
6. To maintain or engage in relationships on professional profiles if conversations or images become harassing, offensive, or abusive in nature.

ALWAYS check the fine print.

1. Facebook’s policy: all content uploaded is transferrable and sub-licensable.
2. You retain rights to content and images, but Facebook may also use; by agreeing to the terms and conditions, and uploading content and images, you give Facebook permission to use these as well.
3. Always get permission from creator to use work in Facebook.
4. Address limitations that could transcend to social media.

My thanks to Jennifer Maggiore of Maggiore Consulting and Marketing for allowing me to post an article about this class. I gained much insight, and I hope you do as well.

This week Pat and I did things a bit differently due to conflicting schedules over the next two days. I very much wanted to visit a new networking group to determine if this would be a better fit for my business than my BNI group, but I also needed to attend the asba Social Medial Exchange and take notes in order to help Jennifer Maggiore, the facilitator, write a blog post about this topic (setting social media policy for the workplace). Because of this meeting Pat and I were not able to meet tomorrow after the networking event, so after much tussle with our schedules we settled on 10:30 this morning at Paradise Bakery over at Desert Ridge Marketplace. We probably wouldn’t be able to meet there again unless we went an hour earlier; the place began buzzing at lunchtime, which was fine, but the noise level soon became a bit difficult to tune out. Lesson learned: quieter can make for better listening!

Today we discussed marketing at length and Pat answered many questions I had. Unfortunately, the majority of these questions had been tossed to him during last week, so lots to catch up on! I find not a day goes by anymore without me thinking about my business to some degree. It doesn’t seem to matter if it’s about marketing, networking, financial questions, application vs. theory — they are all vitally important to this new child I hold in my hands: Deseyner’s Eye Creations, my graphic design business.

(I’m going to interject here that much of what we discussed I did not write down, so I am relying on my memory and Pat to guide me.)

“Every experience is worth going through as long as you learn from it. Choose wisely.”

This was a phrase Pat was taught while very young and its logic never left him. It partners nicely with another phrase his father taught him in his youth: “There are a lot of things you could do, I just wouldn’t recommend most of them.” For example, you COULD jump out of a perfectly good airplane, but his father just wouldn’t recommend it.

Let’s apply this logic to one of my current business questions: “How do you know if you have replaced your not-so-good client?” Rather than jump the gun too soon, it’s better to continue to market for a new client to replace this not-so-good client BEFORE it becomes necessary to do so. Remember last week we learned the definition of insanity? Replacing a client too soon would absolutely fit the description. It may be wiser to try and service their needs from different standpoints until I finally have enough in my back-pocket to allow leaving (this would include projects completed and billing sent out). So, I COULD replace them now and not worry about the lost income, but it’s better to reap and sow than to react to the situation. Pro-activity, planning, and planting are much better when done not under situations of extreme need.

Always market. If I stop marketing, my business will stop also. I sat next to a printer in one of my first networking meetings and asked him how long he had been networking. His answer was simple yet profound: “I’m out talking to people and attending networking functions at least twice a week, more if I can. If I don’t, my competition will and my clients will go to them because the competition would be seen more than I.” Very simple, very profound. Not every business can continually go to networking meetings; so, then, how do these business owners get the word out? Consistently and creatively.

My biggest concern is how to replace the lost income, which Pat had told me before was always good to do before it became necessary. He told me today, “Don’t worry about replacing income from a fired client.” Waitaminute! Now I’m confused! New business owner or seasoned, don’t you always worry about lost income? This idea sounded very strange to me until we talked it out: If I’m not spending that time on the not-so-good client, it’s true I have income to make up, but I also have more time to throw toward my own marketing, or invest in an existing client. If I invest more time in the existing good client, this client realizes they are important to me and not just a number. The result from this can either be a new project (income-producing) or a referral (potential income-producing), either of which is very acceptable.

F.E.A.R.: False Evidence Appearing Real.

What this acronym comes down to simply is perception. It is very common for a business owner to have assumptions when starting a business: the business owner does everything themselves, no real schedule as it can be usurped very easily by outside influences, no downtime, and working on their business 14 or so hours a day. What is the reality? Business owners can learn to outsource the hats they choose not to wear anymore; keeping a tight schedule so he or she can be relied on, counted on; and lastly, a business owner may only need to spend 10 or so hours on the business once it’s established. My perception of my assumptions can make these statements into a self-fulfilling prophecy, but honestly, that just takes too much energy.

When dealing with F.E.A.R., one phrase of Pat’s sticks out clearly to me: “Knowledge without truth is a dangerous thing.” Instead of operating under “knowledge”, try “theory”, “assumptions”, “risk”. Truth can also be labeled as “fact”. I daresay by working out my mission and vision statements, I may be able to eliminate or minimize some of the assumptions (theories) that continue to plague me and hold me back!

We also discussed target markets and how I can really narrow my focus until I’m working with the desired industry or industries I want to partner with. Another benefit: by narrowing this focus, I in turn narrow the offerings available by pre-qualifying what the client’s needs are. I also hope to predetermine whether or not a client is a good fit for me. This may take more time to learn, but through mentoring and my own research I’m confident I can make the determination and potential corrections.

Let’s take a look at this scenario: Say I’m starting a new marketing program that involves my sending out 1,000 pieces of a postcard. The ROI on such a scheme is usually 1% -2%. Not very good results. Now, if I’m sending out 20 of these postcards to my target market group, my results should improve to 30%-50%. Which is a better idea? Personally, I’m all for marketing to less to achieve more!

Activity = Results. This is a very true statement, although whether or not it is a positive consequence is determined by outside forces. For example, networking three to five days a week does produce results; the downside, however, can be these results: no new client, backlog of work, no time for family. I can use OBT (Outcomes Based Thinking) to measure whether or not an activity I’m about to engage in will equal a positive result, then plan tasks according to what the desired result should be.

“Hope for the best. Prepare for the worst.” Why this statement? Every client relationship starts out with good intentions. It unfortunately doesn’t take long for some of those intentions to manifest themselves into a one-sided verdict in favor of the client, with nothing left for me. Let’s go back to our not-so-good client and tell him ‘I’m afraid the dynamics of our relationship has changed, and we should re-negotiate the conditions upon which we agreed to [time frame] ago.’ The potential problems that may arise from this include but are not limited to litigation scare tactics and smear campaigns. By preparing for this potential outcome, I can begin to talk to people around me in an effort to determine or pre-qualify what their intentions may be. Try to keep my business’ best interests in mind at all times.

Bottom line: each lesson is a step in the process. In order for the process to completely and accurately be of large help, the steps must be followed without too much deviation. Don’t skip the steps! If I need a different result, I must change the variables involved with the steps or the definition of insanity comes into play. I must keep using Outcomes Based Thinking and organize my tasks to support each Outcome in order to achieve my desired result.

Stay tuned!

Cheers,
Lisa

TERMS TO REMEMBER:
fixed expenses – Largely same as fixed costs, except that non-cash items such as depreciation and depletion are not included.

variable expense – (alternative definition for direct cost) Expense that can be traced directly to (or identified with) a specific cost center or cost object such as a department, process, or product. Direct costs (such as for labor, material, fuel or power) vary with the rate of output but are uniform for each unit of production, and are usually under the control and responsibility of the department manager. As a general rule, most costs are fixed in the short run and variable in the long run. Also called direct expense, on cost, operating cost, prime cost, variable cost, or variable expense, they are grouped under variable costs.

VCP – Visibility, Credibility, and Profitability.

target market – Cost such as that of advertising, preventive maintenance, research and development, that a manager may eliminate or postpone without disrupting the firm’s operations or affecting its productive capacity in the short run. A discretionary cost is usually specific in amount, or is determined by a formula such as a certain percentage of sales revenue. Also called discretionary expenditure or managed cost.

aggressive – Willing to accept calculated risk of greater than average loss in pursuit of greater than average returns, without gambling on random chance.

uom – unit of measurement.

Pat and I met back at Next Coffee this past Tuesday morning. It’s a great meeting place: free wi-fi, good drinks, and if you’re hungry they have breakfast for $5.00 with the purchase of a coffee drink! I’d love to redesign their announcement about this and hopefully gain them as a client, so I’m working on that this weekend. A business owner has the right to dream big, right?

Pat told me a tale once of his wife asking him to paint a wall in their home. He agreed, and she moved the paint supplies to the room where the wall was. Long story short, he was contentedly parked at the television catching up on a football game as she passed by him on her way out. She looked down and the paint supplies and told him, “A can of paint will always be a can of paint until it is applied to the wall.” After his wife left, Pat let this thought sink in and, marveling at the simplicity of this logic, painted the wall between quarters.

He then thought about what else this logic could be applied to as it pertains to business, and quickly realized it can be applied through every aspect of a business, as well as in life. It’s a similar method when working with software, such as Microsoft Word: you can’t change the size of the type without selecting the type, then applying the change. Remember in last week’s post we learned about the definition of insanity:

Insanity: doing the same thing over and over again, changing no variables, and expecting a different result.

This week has been a week of learning (as always), but learning how to now apply what I have learned so far. This week has been a week of revelations, as I now realize some of the activities are not only not profitable, they are borderline self-destructive for a business. Variables must be altered in order to bring about change; whether this change will be positive or negative will be determined by my intentions and follow-through. This is a test of knowledge and understanding, one I hope I will pass.

We now have my financial statement for the rest of this year and a forecast for next year. I had to re-calculate this year’s because, in my excitement, I did an entire year based at the beginning of the year rather than using actual numbers from this year and projecting with what I will finish the year; therefore, I must start with what I know (x), and project the rest by applying standard trending to the rest of the year. This is how I will find my revenue, and it breaks down like this:

Revenue = Price X Volume
January through July = known information, also called “actuals”
August through December = unknown because it has not occurred yet

so:

X = known (actual numbers, what’s been done)
Y = projected (future numbers)
Z = forecast

Thus I arrived at my first financial projection and forecast. It actually was easier once Pat went over the data and definitions with me, but for the purpose of this post (as well as my own understanding), I’ll include the definitions at the end.

So, now I have this projection and forecast. Now what?

Now, I start working the formula backwards to figure out what I need to really make annually to come up with my desired profit margin. Remember our formula:

PRICE = DPC + OH + MARGIN
price = direct product cost + overhead + profit margin

Each product I create has a cost associated with it. This is fairly simple to understand, but I honestly didn’t think of it this way. Before, I would plug along, creating business cards, fliers, brochures — whatever was needed — and not for a moment considering the DPC for each item. You might be thinking, “What cost?? It didn’t cost her anything to create those fliers!”

You would be wrong. I was wrong. It did cost me something very precious.

Time. Time, along with the cost of using my computer, software and electricity — all relevant expenses to me to produce the product they are willing to pay for.

As a graphic design company, time (or labor) is the largest expense I will incur. It must therefore be strategically planned out so nothing is wasted. Remember OBT (Outcomes Based Thinking)? If you plan to work ten (10) hours in a day, try to bill for at least five (5). Billing for seven (7) is better. By looking at time as a cost of doing business as well as a DPC, my focus, outcome, and tasks become easier to manage. My focus is not wasting my time, my outcome is to complete as many work orders as possible in a ten-hour day (trying to bill for seven), and each task I assign myself supports this outcome. Remember, the more time you bill for, the more productive your day has been. And typically, there is a direct correlation between higher productivity and higher earnings.

It makes me wonder exactly how much time I squandered before understanding all this. It has definitely made clearer how I should not squander time needlessly, not just on “busy work” but on real, billable hours of work.

This brings about a new thought: how, then, do I find the right customers in order to bill the right hours and create a profit margin each month?

At our meeting next week we’re going to discuss advertising. There are many, many forms of advertising. Look at your desk and see how much advertising is sitting on it right now. Then go into your bathroom; lastly, your refrigerator. As you pass room to room, look at the devices you walk past: speakers, HDTV, satellite, telephone, computer — the list is nearly endless. In business, “advertising” isn’t going to bring in new business unless it’s focused. In order to focus on what advertising will be the most effective and least costly, purposely utilize OBT to avoid the spaghetti-on-the-wall scenario.

What does this mean? By running here-there-here-there to every meeting or networking event you can find, you will appear very busy but will have wasted precious time that can’t be rewound and replayed, and may not have even one new client to show for all the “hard work”. Solution: attend these events strategically by finding out what vendors will be set up, who may be attending, and in what part of town. Another potential solution may be to advertise online. Potential traffic-makers but not necessarily cost-breakers are blog writing and social media.

This might help illustrate the above point and tie into the point below: One of my clients told me Monday that Corporate wants them to reduce costs and asked her to design a flier. I can anticipate future cost-cutting measures and come to understand I must replace this client with at least three more clients. In the past that might have meant more networking events for me to attend; now it simply means I have to focus, plan, and strategize my events to maximize my time.

Says Pat: “You can’t plant the seed in the time of need because the seed must have time to germinate and grow.” Simple, but very thought-provoking. He is right; networking takes time because it’s about building and maintaining relationships, not about the quick sale. If I need money today, my activities (tasks) must center around that outcome. If I need money in three months’ time, my activities must center around that outcome, knowing the expectation is not immediate.

Bottom line? Be careful where, how, and what you advertise. The “where” and “how” both involve planning, and can usually affect each other. The “what” is personal to all business owners. The “what” is what we offer for products/services, and can backfire despite good intentions. For example, I’m pretty good at designing signage, but maybe I don’t want to do it anymore, either because I realize it is not very profitable, or that I just don’t enjoy it. If I advertise I can design signage, I’ll have more of that type of work even though I don’t want to do it. What we as business owners should do is walk in knowing the three or four things we do best, and describing that to each potential client I meet.

The last part we talked about was aggressive/risk and the sniff test. Now that I know exactly how each one of my products is affected by the price I set or the amount of time put in to each piece, I have a clear pricing structure; however, by understanding how these numbers affect other lines in my P&L (profit & loss statement) and forecast, I can begin to change the data to affect how next year’s forecast should look. Now I’m strategically deciding how many of each product I can do in the course of a year, strategically planning how I’m going to market that awareness, and utilizing OBT to stay on track. The biggest part to remember is to not get awfully carried away. Making a goal a tad out of reach is something to work towards; by making a goal nearly impossible to reach, there comes a feeling of potential failure, which can turn into a self-fulfilling prophecy. Becoming aggressive with my marketing efforts is fine, but not overly so.

The sniff test is nothing more than applying a metaphor to a business situation. As I meet with a client, if it “smells wrong”, I should not engage this particular client, or at least do so cautiously.

What this sets me up to do is focus on my “bread-n-butter” product — the one product that needs no outside source to complete, the one I can do with my eyes closed. What’s your “bread-n-butter” product?

Stay tuned!

Cheers,
Lisa

TERMS TO REMEMBER:
lead time – number of minutes, hours or days that must be allowed for the completion of an operation or process, or must elapse before a desired action takes place.

trend – pattern of gradual change in a condition, output, or process, or an average or general tendency of a series of data points to move in a certain direction overtime, represented by a line or curve on a graph.

actual cost – actual amount paid or incurred, as opposed to eliminating cost or standard cost. In contracting, actual costs to date amount includes direct labor, direct material, and other direct charges.

discretionary cost – Cost such as that of advertising, preventive maintenance, research and development, that a manager may eliminate or postpone without disrupting the firm’s operations or affecting its productive capacity in the short run. A discretionary cost is usually specific in amount, or is determined by a formula such as a certain percentage of sales revenue. Also called discretionary expenditure or managed cost.

aggressive – Willing to accept calculated risk of greater than average loss in pursuit of greater than average returns, without gambling on random chance.

uom – unit of measurement.

I met Pat back at his client’s training center. I’m happy to report they’ve held three training sessions, and things seem to be moving right along! As in most new businesses or ventures, there have been a few bumps encountered along the way, but so far nothing too extreme that can’t be handled.

The financials are proving a challenge for both memory and understanding, but I credit Pat for his ability to present the information in a format that makes learning much easier. I am honestly amazed at the amount of budget breakdown that must occur. If I have learned one thing, it’s to very much appreciate the knowledge of a bookkeeper/accountant!

It’s a huge wake-up call to realize that, as a business owner (new or not-so-new), there is a budget that not only must be planned out, but also must be adhered to. As we grew up from high school to college to our first job, our parents taught us how to make out a budget, and for the most part, how to manage it. “Don’t spend more than you make” was the mantra we rehearsed over and over.

Now, let’s apply this to a business. The term “cash flow” means all cash coming in and out of a business; “cash inflow” refers to income from our job or business, investments, and payments from outside sources; the term “cash outflow” refers to anything purchased – a loan payment, groceries, utilities, even a lease or mortgage. The object of the game is to manage both sides of the coin and come out ahead (positive cash flow). The very last thing a business owner wants or needs is to come out behind (negative cash flow).

It sounds simple. It doesn’t look very difficult on paper. Why, then, does it seem that each week another business has had to shutter? Is it always a lack of foot traffic, or something else? If we have been taught basic budgeting and cash flow, what happens between our youth and when we decide to run a business?

Part of that answer lies in what I’ve been learning about: making, maintaining, and feeding this budget. Writing out a budget for what you expect to make and spend is pretty easy, even for me. The hard part is yet to come and will be a huge daily test even after Pat and I have parted ways as mentor-mentee, and that is planning to keep the budget intact, alive, and fully-functioning. I honestly feel some business owners are missing this vital key. I think it’s assumed that, when you start a business, you’re supposed to know all this, and that’s sadly far from the truth.

Insanity: doing the same thing over and over again, changing no variables, and expecting a different result. This sounds a bit like banging your head against a brick wall over and over,
expecting the brick wall to move or break. Very painful and silly, definitely not logical. So, how do you effect and stay in business?

1. Acknowledgement. This was part of my “awakening”, as I call it, or “enlightening”, as Pat describes. Realizing something was wrong wasn’t enough but it became the start of the fight to keep my business alive. If a business owner knows or feels something is wrong, seek a mentor.

2. Evaluate your budget. It’s not enough to make a budget. It has to be evaluated on a regular basis, especially at the first sign of a negative cash flow. Re-work projections if the variables change. Such variables include number of new customers, amount of new/repeat work, a drop in positive cash flow, or needing to dip into reserves to get through “a rough patch”. The time to correct a problem is before it becomes a problem.

3. Engage in OBT. OBT means Outcomes Based Thinking. This is similar to making a daily to-do list, except the term “objectives” is more business-based, more positive. Make a list of objectives to engage your business positively, then plan tasks that support the objectives. For example, if one of your objectives is to make two new customers this week, one task might be to contact current customers and ask for a referral; another might be to attend a specifically targeted networking event.

4. Focus on the goal. Remember why you are doing your tasks. A business is a living, breathing entity and should be treated as such. Are you simply in business to “get by” until the next job offer comes along, or are you ready to really make a difference and be the boss?

I’ve come a long way since I began my mentoring but I’m far from having learned it all. From my standpoint, that’s a great thing.

Stay tuned!

Cheers,
Lisa

Pat and I met today back at Next Coffee to further discuss my business financials and resolve questions I had come across while trying to complete. We delved a bit further into Basecamp. This software, though browser-based, will help manage projects on both the contractor’s end and the client’s end, manage time spent on each project, report when a project was downloaded by either a contractor or the client, all on a secure login. It’s well worth the $30/month investment, same amount as a BNI membership. At this time my programmer is working on a similar program and could be both useful and less expensive. My forecast is to purchase Basecamp but test what my programmer completes so a direct comparison can be made.

Does income = cash flow? No, they are not the same. As defined by businessdictionary.com:

income – General: Flow of cash or cash-equivalents received from work (wage or salary), capital (interest or profit), or land (rent).

cash flow – Incomings and outgoings of cash, representing the trading (operating) activities of a firm.

It is possible to have a good income from your business but have negative cash flow. A business should not operate in the red for too long; continued monthly analysis of the cash flow is therefore critical in order to keep the business from operating too long in the red (loss). If possible a business owner should try to keep six (6) months of cash reserves available but not tap into it unless absolutely necessary.

We discussed capacity, as in my capacity — how much time I want to put in, per project/per day. It does seem that many business owners spend 12-14 hours a day working, and I would guess at least 90% is spent IN their business, if they’re lucky. At some point a business owner should spend 20%-30% of their time ON their business, maybe 50% of their time IN their business, and the rest as what I would describe to be “downtime”. Nobody should work all the time, and if a business owner doesn’t learn to play a little, they won’t love being a business owner.

Capacity, much like any other business avenue, should be measured for positive or negative ROI and billable time. A good level of productivity is 70% or more. Productivity level can be measured as such: billable time divided by time. For example, the total amount of time you want to work is 2,080 hours a year. Now subtract out vacation and sick time of 90 hours. This will leave you 1,990 hours. Now subtract out the holiday hours normally given in a workplace environment, approximately 48 hours. This leaves 1,942 billable hours that can be worked in a year.

What did I learn from all this? Always think of outcomes and always measure the success of the outcomes. This sounds more confusing than it actually is. I need to consciously choose to utilize Outcomes-Based Thinking. Objectives are planned each day, and the tasks I choose to do must support and fulfill the objective(s) in order to create positive cash flow.

Pat also reminded me of the four components of design: audience, message, visuals, and CTA (call to action). This isn’t very much different from running a business, any type of business. I must define my audience, my target market; I must craft a message that hits this target market so they know I am speaking directly to them and educate my value to them; I must create visuals (samples) to show the audience I am well-versed in my craft; and I must create a sense of urgency to close the sale (call to action).

This week my homework consists of finishing my financial statement for both this current year and a projection for next year. I also must familiarize myself with IRS.gov and look up “contractor vs. employee”; Pat and I have talked about my hiring some freelancers to help my business as I engage more contracts, and I want to make sure I don’t put any undue measures upon the freelancers that would take them out of the “contractor” category. When interviewing, it’s important to understand the person’s intent vs. motivation; two very different ideals, but one can directly influence the other and still stand alone.

REMEMBER THE FORMULA: P = DPC + OH + Margin (price = direct product costs + overhead + profit margin). We will revisit this formula next week.

Stay tuned!

Cheers,
Lisa

Today I attended a sales training course with Mike Leeds of Pro Sales Coaching. Mr. Leeds has been in sales for nearly thirty years and is one of the top coaches in AZ Sales Pros. His approach is to teach people how to not hand out business cards like a Pez dispenser, how to not sell like Herb Tarlek of WKRP in Cincinnati.

The topic was The 5 Ps of Total Value.

There are five essential pieces to the puzzle called Total Value. Total Value is the value perceived about your business by customers. There are five components to this puzzle: Price, Product, Performance, Place, and People. Business owners have the task of trying to fit into as many of these components as possible. Why is this important? In order to try and garner as much business as possible, it’s important to understand what these five components mean, how many their competitor fits into, and how many the business owner fits into. Let’s take a look at the five Ps.

Price. Businesses in this component compete on price, period. This usually means they tout being the least expensive on their battlefront. While this may be seem like a good start for a business model, the inherent danger is one day, a competitor will come along and be less expensive than they are, and boom! The customer has flown the coop. Companies basing their business model on price include: Motel 6, Geico, Southwest Airlines, Walmart, Progressive Insurance, and Discount Tire.

Product. This component focuses on the product. The product is the backbone of the business, almost as if it is the culture of the business. They may not be the cheapest, but for these businesses the product is the driver: Apple, Best Buy, McDonald’s, Progressive Insurance, Whole Foods, and Discount Tire.

Performance. This is defined as how well the product works for the consumer, and how well the consumer responds to the product. Companies in this component go through rigorous trials and tests to prove to consumers their products are THE BEST in their focused field. Companies in this component include but are not limited to: Discount Tire, Costco Car Wash, Energizer, Verizon Coverage Map, Southwest Airlines, and Whole Foods.

Place. Companies in this category are all about location, location, location. These companies understand that to penetrate the marketplace, you have to control the locations in which branches of the company appear. Examples of companies in this component include Discount Tire, Sky Harbor Parking, Starbucks, Circle K, and Walgreens. Sky Harbor Parking only has one location, but what a location! Right by Terminal 4 – even the flight crew would rather pay Sky Harbor Parking to take them to their cars! Their model focuses on safety, security, convenience, and speed.

One more entity fitting this category is the internet itself. Since its creation, many companies enjoy having a 24/7 storefront at their disposal without the hassle of workman’s comp! It should be noted that not every business can have a virtual retail storefront, but, with the right website, every business can have a virtual receptionist.

People. This is the last component, and arguably, possibly the most important of the five components. These companies are focused on the consumer’s experience with their company, product, performance, and sometimes price. The customer’s experience should be a case of under-promise/over-deliver. Some of the companies that follow this component include: Southwest Airlines, Walmart, Whole Foods, and Discount Tire.

Look back at the five components. There are a few companies listed that have leveraged themselves into at least three of the components. As a business owner, it is optimal to leverage your business into as many of these components as possible. Why? By being in as many of these 5 components as possible, you will demonstrate the total value that you provide your customer and increase your chances of maintaining a long business relationship.

The rest is up to you.

Now it’s your turn! How many of these components does your business fit into? What are you going to change fit into another component?

My thanks to Mike Leeds of Pro Sales Coaching for this educational and integral piece of the sales puzzle.

Cheers,
Lisa

Businesses need as much help as they can get in order to market themselves in this economy. A good flier can describe a special event and help drive traffic back to your store front. A bad flier can make a negative impact if the information isn’t clear or poorly designed. Below are a few tips I’ve learned over the years to make a better flier.

1. Define the purpose. Why do you need to make a flier? Are you just trying to advertise for new business? Are you letting people know you’ve moved to a new location? Do you have a special event coming up? Are you selling something for a limited time? Make sure you have a specific
purpose for your flier; otherwise, it will look like you threw spaghetti at a wall in the hopes something would stick.

2. Define the target market. Sometimes this can be accomplished by defining the purpose, as stated above. For example, say you are holding a roller-skating event from 8pm-midnight. You could target both the teenage crowd and adults, or just stay with the teens. You could break it down
further by the type of music the DJ will play and whether or not to offer something for paying admission, such as Silly Bandz or a glow-in-the-dark necklace.

3. Choose your words carefully. If you have a coupon that requires an expiration date, list it. If you are offering this event only on Friday nights, say so. Give enough information about the offer or event to make people want to come. Otherwise, it’s a waste of time and paper. Be sure to list a special price if you have one, especially if it’s only for a certain timeframe; list the regular price either below the special or in a disclaimer. Be sure to include a “call to action” if applicable.

4. Use artwork as a visual aid. This is the one area some people aren’t sure what to do. Most do not err on the side of caution and tend to load up the flier with all kinds of clipart they think is cool. Two problems arise from this: first, it looks very cluttered and junky, losing the point of the message; second, many times the artwork used does not relate to the event. Back to our skating example. If you’re targeting teens, rather than using a schoolbus, you might use photos of teens on skates, or maybe a photo of a skate on the floor. If you decide to use clipart, you might use artwork that revolves around music, or maybe a grunge background with speakers. VERY IMPORTANT: include your company’s logo for branding and recognition.

5. Choose colors and paper wisely. Color makes an impressive statement but only if it isn’t overused. Black and white can make a striking impression, particularly on astro-bright paper, but drop shadows make give the flier a “dirty” look. The same goes for the paper: did you want to print this on 100 gloss book stock, 16pt. cardstock, or just regular copy paper? Always take into account your target market, not just your budget.

6. Putting the pieces together. Try to think of your flier as a physical collage rather than a “sheet” of paper on a screen. Everything on a flier is a separate element: the text, the paper, the artwork — all separate elements of a puzzle that, when put together, makes a straightforward and clear message. Don’t make the artwork so big it overtakes the text. You can use different typefaces, but no more than three should be used on any separate marketing piece. Determine what your most important points are and make those big enough to stand out. If using color, use on these important pieces to give more visual identity and help create a sense of urgency (depending on the text).

7. Please press PRINT. Who will be printing this masterpiece? If you are intending to print from your own inkjet or laserjet, choose paper that best works with your printer. If you are not sure what to use, consult your owner’s manual or search engine on the web. Determine how many fliers you will be printing and buy enough paper to cover that plus an extra twenty or so, in case some of the fliers don’t print exactly right. If choosing a print shop, be ready to ask some questions – and not just about cost! Please refer to my post “Ready…Set…Print?” for tips on taking your files to a print shop.

That’s it! You’re done and ready to show off your flier to the world!

Now it’s your turn! What were some of the challenges you faced when creating your own flier? How did you overcome these challenges?

Cheers,
Lisa

There are many ways you can use printed material to advertise your company: business cards, brochures, fliers, postcards, newsletters, newspaper and magazine ads, bookmarks, and greeting cards, to name a few. You can elect to design these marketing materials yourself, or you can pay someone to give your presentations a more professional touch. If you design them yourself, how do you get them printed?

There are a lot of online print shops you can purchase printing from. These shops can take several different formats and normally can turn a job around in five days or less. You can also choose to use a print shop in your own neighborhood. The advantage here is you can actually talk to a live person about your job, which gives the print shop an opportunity to recommend options such as paper stock and glossy coating or matte finish.

So you’ve chosen the printer and given them your file. Now all they have to do is print it and have it ready for you to pick up. Sounds simple? You’re just getting started.

Do you know if your job needs a bleed edge? What file formats can the print shop work with best? If your work is Windows-based, can the print shop print it? Do they have the fonts you used? Can you use photos with an RGB color profile?

If you don’t ask the print shop questions, they may assume you know what you are doing or have worked with them in the past. Some of the questions you should ask have to do with preferred color format, resolution, margins for bleed (and what is a bleed, anyway?), and preferred file format for the print job. If you do not know how to make a file into a .pdf format (portable document file), will you have to give your fonts to the printer?

Always talk with your print shop, and keep in touch with them during the printing process. The more you can learn about what it is they will need from you, the easier it will be for them to make your project look great in print.

Now it’s your turn! What was your most challenging piece to print, and what made it so challenging?

Cheers,
Lisa