How do you identify “bad” customers?


All businesses have “good” customers and “bad” customers. The “good” customers make you a lot of money – directly and indirectly; while “bad” customers do not make you much money and in some cases incur you losses. These “bad” customers not only make you lose money directly; but they also drain your energy and resources in other ways. For many small business owners, the “bad” customers appear to be helping your business on the outside; but when you scratch the surface you may realize that it may not necessarily be the case. They may be doing you more harm to your business than you may realize.
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Use S.M.A.R.T. Technique to Achieve your Small Business Goals


The majority of goals set by people are never fulfilled or at least fall short. If you want the proof; go and check out health clubs in the first 2-3 weeks after New Year. They are so crowded by the people who have made resolution to lose weight, that it is difficult to find free exercise equipment. And then the crowd fizzles out after 3 weeks and only the regulars keep coming.
The reasons majority of goals go unfulfilled are multiple – they are too vague or too difficult or they don’t have any time limit. Because of this, people setting the goals either don’t know how to achieve them or they give up thinking they can never fulfill them.
We came across the S.M.A.R.T. goal setting technique a while ago that can help anyone achieve what they want in a reasonable time period. S.M.A.R.T. stands for Specific, Measurable, Attainable, Relevant and Timely. Essentially S.M.A.R.T. goal setting ensures that you know what you want to achieve, how to achieve it and when to take actions. Below are the details on how to go about setting S.M.A.R.T. goals.
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Improve Your Business by Listening to Customer Stories


In the previous several posts here , here and here we have discussed how looking at performance metrics helps understand how your business is performing. We also mentioned that you should be looking at the reports on a daily, weekly and monthly basis to stay on top of your business.
The reason you want to look at the metrics is simple – numbers don’t lie; people do. However, from our experience as past business owners we have noticed that numbers tell only part of the story when trying to assess business performance. The metrics tell you what is happening to the business. They don’t tell you why. You have to dig deeper to understand why the numbers are what they are. For example, let’s say you are looking at sales going down for the last several weeks. You want know why this is happening. Further investigation shows that the customer count has been declining in that same period. But this still doesn’t tell you why customers are not coming to your business leading to declining sales. It may be because they are not being served well; maybe there is another competitor in town and so on.
So how do you go about collecting the anecdotal stories to understand the reasons behind the numbers? There are several ways you can do this.
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Key Performance Metrics for Hotels and Services Business


In the previous blog post we indicated that many types of small businesses have “standard” set of metrics that you can use as a starting point to determine the key metrics you should track for your small business. We discussed key metrics in the retail and restaurant business in the previous post. In this post we have shown the metrics for additional businesses – hotels / motels and service businesses.
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Key Performance Metrics for Retail and Restaurants


Every small business owner needs to look at the business reports daily, weekly and monthly on a regular basis to stay up-to-date with how their business is performing. You need to understand what key performance metrics to look at in those reports. We showed how to identify and track key performance indicators in this post.
You don’t have to start from zero when looking for key performance metrics for your business. Many types of small businesses have “standard” set of metrics. As a small business and franchise owner you should be aware of these metrics. In this post we will summarize the key metrics for retail businesses and fast food / restaurants.
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How to identify and track key performance indicators?


In the previous post we mentioned that many small business owners find it difficult to explain how their business is doing with the numbers backing up their words. It is even more difficult to predict how the business is going to perform few months down the road. However, it doesn’t have to be this way.
By identifying and tracking few key performance indicators (KPIs) any small business owner can not only figure out how the business is performing; but also forecast where it is headed. This is no different from when the doctor checks vital signs such as blood pressure, pulse, weight, etc. of the patient to find out what is wrong or could go wrong. You only need 5 or so KPIs to get a feel of the business performance.
Typically, these KPIs will be different for different industries. For example, the retail store should look at comparable sales and inventory turnover; while exercise facility would track customer turnover and average sales per customer. Most large publicly traded companies include these KPIs in their annual reports or in the financial analyst reports.
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Reports you should use to assess business performance


In the previous post we mentioned that as a small business owner you should know the key numbers of your business by heart. These key numbers provide valuable insight in your business and act as early warning indicators. Without them you may not realize if the business is heading for trouble and by the time you do it may be too late.
We also advise you to spare some time from daily operations and spend 15 minutes daily and several hours weekly and monthly to go over the reports that show how your business is performing. In this post we will provide more details about these reports and what you should look for in them.
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Do you know how well your business is performing?


If you answer this question with “Oh! It’s OK” or “Just like everyone else”; without backing that up with the sales, cost or profit numbers your business may be heading for trouble.
Whenever we meet with our business colleagues and clients we ask this general question to get a sense of whether the business owner has a grip on his/her business. Many times the answers are what we mentioned earlier. We probe them further by asking follow-up questions such as “why do you say so?” or “how is it compared to others or last year?” and if they don’t have good numbers to explain, we know they need to work on getting a handle on their business.
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Importance of Due Diligence in Buying a Business


Whether you are buying a business for the first time or you have purchased and sold number of businesses you cannot underestimate the importance of due diligence before signing on that dotted line. The mistake made at this stage can not only be costly in terms of financial losses; but it will get you stuck with bad business for a long time.
So what is due diligence? Due diligence is the process of looking at the business you are planning to purchase from multiple angles to verify that the financials match with what the seller promised earlier. Presumably, you have already done your homework in terms of market analysis, competition, and future potential before putting an offer with the seller. The due diligence comes into picture after the seller has agreed to your offer. It is usually one of the last steps in the buying process before you start preparing the closing documents.
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Do you Know Who your Best Customers are?


For most small business their “best” customers contribute more than 30% of sales and profit even though they make up only 10% of total customers. Think about this!! These are the customers that help you pay your bills. Not only do they deliver you more sales and profit directly; but they also help you increase sales indirectly by spreading good word about your business to their friends and families.
Given the importance of these customers it behooves you to know who they are. Unfortunately, not too many business owners spend time identifying these customers let alone making sure they are taken good care. In this post we give you several ways you can identify your best customers. We will look at how to take good care of them once you have identified in the subsequent posts.
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