Rapid Growth Could Kill Your Business
July 26, 2007
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Everyone wants to have a fast growing business, but trying to grow too quickly could kill your company. I’m not suggesting  that you shouldn’t try to grow quickly, just don’t go over the top. A few years ago, I tried to grow my business too quickly and got into a real pickle. Let me share what happened, so you don’t make the same mistakes.
Mistake Number 1:Â Having No Idea of How Much Cash We Would Need to Grow
The business was initially owned by my ex husband, but it wasn’t doing well, and he was on the verge of bankruptcy when I joined.  What I did immediately was to market the types of service that would bring in instant cash. That was fine, and it worked well. Then after that, I marketed agressively to just about everyone I could think of.Â
The work started flooding in, which was great, so I continued to go after more and more work. Then we hit problems. Many of the customers we’d carried out work for were particularly slow payers. This caused a huge problem, because we had a heap of work coming in, but we didn’t have the cash to buy additional equipment, or take on more employees.
Lesson Learned: Monitor Your Cashflow Carefully. Allowing people an extra month or more to pay you can cripple your business financially. If you use small business accounting software like this one growth can be carefully forecasted. I use it and it helps me to work out exactly how much it will cost us to do a certain amount of work, then we know in advance how much we can actually afford to do. You can also use it to work out what would happen if customers pay you late, and it really helps you to avoid getting in to sticky situations.
Mistake Number 2:Â Not Chasing Up Our Debts
The next problem was, because we were so under resourced, we simply did not have time to chase up the money already owing to us. Unfortunately, a lot of people don’t pay up until you chase them up, so the cash took a long time to come in. By this time we were really struggling to pay the bills, and carry out all the work too.
Lesson Learned: Chase up your debts as soon as they become a day overdue. If people don’t pay straight away - keep calling persistently. In some cases, it’s also worth calling before the due date to remind them that payment will be due soon. Also, it’s worth considering offering a discount for early payment, or adding interest onto a late payment.
Mistake Number 3:Â We Ended Up Undercharging Because We Were Too Busy To Cope
The problem is, when you’re rushed off your feet and don’t have enough staff to cope, if you work in an industry with quite a complex pricing structure, your liable to make mistakes. We did. The fact is, if we hadn’t been rushing about like idiots, we could actually have done a third of the work and made the same amount of money.
Lesson Learned: Often it is worth taking on less work and ensuring that you get every penny possible out of each job. If you are rushed off your feet you make mistakes.
Mistake Number 4: We were so busy that we couldn’t possibly do as great a job, as we would have been able to do, if we had more staff. This was a massive mistake. If you’re not providing the very best possible service, some customers just don’t use you again. We also had to give up one huge contract, which I’d put a lot of work into, because we simply did not have the manpower to deal with the work.
Lesson Learned: Don’t take off more work than you are able to do, and if you are completely snowed under, don’t go after massive contracts in addition to that work. Sometimes, it is better to turn work away, and you’ll always have another opportunity to go after that work later. If you bite off more than you can chew and can’t fulfil your obligations, you may never have that opportunity again.
I hope this has helped to highlight some of the problems that rapid growth could cause your business, and that the tips will help you to grow your business at a manageable rate.
Would you Be Better off Just Staying in the Box?
July 24, 2007
Creative thinking is important in entrepreneurship, and you’ve probably already been told that you have to think out of the box when coming up with a business idea.  Unfortunately, some people seem to think that this requires inventing totally ridiculous products that even their own mother wouldn’t buy.Â
Does this sound like you? If your ideas even vaguely resemble those of some of the contestants on the Tycoon TV show, maybe it’s time you put the lid back on the box and kept it firmly shut.
Tycoon is hosted by Peter Jones, the entrepreneur of Dragon’s Den fame. Before starting the show, in an interview with Forbes, he said ”There’s a sense that business reality TV is the new rock and roll.” It’s too bad that his contestants thought that meant it also involved the excessive use of illegal drugs before pitching their ideas. Â
The worst one on last nights show had to be the woman who wanted to turn the ashes of her customers or loved ones pets into a photo frame. Didn’t she ever hear of death with dignity? It’s almost as bad as the idea I heard a few years ago of having your body preserved when you die and stuck inside a glass coffee table.
Remember, when you’re trying to come up with an idea for a new business, you have to come up with something that people will actually want. No business can survive without customers, and coming up with a crazy idea or invention, without doing any research could land you on www.fuckedcompanies.com
Don’t worry though - even if you’re as mad as a hatter and can’t imagine ever coming up with a rational idea, because some crazy business ideas do take off. For example, take Byron Reese who wanted to be Santa Clause. Who would have thought anyone could have made a fortune from writing letters to little kids? Reese set up http://www.santamail.org in 2001 and in 2005, he sold $1 million dollars worth of his Santa letters.
Even if you’re totally brainless, and can’t come up with a bad idea, never mind a good one, you could still succeed in business. Jade Goody had to be the least intelligent person ever to star in a reality TV show. She held the spotlight for her stupidity - actually believed Saddam Hussein was a boxer, and asked silly questions including, “Do they speak Portuganese in Portugal? I thought Portugal was in Spain.” However, despite appearing to be as thick as a brick, making racist comments on TV, and setting up a beauty salon called “Uglies” she is now a multi-millionaire, which just goes to show you can do anything if you’re determined.
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5 Great Marketing Ideas for Your Service Business
July 23, 2007
Coming up with marketing ideas for a service business can be a challenge. If you’ve just started out, the chances are that you may be doing much of the technical work yourself, so you’ll want to make every single second of the time you allocate to marketing your service business pay.Â
Whilst it might be tempting to spend much of the time you’ve allocated to marketing going after large lucrative contracts for your service business, in the early days, it’s best to concentrate on marketing activities that will bring money into your business quickly.  Some of the best marketing ideas are simple, but they’re effective. Here are five that tips that are certain to get you sales now:
Flyers are one of the most cost effective marketing ideas for a service business. It doesn’t cost much to create and print a few flyers, and deliver them by hand to customers mailboxes, and believe it or not, this can be a great way to generate business. It is particularly effective if you distribute flyers to the same homes two or three times, over a period of seven days. The only downside is that flyer distribution can be time consuming, so it’s great if you have people to help you out. Or it may not cost you much to ask your local paperboy to distribute your flyers along with his newspaper deliveries.
2) Do make sure you get repeat business from your customers. A great way to remind them that you exist is by giving them promotional items, such as fridge magnets and pens. They don’t need to cost much and they could make the difference between your customers remembering to call you, or seeking out a competitor from the Yellow Pages.
3) Team up with service businesses who have the same customer base as you. Negotiate a referal system with them. It could be as simple as referring one another to your existing customer base, or you may even want to pay each other a commission. If you don’t know any suitable service business owners in your area, do a quick search on the Internet, or in your local Yellow Pages, then send a brief letter outline your proposal, and follow it up with a call. Make sure you use the business owners name when your write, not just Dear Sir, or Madam. If you don’t know it, call and ask first.
4) Even if your service business operates in a local area, a website is an essential marketing tool. When we first started our plumbing business, we almost put off setting up a website, as we didn’t believe many people would use the Internet to find a service business, but you’d be amazed at the number who do. We’ve already had a considerable amount of work from our website, and we’ve even been approached by a national company, who have offered us a sizeable contract. If you don’t already have a website, and can’t afford the expense of having one designed, don’t worry. We designed our own cheaply and easily and you can too. I highly recommend Site Build It, as they offer the ultimate package for service businesses who want to build a website and market their business on the Internet. Don’t just take my word for it though. Click here to check out other service businesses owners who have developed successful online marketing strategies using Site Build It.
5) Buy some names from a decent mailing list, or ask another local business if they would be willing to sell you names and addresses of their customers. Then mail a short, but appealing offer to potential customers, which sells the benefits of your services to them. Include a limited time bonus offer which encourages them to act now. If you have time, it’s worth following up these letters with calls. If you don’t have time to make the calls personally, outsource them to a reputable telemarketing agency. These mailings can be time consuming, and you could find yourself stuffing envelopes into the early hours, if you don’t have a helper. I use a letter folding machine like this one to save me a heap of time.
So what are you waiting for - make a start. Implement these ideas into your service business marketing strategy now, and you’ll see some great results.
Starting a Business? Don’t be a 95% Loser
July 22, 2007
It is common knowledge that 5% of the world’s population control 95% of the wealth. So, it stands to reason that by doing what 95% of the population do, you have little chance of becoming successful.
You have a far higher chance of winning in business, if you start something that the vast majority of the population are not interested in starting, and sell it when everyone wants to get into that type of business.
Business ownership is much the same as any other market, such as the stock market and the housing market. Before a crash, the majority will be rushing to do the same thing - eg. buy shares, before the stock market crashes and buy houses before the housing market crashes. The problem is, far too many people are influenced by “follow the crowd mentality” and by what they read in the popular press. Don’t be one of them - especially when it comes to starting a business.
So how do you know when this is happening in business? What are the signs that tell you when to buy and sell? It’s not too difficult - just observe what is going on in your local area and in the media. Let me show you an example from my own experience:
Until last year, I owned a fire and flood restoration business. The area I lived in wasn’t in massive demand for this type of business, as it didn’t have a history of widespread flooding. I knew that the global climate was beginning to change, and other areas of the country that hadn’t experienced much flooding in the past were beginning to suffer bad floods.
It wasn’t long before the area I operated in began to suffer widespread flooding. We were rushed off our feet, and this flooding continued in various areas for a long time. Then my home town was flooded badly - bad enough that it even made the TV in Japan.
Of course the business did well in the floods, but after that, the risk of flooding was being discussed all the time in newspapers, magazines and on the Internet, and the message was that it was going to become much worse. Suddenly, everyone was an expert on floods, and more and more flood restoration companies were springing up everywhere.
At the same time, the amount of money that insurers were willing to pay restoration companies to carry out flood restoration was rapidly decreasing. As in any other business, when you have hundreds of companies all doing the same thing, they run out of things they can compete on, and they have to compete on price. Once you start reducing your prices, it will affect not only your profits, but also the quality of service you are able to offer.
So for me, it was a good time to leave, and of course it was easy to sell, because everyone was wanting to jump into what was becoming a saturated market. I knew that the floods would continue, but I also knew that the competition would become intense, and that the profits would continue to decrease.
So before you start any type of business - do your research and consider the following:
How many people are starting a similar type of business in your local area?
Have you read a lot of stories in newspapers, magazines, and on the internet, about how your particular type of business is booming? By the time that anything is described as booming in the popular newspapers and magazines, it’s a good sign that it’s about to take a downward turn.
Are you noticing a lot of price competition in your chosen business? For example, are the bigger players always advertising sales and the lowest prices? If they are, the chances are that the industry has become so saturated that they have nothing left to compete on but price.
So don’t be a 95% loser. If everyone is doing it, don’t be afraid to go against the crowd, because the majority of the time, the majority are wrong.
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