Do You Deserve a Business Mentor?

November 23, 2007

If you are lucky enough to find a decent business mentor the most important thing you can do is listen.

I don’t know if you’ve ever watched Gordon Ramsey’s Hell’s Kitchen? Basically, he helps and advises restaurant owners who are struggling. But unfortunately, some of these restaurant owners are the most ungrateful b…ards I have ever come across.

Now, imagine if you had a restaurant and it was on it’s last legs. Your regular customers wouldn’t come back, because you’d kept them waiting all night, then gave them food poisoning a la carte. And you were facing a miserable winter season with the prospect of zero customers.

You’d be v grateful if someone who owned some of the best restaurants in the world offered to help you turn it round wouldn’t you?

But some of these people don’t deserve any help at all. A couple of nights ago, we watched Gordon Ramsey attempt to help some guy who’d opened a restaurant in Spain with his parents money.

The restaurant was a complete disaster. His complicated menu resulted in complete chaos - people were waiting for hours for their food; he was serving up lamb which was raw inside (yuk); he was receiving complaints from locals and still charged them full price for their meals.

And the worst thing was, he didn’t listen to a word Gordon was telling him, even though he devised a new menu for him and showed him how to cook properly.

The bread and butter pudding he was serving up was burnt to a cinder, but he wouldn’t have it. Some of his customers liked it, he said. And a couple of his customers liked vomit inducing concoctions such as chocolate prawns, so he was keeping them on the menu too.

Luckily for this guy, Gordon took extreme measures to change his ways, including putting him in a ring with a bull. And the restaurant survived, but it still has a long way to go.

So, if you manage to find a decent business mentor - the first, most important thing you can do is listen. Remember they have already got to where you’re trying to go. And they don’t need to help you. In fact, if you don’t listen, they’ll probably do what Gordon often does and tell you to f… off.

And if you’re struggling to find a business mentor at all, watch this space, as I’ll be sharing more tips on finding a decent business mentor at the weekend.

Posted by cathlawson | Filed Under Mistakes | Leave a Comment

The Biggest Profit Eater

November 22, 2007

One of the biggest profit eaters a business can suffer is non-paying debtors.

I am in the process of winding up a company that should have paid me a couple of years ago. It’s not fun, and if I had known then what I know now, the matter would have been resolved a long time ago.

Here’s a few steps you can take to avoid having your business ruined by bad debtors:

1) Don’t extend credit to anyone without running a credit check.

2) For larger jobs, negotiate interim payments, rather than invoicing the whole job at the end.

3) Offer a written guarantee with any work carried out. Make this part of your contract and get the customer to sign it at the beginning of the job. Make sure you word the guarantee so that if they have any problems with your work at a later date, they must contact you first to put the problem right, and the guarantee will become void if anyone else touches the work.

4) Either a) Add interest for late payment or b) Reduce the amount of the invoice for early payment.

5) Contact your customer a week before payment is due to remind them that the invoice needs to be paid.

6) Take action as soon as payment becomes late. Call the customer straight away and ask when you can expect payment.

7) If you still haven’t been paid and the amount is significant, pass the debt to a solicitor or collection agency straight away. Don’t waste time or effort trying to do it yourself. Serial non-payers are used to court threats etc, and they’re often likely to just ignore you, knowing that this just buys them extra time.

Don’t let the fear of not getting further work from non-payers deter you from taking action. Do you really want to carry out work for people who don’t like to pay - no matter how lucrative the work sounds.

Posted by cathlawson | Filed Under Mistakes | 2 Comments

Is Your Business Leaking Money?

November 20, 2007

Yesterday I explained how you can increase your profits by 35% if you charge 10% extra. And although increasing your sales is the best way to make more profits - you need to make sure you’re not giving those profits away.

Think of it this way. If your profits are $100,000 a year and you cut your costs by 5%, that’s another $5000 for you.

Here’s a few ways your business could be leaking profits:

1) Two legged paper shufflers: Many people believe that their business will look bigger and better and attract more customers if they have more staff. But, more staff isn’t always better. Towards the end of my last business, I had two staff too many. And unfortunately, more staff doesn’t always equal more sales. Make sure your business isn’t over staffed.

2) Know that you are not Buckingham Palace: It amazes me how many business owners think their office needs to rival the Queen of England’s. Some people seem to think that if they have expensive stuff in their office it impresses customers. It doesn’t. In fact, it usually has the opposite effect. If your office is expensive, they usually think you’re passing the costs onto them. So, keep any office furnishings as cheap as possible, rent a cheap office and if possible, work from home at first.

3) Stop the happy shoppers: Don’t let anyone order a single paper clip without a purchase order number. People like shopping - even for office sundries that you don’t need. It makes them feel important and happy to splash your hard earned profits on 100 boxes of ink.

4) Kill unneccessary perks: Don’t give out work mobile phones, or company credit cards - unless they are essential. And if employees have to stay in hotels overnight, make sure they’re the cheapest ones possible. Also, put a limit on their food expenses.

5) Understand you’re not here to keep the Royal Mail in business: Most letters don’t need to get there the next day, but office staff can be lazy and they’ll send everything first class unless you stop them. Make sure your franking machine is set to second class postage. If an item is urgent - write first on the envelope.

6) Don’t pay top dollar for everything: Every few months, examine your costs. Are you overpaying for supplies? Check delivery costs carefully, as they are often over-inflated. If you’re paying too much, negotiate a better deal, or move onto another supplier.

Posted by cathlawson | Filed Under Mistakes | 6 Comments

How To Increase Your Profits By 35% Right Now

November 19, 2007

When was the last time you increased your sales prices? Believe it or not, some companies I’ve dealt with have gone for years and years without increasing their prices at all.

Does this sound like a smart way to run a business? I think not. Yearly inflation rates will always ensure that anything you buy is going to cost you more. So, if you’re not increasing your prices regularly you’re losing money.

Now, before you start banging on about all the customers you’re going to lose, if you increase your prices, let me show you what would happen if you increased your prices by 10% and also lost a massive 10% of your customers as a result:

Fred’s Discount Store did 1000 sales last year at $100 a sale.

Fred’s total sales were $100,000 and his profits were $20 a sale, so total profits were $20,000.

Fred was tired of working hard and making very little, so he decided to increase his prices by 10%. So, he was now charging $110 per sale.

10% of Fred’s customers didn’t appreciate the price increase, leaving him with only 900 customers the following year.

But, Fred was now making $30 profit per sale. Despite losing 10% of his customers Fred was making $27,000 profit instead of $20,000 for doing less work.

By increasing his prices by only 10% Fred’s profits had increased by an astonishing 35%.

So, the point is, don’t be afraid to increase your prices. A small increase in sales price can mean a huge increase in profits for less work.

Posted by cathlawson | Filed Under Marketing | 6 Comments