Who are your customers?

Do you give much thought to who your customers are? It’s really easy when first starting your business to go after anyone who will give you some money. Then after a while you find that your time is taken up with lots of customers, some profitable and a lot that aren’t. How did that happen?

If you’re in that situation what can you do about it? Take a big breath and get rid of the customers that give you most of the hassle, don’t pay on time, and want lots of discount. It’s the old 80:20 rule, 20% of your customers probably give you 80% of your profit and conversely 20% of your customers probably take up 80% of your time.

By getting rid of them you can offer the customers you do like a much better service and clear the way to attract the customers you do want. You will have more time to go back to your existing customers and tell them about the other products or services you offer and help them spend more money with you.

You can then think about who your ideal customer is and write a description of them. What do they look like, what age are they, do they have kids, how much do they earn? Whatever is relevant to building up your customer profile.

Once you’ve done that design your marketing to attract them. Your customer profile will dictate how and where you market and advertise. By the end of this process you will have a better business and you’ll enjoy serving the fantastic customers you have.

Why are YOU in business?

Did you ever feel there was a ‘why’ missing from your business? I don’t mean the money or the freedom but maybe something a bit bigger! How can you design a business that not only gives you what you want, what your customers want but that can give back too?

The future

I’ve seen the future of business and it’s really awesome. In fact WOW!! Have you heard of B1G1?  I hadn’t until I went to an accountant’s conference recently. I know what you’re thinking, nothing inspirational happens in the accountancy world – but you’d be wrong.

Paul Dunn, an internationally famous inspirational speaker told us how this came about and I struggled to keep the tears from my eyes. I came away more fired up than an accountant ever should be and now I know I can play a small part in changing things for the better.

How?

B1G1 stands for Buy 1 Give 1 and it’s a way that business owners can involve their clients and employees in specific charitable projects. So for instance if you are a café every time someone buys a coffee they could give clean water to 1 person for the day in Malawi or Ethiopia. Did you think you could make a difference like that by buying something?

100% of the money goes to the project, it’s not swallowed up by admin fees. As a business if you want to join you pay a fee and that goes towards the admin. I’ve signed up on behalf of Murray Associates and in the past month we've sent 45 kids in Nepal to school for a month.

I am so excited I can hardly contain myself. I’ve found my ‘why’ and I’ve been waking up everyday thinking about who else I can tell about this. So now I’m telling you. Check out www.b1g1.com and see what you could do to make a difference.

Turnover or Profit, which would you choose?

Turnover is vanity profit is sanity! You’ll always hear me saying this.Why? Because it’s easy to have £1m turnover and not much profit. You can be a busy fool, so the profit is of major importance.

Being an accountant I’m always around business people and I love to hear about their business. But as soon as I hear someone bragging about their turnover I get alarm bells ringing in my ears.

Don’t just set goals for your sales make sure you have a profit target as well.  It’s really easy to make unprofitable sales – it’s called giving it away! What’s the easiest way to make a loss? Don’t charge enough for what your doing. So make sure you’ve got a really good handle on how long things take to produce or service. Look at your whole process and what’s involved.

It can be too easy to think about your profit in terms of an hourly rate and compare that to a salary. Remember if there’s only you in the business then you can’t spend 35-40 hours a week producing or serving your customers. You’ve got admin, you’ve got quotes, you’ve got meetings!

In general, one third of your time will be spent generating the money and two thirds doing everything else. Doesn’t look quite as generous now, does it? Set your profit targets and then work out how you can get there. And if you’ve got incredibly tight gross profit margins I would look at what you’re doing and ask if it’s worth all the hard work.