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Avoiding the 10 Common Killers of a Small Business

10 Common pitfalls to avoid for a small business

businessStarting a business is a huge venture, and it requires a lot of hard work and dedication to get that business off the ground. Even with the best intentions, some people estimate that up to 50% of businesses fail within the first 5 years. Keeping those statistics in mind, some business owners have begun looking for answers on why those businesses do not make it. The following list highlights the top ten pitfalls for small businesses to avoid in order to succeed.

1. Starting the business for the wrong reasons:

There are many reasons why a person would open a business, and all of those businesses share an equal shot at succeeding. However, when a business owner opens shop for the wrong reasons, that business is executed with the wrong planning, the wrong passion, and the wrong mentality. Starting a business as a lack of other options such as a lay off or unemployment situation can leave an owner overwhelmed and barely treading water. A business takes months or even years of planning, and all aspects must be examined. Owners with a passion for the business or trade they are in stand a better chance of keeping that business afloat. Similarly, business owners must have enough know how to run a successful business.

2. Cash flow problems:

Many businesses are not prepared for the months, or sometimes years, that it takes for the business to grow enough to be profitable. Owners should prepare themselves for the fact that they not only need to have six months of operating expense money for the business, but also six months of living expenses for themselves while the business builds a client base.

3. The word hasn’t gotten out yet:

Advertising is key in getting a small business off the ground. Although word of mouth promotion is important to a business, there must be enough customers to begin with to spread to the word. Many owners overlook a budget for advertising, and this is a major mistake. Let everyone know where the business is and what service it offers. A good marketing campaign will pay for itself many times over.

4. Not enough room to grow:

When a business suddenly takes off, some owners are unsure on how to handle the onslaught of new business, and all the upgrades that it requires. Owners who reinvest in their companies give those businesses the upper hand. Technology is a big part of this pitfall. Many customers today are put off when a business does not use the technology that is expected. A business should not look cheap to customers, as it implies that the services or goods are cheap as well.

5. Image issues:

Along with advertising, businesses need to keep their reputation in tip-top form to keep their customers coming. Customer service should be the number one priority in any business, and those that show superior customer service have more word of mouth referrals. Along with keeping up with technology, image issues are also based on the physical appearance of the store and its employees.

6. Staffing issues:

As a small business grows, some owners are late to notice the need for more staff, or even more knowledgeable staff. Owners should analyze business trends frequently to ensure that their customers are receiving prompt and professional service from staff members.

7. Lack of planning for slower times:

Businesses are rarely booming all year long. There are months and seasons where business tends to slow down. Owners need to plan for those slow seasons by offering incentives for customers to come in and spend their money. Even with that planning, it is wise to have a cash back up to cover those leaner times.

8. High prices or cheap products:

Customers want to know that they are getting a good deal for their money. Many start-up business owners price their products or services too high to compensate for slow business. Small businesses have to compete with the big box stores that can offer low prices because of their high volume. Owners need to sell or offer high quality goods or services at a reasonable price.

9. Lack of knowledge of rules and regulations:

Fines and temporary shut downs can be a huge drain on a business. Business owners should avoid these by making themselves knowledgeable of the laws and regulations of the city and state, and to be sure that they are always in compliance.

10. Hunter mentality:

A major pitfall to avoid is going for the quick sale without thought of future sales. This hunter mentality can cause a business to fail. Businesses must cultivate relationships with their clients, much as a farmer cultivates a field, concerned with not only the current need, but also the needs for the future.

Although these ten items are not the only reason that businesses fail, many fall into these traps, which can be a step on the way to failure. Being aware of these common mistakes can empower an owner and give the knowledge needed to run a successful business.

Keep you business going by reducing overhead! Next Up is on “Cutting Your Overhead with Open Source IT Solutions”

Tips for Customer Retention & Keeping Your Cool

Tips for Customer Retention & Keeping Your Cool.

“The customer is always right,” is an old cliché, but here’s why it’s true. It’s harder to win new customers than to keep old ones. A recent survey conducted by accounting giant PricewaterhouseCoopers found that it costs five to ten times more to acquire new clients than to keep existing ones happy. And with customer turnover of about 50 to 65 percent on average every five years for the typical shop, learning to keep customers is a key part of doing business. Even when your customers are upset (or worse), take a deep breath and remember that their satisfaction is literally part of your bottom line.

Here are 10 tips to manage your clients successfully and to increase retention and overall customer bliss:

  • First impressions about how you communicate are important: Your first contact with customers is often pivotal in determining the tone of your business relationship. When you send your project proposal on time, it signals you are diligent and efficient. When you send an email follow-up, it signals you are organized and thoughtful. When you produce correspondence and all other branded material in the same way, it signals you are consistent and professional. On the other hand, you don’t want to set up unrealistic expectations. If you respond to an email within minutes of it being sent, that might set a precedent you can’t live up to later. If you allow your customers to call you at anytime, they may call you when you are on a deadline or have other pressing priorities.
  • Set boundaries and expectations and then live up to them: Particularly if you are a freelancer, you should make your customers aware of your boundaries. Freelancers have to balance their development time with customer consultation time, which can become impossible if customers call at inopportune times. Try to make a routine for emails. Instead of checking emails all day, consider checking email only once or twice per day, but make it a point to respond within 24 hours. As for phone calls and IMs, make sure that you schedule them so they don’t become disruptive. If you explain to your customer that setting an appointment for a phone call will be more productive because you can prepare ahead of time, you can make the customer feel appreciated without needing to be on high alert for random calls. When you keep up habits and patterns, customers will know what to expect and will adapt accordingly.
  • Be transparent and professional about billing, time sheets, and turnaround times: If you show how much you bill and how, your customers will face less sticker shock. One of the most frequent complaints in customer care is a lack of billing transparency or a gap between perceived value and price. Being upfront can ease this. It also helps to develop real plans for turning around project work items so that you can accurately and confidently quote this information in future correspondence. If the customer suggests a change but you don’t know how long it will take, follow up with more information instead of offering a vague promise. It’s better to follow up with more information confidently than to set your customer up for later disappointment.
  • Build self-service, timely updates, and useful features into your website: Your website should offer continuing value for your business. Freelancers should sign up for project management and billing sites to make sure they make professional and accurate communication with their clients. Self-service can help customers to feel empowered, but make sure that your site provides a quality personalized experience.
  • Approach confrontation with the customer with their perspective in mind: Everyone eventually faces the irate call from a customer due to a missed deadline or some other problem. Listen to the customer, and respond gracefully and professionally. It helps to repeat back the customer’s question or complaint to confirm that you have listened. It also helps to use positive phrasing such as “Here’s how we can solve this problem”. If the conversation becomes particularly personal, gently remind the customer by saying something such as “I know that these comments are not directed towards me but this situation, which if I were you I wouldn’t be satisfied with either.” Some social scientists have discovered that in the case of refunds, it can actually be helpful to ask the customer to suggest a fair refund price. More often than not, the customer will offer a price lower than you expect, and if you keep the customer, this goodwill will pay dividends.
  • Personalize all correspondence and communication as much as possible: When you send correspondence to your customers, use their name and information about a recent conversation to make the correspondence seem more urgent and timely, which gives the customer greater satisfaction. If sending a generic email, at least give users a chance to opt-out. Sending email too often will seem like spam, so use software that detects whether the user is reading your emails or not. Use a service like Scrubly to make sure that your address book contains the best name to use to address customers and that all email addresses in your address book are clean, neat, and up-to-date, which will prevent annoying customers with accidental duplicates and improper salutations.
  • Use automated telephone systems with care:If you use a computerized telephone system, make sure that customers are able to speak to a real live person at any time. If you can afford it, use professionally recorded audio instead of text-to-speech, which can sound robotic and unfriendly.
  • Ensure that customer care representatives have everything they need to interact successfully with the clients: You should keep a log that documents all customer interactions. No customer likes the sense that they’ve had to repeat information from earlier conversations. This log will also help you to develop a rapport and to find leads.
  • Under-promise and over-deliver: Customers get excited about big project plans at deep discounts, but this is a recipe for disaster either because you can’t meet the price or you can’t meet the high expectations. Going the extra mile on a smaller project plan will delight the customer and will show extra value than failing to deliver a bigger plan.
  • Cold-call old clients and win them back: One of the difficult things to do, particularly for freelancers, is to learn to cold-call old clients. Old clients could be easier to win back than you think even if you parted on not-so-good terms. Focus on a technique called “the soft sell”. Instead of convincing customers they should come back, remind them of what it was like when they did business with you. Talking about the past conversations you had and other information about your relationship shows that you are considerate and remember their specific business. If they talk about their current projects, suggest how those projects would have been on time and on budget if they were still a client.

Up Next: “Avoiding the 10 Common Killers of a Small Business”

Telecommuting: Keeping Your Offsite Employees on Task

Telecommuting: Keeping those offsite on target.

telecommutingWith the economy in the state is in today, telecommuting is fast becoming a popular alternative for employees. The question is how to keep these employees on task so that productivity is still achieved at a maximum level. Telecommuting offers flexibility which is highly desired by many employees; however, companies are sometimes hesitant to offer this opportunity due to bad experiences in the past with employees who did not pull their weight and were a drain on the company. Most remote workers understand the need to work harder than their counterparts on site and strive to make it happen.

Although there are many advantages in being an offsite employee, there are disadvantages too. Telecommuting employees are not able to participate in the water cooler conversations that happen on site. They do not get to develop strong personal relationships with their cubicle neighbors. They also tend to bear the brunt of blame when things go wrong. Looking deeper at these disadvantages; however, reveals that they might not be as negative as they seem. Water cooler is often centered on gossip, employees can still get to know their team without being in a cubicle next to them and people often try to find scapegoats wherever they can, regardless of where they are located.

Remote employees need to recognize that although a flexible schedule contributes to a better work and life balance, they need to be accountable, stay connected and communicate in ways that lets the office know what they are working on as well as establishing relationships with the teammates back at the office. Do not give off the appearance of a robot that sends emails and has an electronic voice. If you take the time to get to know the onsite employees at your company, you will be appreciated and accepted by them even if you are not physically with them all the time.

Consider these five tricks and tips to help you maintain those relationships and stay productive:

1. Track your work output – Let your manager or supervisor know what you work on every day. If it makes sense, keep your teammates up to date too. There are lots of resources on the Internet, including free online tools to keep track of work output.

2. Use Instant Messenger like it is your best friend – Most likely you are working near a computer with Internet accessibility. Utilize an IM program that allows you to send links, information or questions whenever you think of them. This makes you feel connected to those at the office and lets them know that you are actually working. The conversation that you have with IM is more fluid than simple emails.

3. Stick to a schedule – Although a flexible schedule is one of the desired outcomes for an offsite employee, having clear work hours is still a necessity. This makes you accessible to your teammates at the office so they know when to get a hold of you.

4. Set up weekly communications – If you are unable to make it to the office once a week due to distance, set up a weekly communication with key members of your team. Video chats or conference calls are important whether you perceive a need or not, so you can show off your personality and talk shop. You will find that there is always something to talk about even if you did not have a list of topics ready beforehand.

5. Make your voice heard – Just because you are not physically at the office does not mean you are not a vital part of the team. Make your voice a part of the conversation when emails are sent or during conference calls. This is an excellent way to digitally brainstorm with your fellow teammates and clarify what happens at the office when you are not there.

Keep these five tips in mind when working at a company that allows the flexibility of telecommuting. Get to know your fellow teammates, stay connected with management and communicate regularly on what you are doing to ensure that you stay accountable and visible from your office at home.

To help with the idea of productive telecommuting, why not check out our next article on the “Results-Only Work Environment (ROWE), What it is and How it can Help Your Business.”

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Workplace Policies on Social Media

Social Media, Policies and the Workplace.

social mediaIt’s a simple fact of life that the vast majority of the employees in any business are also going to be users of various social media sites. As an owner or manager of a small business designing a correct set of policies for social media use is vital, not just for avoiding potential legal issues, but also for avoiding negative publicity and ensuring workplace productivity. This article will give you an overview of some of the risks, and approaches your company can take to mitigate them through intelligent policies, however it is not a comprehensive list and should not be taken as legal advice.

The first and most dangerous set of risks to the company are security risks. From an IT security point of view, every method of communicating with an employee directly is an avenue for compromising your network, and a potential means for sensitive data to leak out. In the worst case scenario this can result in your companies entire email system or knowledge base being made public, with catastrophic consequences. The second set of risks are legal, a careless statement by an employee from a work computer can create liability for libel, or under data protection laws if that employee has disclosed sensitive information. A company can also find itself at risk under copyright law, if an employee downloads a pirated piece of software, or shares music or video files. The third set of risks are public relations. Aside from the dangers of an employee complaining about the company they work for, there have been several cases where individuals complaining about a companies policies or actions on social media sites have been attacked by company employees, often resulting in negative national, or even international press coverage. One ill-judged post from an employee can blow up years of public relations work. The final risk is productivity, you’re paying employees to do a job, and unless they’re your social media manager, that job probably does not involve 2 hours a day of posting to Facebook. While productivity losses are unlikely to produce the same sort of crisis as the other 3 risks, a slack and unproductive atmosphere in a business can quickly become toxic for everyone involved.

As a result, many companies simply ban individuals from using social media sites during work hours, and install filtering software or editing firewall settings to block employees from using social media. While simple, this approach has its own drawbacks. First, this will create resentment, particularly amongst skilled employees who are used to independence of action, and capable of finding work elsewhere. Many managers will assume that if an employee is on Facebook or Twitter, they must be wasting hours of company time, however, it’s worth remembering that many people communicate with friends and family through short messages social media sites. A blanket ban is like banning people from making personal calls while on lunch or on break, it’s bound to create negativity amongst the workforce, and it gives the impression that management are either clueless or punitive. While it’s unlikely an employee will quit just because they can’t update their Facebook page, it could be the difference between an employee accepting an offer from another company and turning it down.

A better policy is a combination of monitoring and education. Speak to your IT department about monitoring employee Internet usage. Make sure your employees are aware that you’re going to be monitoring their Internet usage, and make sure they are educated about the need to maintain security, confidentiality and the correct public image while communicating on line. Set acceptable use guidelines covering both the time alloted to social media sites and in terms of content. As an example an employee should not be spending more time on line than they have for their breaks, nor should they be making any statements that harm the company’s interests. Make sure your employees are aware of the consequences for exposing the company to legal liability or compromising network security, and public image. Have a lawyer review your proposed policies to make sure they do not run afoul of any laws protecting certain sorts of employee communication. In particular many jurisdictions have labor laws protecting employees discussing their wages and terms of employment and whistleblower laws protecting employees who disclose criminal activity. Finally, make sure these policies are correctly and evenly enforced. While you will not completely mitigate the risks, you will have gone a long way to protecting yourself against the dangers posed by social media, while not denying yourself or your employees the opportunities for enhancing their jobs and furthering the interests of the company that social media provides.

Social Media is not the only workplace concern. “Telecommuting: Keeping Your Offsite Employees on Task”

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