Business success: The short (term) and long (term) of it

In today’s business environment a focus on the short term is really important. The critical pieces that need looking into are your revenue and your costs.

Monies in

Think of revenue as gas for your business. You can get that revenue from two sources: existing customers and new customers. Existing customers will either stay or leave. New customers will try you, and then become existing customers and stay or leave.

One key to success is increased revenue. To increase your revenue you must manage your customers. That’s right; manage your customers. Do you provide your customers with what they want all the time? You do if you have a strong repeat customer base. You don’t if you “churn” customers. Increasing your revenue can be accomplished by getting more from the existing customer or getting more new customers (and keeping them).

The key to increased revenue is: 1) a strategy to know your customers’ wants and needs and 2) a strategy to get new customers.

How do you know what your customer wants or needs? You ask. And you ask every customer that you come in contact with. And your employees ask every customer they come in contact with. You and your employees talk about what is being collectively heard, and you provide your customers with what they want and need.

Key here is asking the right question(s). When was the last time you gave someone an honest answer to the question: Need anything else? Never, I’ll bet. So your questions have to be probing; you have to be willing to listen and ask more probing questions. It is that simple!

Do you have a customer advisory board? What a wealth of information they have, and all you have to do is ask! Setting up an advisory board is relatively cost free (maybe a nominal gift certificate as a thank you) but can pay huge dividends in providing timely information. Remember that not only do potential board members have information, but they also have friends who have friends that have information.

By understanding your customers’ wants and needs you will increase your “average” order because they will be able to buy more of what they want and need.

How do you get new customers? First, you provide customer service that keeps them coming back, and, second, you develop a marketing and advertising campaign that will get your message out.
 
Providing customers with service that keeps them coming back is asking them what they want (getting to know your customers’ wants and needs) and providing just that.

Developing a plan to acquire new customers is nothing more than determining what you are willing to spend to get those new customers and what vehicle you are going to use. You can do as little as ask your existing customers to tell their friends about you (when was the last time you did that?) or as much as a full-blown advertising plan. The point is you must do something, take some action to get new customers.

Monies out

Costs/expenses use up your gas. You can reduce that drain by examining the components of your costs and expenses.

Sometimes you are too busy looking at how to get money in the door, and you forget about how not to spend as much to get that money in the door. Pennies add up to nickels, nickels add up to dimes…and so it goes.

When was the last time you looked at each line item and asked, “Is this the cheapest I can get this?” Have you asked your supplier for a better rate? Have you had two or even three vendors bid for your business? It is amazing how competitive they can get on pricing.

Have you thought of talking with other business owners about pooling your purchases to get quantity discounts on supplies?

Is your staffing optimized? Or are you wasting payroll dollars by overstaffing? Or losing revenue by understaffing?

Understanding your business discipline and making certain your employees understand it is important to the success of your business.

Is your business a customer-oriented business, a product-innovator business or is it a low-cost provider? Knowing what your discipline is will dictate to you the type of employees you hire.

Focusing on the long term is building a foundation for future growth. Moving forward, keep your tank full and your eye on the road.

Dick Barkley is the president of Barkley Consulting Group, Inc. One of his clients is InMaricopa. For more information, visit barkleyconsultingaz.com.

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