To earn more money without marketing:

1. Sell the clients you have more while you’re in front of them.

This can include adding a bottle of wine to the  customer dining in your restaurant, or adding a service contract to the end of a large sale. Do they know the extent of your product offering, and are you meeting all the customer needs that you can?  Make sure you ask if there is anything else you can do.

2. Sell the clients you have more often.

A dentist that sees patients every 6 months sells double the amount as the one that only sees patients annually. And they have better looking, happier clients due to their increased sales. Revisiting for the smaller sale wins for big for everyone.

3. Revisit and service your long, lost clients.

If they are your clients, and you don’t service them, you are waiting for someone else to come along and steal them (and likely sell them something bigger). If you know you aren’t going to serve them, visit them and refer them to someone who can better fit their needs, and get a referral bonus.

4. Ask for referrals.

I know, I know. You’ve never heard that before. Still, you should do it.  Even if you think you aren’t in a referral-driven business, try it out and see if you get any business that way. You refer restaurants to your friends, right? A restaurant owner can easily walk up to a patron’s table to greet them and ask them to send a friend, too.

PHOTO: Customers Spending Cash at a Small Business.

To spend less money and deliver the same quality:

1. Revisit purchasing practices and optimize the input spending.

Do you make sure you get the best prices on your cost of goods sold?

2. Look through each line of your Profit & Loss.

Find areas of excessive spending in the P&L and attack with a scalpel.

3. Look at the balance sheet spending of your company.

Then do as little spending as possible.

Lately, one of our longest-standing clients had an incident of fraud. This was shocking to us, as we have done varying business management projects with them since 2008, and they even have back office systems for fraud prevention!

The fraud was discovered just as one office manager left, and the replacement employee found all the stuff that got buried. The back office systems we set up in 2008 were great, and would have found the fraud right away, but the managers weren’t following the systems.

Detecting Fraud and Preventing Future Fraud

Fortunately, our business management consultant team was there to help.  Here are some ways this 12-employee construction company could have found the problem in month 1, instead of finding it after month 7:

1. Run periodic Quickbooks reports (memorized reports)

In past projects, we set up business management systems, and then hired their office staff to replace family.  We then set up Quickbooks reports to be run each week or each month.  When we audited the construction company’s business management systems, it was discovered that the fraud didn’t start until after the reports were no longer being run.

2. Have Owner Oversight Meetings

Quickbooks reports were always part of the agenda for the Owners’ meeting (brothers).  Along with the fraud, cash problems, lack of money, and conflict amongst family all increased at the same time. Even when times are tight, you can save money and hassle by having the Owner’s Oversight meeting to do the work of business management.

3. Let Incompetent Employees GO!

Like most of our clients, the owners of this company are *really* nice. We love them that way!  They forgive easily and repetitively, expect that any work problems are management problems, and overall just want to help each employee family in the business provide for themselves.  However, at work, business comes first. If you have an employee with big attendance problems, work production problems, competency issues, or if you wish an employee could just do their job, you need to remember: Business first.

4. Reconcile your bank accounts

When the new Office Manager came back, she found all this fraud through reconciliation of the bank accounts. Check numbers were missing from Quickbooks. She also found in Quickbooks that Home Depot spending had tripled, and owner disbursement accounts had skyrocketed.  The owners were shocked! These are all places that the books were “cooked” to cover the fraud.

Need Help with Fraud Detection and Prevention?

If you’re wondering how you can make time to do all this, consider hiring a outsourced business management consultant.  Business Management Consulting Firms like ours can go in, set up systems, and then sunset out… And come back in when concerns like this rise up.  We’re here to help when you want a deeper team in your small business.

The National Labor Relations Board (NLRB) is an arm of the National Labor Relations Act (NLRA) enacted in 1935.  The NLRB issues regular memos detailing the findings of labor investigations they conduct, and these memos sure don’t make for light reading!  Fortunately, business management professionals are well-versed in NLRA law and have plenty of experience interpreting NLRB findings for you and your business.

Social Media Policies Found Lawful or Unlawful by the NLRB

The NLRB found it was OK to prohibit employees from discussing things on Social Media outlets:

• Proprietary or confidential company information about the company and/ or the company’s partners, clients, vendors
• Explicit sexual references
• References to illegal drugs
• Obscenity or profanity
• Company intellectual property
• Putting someone down because of race, religion, gender, disability, sexual orientation, or country of origin

What is not allowed in your company’s Social Media policy, based on NLRB rulings:

• Broad prohibition of use of social media
• Banning employees from any conversation about working conditions or workers’ rights
• Prohibiting employees from posting photos depicting the company, if not part of one of the prohibited categories from the list above

Need help navigating the world of NLRA and the NLRB memos?  Business management professionals work with these laws every day, and are trained in understanding and interpreting them for you.  You never have to go it alone with your company’s Social Media Policy again!

The papers and electronic records you keep in order to validate your firm’s accounting records are known in the finance world as the audit trail.  While the word ‘audit’ is most commonly associated with a harrowing process that companies or individuals are put through by the Internal Revenue Service, companies may also undergo internal audits to make sure everything is in order should the IRS come knocking.

In fact, putting your company through an internal audit every year, even without probable cause, might make your life a whole lot easier if the IRS decides to review your company’s audit trail.  Outsourced bookkeeping or an accounting consultant keeps the audit processed fair and balanced.  You can even outsource a Chief Financial Officer (CFO)!

What you can do

Whether the audit is an internal audit performed by a business accounting consultant, or an external audit performed by representatives of the US Federal Government, here are a few things you can do that will make your life easier:

1.) Minimize your risk.

In the business world, three aspects make up what is known as the Fraud Triangle, and when the triangle is complete, fraud may occur.  The aspects of the Fraud Triangle are: Motivation, Opportunity, and Rationalization (or Perceived Pressure).  A classic example is a sales manager reporting their own numbers (opportunity), whose bonus is based on his or her annual sales (motivation) and who may need the extra money to fix his or her car (rationalization).  For this example, by putting someone else in charge of reporting the sales figures, and/or basing the annual bonus on other merit besides the amount of sales, you are minimizing the risk of fraud, which will be of great help to you should your firm be audited.  Outsourcing bookkeeping responsibilities using a business consultant is a great way to prevent fraud.

2.) Create an accounting policies and procedures manual.

Non-standard accounting procedures or those that vary from year to year are more likely to raise flags at the IRS.  The manual can be used as a training guide for a new employee, and can be created by employees in different departments by simply having them write a report to the finance manager about how they perform their jobs.  In some cases, the finance manager, vice president, or chief financial officer (CFO) may need to make a policy decision for accounting procedures within the company.  Your business management consultant will be of great help putting these together.

3.) Keep impeccable primary and secondary records.

This means not only keeping a receipt for every incoming and outgoing financial transaction, but keeping the receipts in chronological order, as well.  Scanning receipts and keeping a digital file of these secondary records in two separate locations, also in chronological order, is a good idea, too.

4.) Write notes about bookkeeping decisions.

Accountants are allowed to write notes about why certain bookkeeping actions were taken, and you should definitely have your firm take advantage of this even if you don’t have an accounting consultant, especially when taking action not covered by the procedures manual.  Take the time to write detailed notes about decisions such as where you reported individual expense accounts or which inventory method you are using so that auditors can quickly see the logic behind your decisions.

5.) Get professional help.

An enrolled agent, business accounting consultant, certified public accountant (CPA), or tax attorney will help you make sense out of the US tax code, which can be confusing at best.  An outsourced CFO or business consultant will also help you set up your systems such as Quickbooks, make sense out of your records, check what others are doing, provide oversight, and guide you through the process of audit preparedness before the audit occurs.

Well, 80 pages of size 14 font, much like its inspiration (only shorter), I can report that it is a book for the one in charge of change management. Sort of. It celebrates the cheese moving, for sure. Personally, I never recognized that the point of WMMC was to blindly accept change. I would call it closer to “embrace change”, and this book suggests that the theme of WMMC was instead something closer to accepting one’s fate (of change.)

Our protagonist, Max, is our every-mouse. He is the guy that wonders where the cheese comes from. He looks down and digs, he pounds on maze walls, and one day, he looks up!  Max embarks on the journey of discovery, and eventually, affecting the change. Max is the mouse we all aspire to be in the real world. Curious. Interested. Engaged.

There are two other characters (besides the crowd of folks blindly accepting change as a necessity for continued cheese-finding.) Big, a mouse that likes running, not just eating cheese. And Zed, whom my housemate calls the Jesus-Mouse. He’s our philosopher that questions everything about the physical world. He has looked beyond “up.”

This book is a great book to use for a retreat and (again) change management. It celebrates the questioning attitude, not just the change. It is a great book to help employees accept the entry of a business consultant. It has discussion questions in the back – both for an individual and for a team. And, you’ll finish it in under an hour.

If it is the sort of business turn around that should have happened 5-10 years ago, and you think that you have the right leadership some where in the business, I have seen a turn around cost in the neighborhood of 5% of one years sales. This process will typically take close to one year.

This crude estimate includes several types of professional services as well as business consultants. These include:

• Legal advice and changes
• CPA and tax advice
• Turn around business consultant
• Operational and technology updates

While the turn around cost may not be cheap, it most certainly will be a sound investment in your business. Hiring a business consultant to help turn your dying business around will be the the best stress relief you have had in years!

Reading 1: Built to Last by Jim Collins

I have been listening to this audio book in my car lately, and it’s doing a great job of re-energizing me to work “on” the business. I want Fisher to be a visionary business, as I suppose every entrepreneur wants for her business.  A significant differentiator between visionary companies and good companies is their ability to succession plan. Can the business survive a change in leadership? Can the employees? Systems? If a business owner creates systems that survive, then it is likely that the business will survive and thrive through the generations.

Reading 2: Entrepreneur Magazine, the issue I just got in the mail (March, 2012)

One of the cover stories is about “leadership gurus”. They interviewed the CEO of Veritas Software, who took the business from $95,000/ year to $1.6 Billion / year. He discussed and re-emphasized that the business needs to be built with “beyond him” in mind. This meant transparent leadership for him, and it created a way for him to retire in 11 years.

Client Meeting: I have lately had the cause to meet a family business based here in Portland that has had slipping sales (and deeper slipping profitability) since dad passed away in 2005. We will be helping them with building systems, and ultimately design the way the business works for the new generation of  leaders. I am confident that the lessons of the past 7 years will help the family create management systems that help them survive for the next generation as well.

There are many ways to start your business succession plan. Our consultants at Fisher are always excited to help our clients plan for their business to live on for years. The important part is that it gets done. You will sleep much better at night knowing that no matter what steps you take the next morning, your business will continue on if you decide to leave.

When I am hired to engage and empower employees, the first step is to meet and listen to them. Are they happy here? Are they engaged in their current job? What would they do to turn this firm into a growth business? Do they know why a business consultant has been hired to help the company?  There is no perfect company, and a good business consultant will really listen to the comments made during these initial meetings. Since there is no prior relationship with the business consultant, I find that the truth is generally really easy to get. Maybe not deep seeds of what the CEO should do different, but by the end of a few interviews, it is really clear what is happening within the culture and amongst the management of a small or medium sized business.

Once I have talked to each person for 20 – 90 minutes (depending on their job and influence), I have gathered a lot of information. When the goal is to Grow Your Business, the next steps work like this:

1. Engage the top in the needs of the middle and bottom. This simply makes sure that the CEO has a clear picture,
2. Work on a job description update for each employee,
3. Fix any fires that came out in the initial interviews,
4. Do a company goal session (which takes about 2 hours total), where the CEO will learn how everyone wants to participate in the growth business,
5. Build actions from the goal session for each department or person,
6. Perform job reviews for everyone, including goals,
7. Measure, revisit, meet, and update (this is where we make it all stick!)

A business consultant will take the time to hear out all of your employee’s ideas and suggestions. Your employees will feel valued. As the business owner you will have a comprehensive look at all of the great ways your employees want to help your business be more successful, and ideas from your consultant on how to get there. It is truly a win-win situation.

We should start with the basic vocabulary of the Profit & Loss (or P&L), beginning at the top:

Sales = Income

Cost of Goods Sold = What you spent producing your core business

Expenses = What you spend on everything else (overhead, etc.)

Net Income = How much money you made after paying all the bills.

Sounds easy, right?  However, many business owners we meet show profit on their P&L, and have no money. Herein lies the question we get, “Where did the money go?”

We will step through this bit by bit, and I’ll simply invite calls and comments to better explore your individual situation. I look at financial statements often, and don’t want to skip anything, but in this situation, I’m sure it is inevitable.

First, let’s look at a foundation question in fiancial planning and analysis: do you do your books on an accrual or cash basis? While these should be about the same over time, it isn’t always true. QuickBooks has a simple button that lets you switch between accrual and cash basis, so comparison is easy.

Let’s define accrual basis and cash basis, so we don’t skip a step:

Accrual Basis: accounting for A/R as you send invoices out, and accounting for A/P as bills come in.

This doesn’t tell you anything about actual money in the door, nor bills you actually paid. If you have a stack of unpaid bills, your profit will show up much lower than the money you have, as the system assumes you pay the bill the moment it is due.

Cash Basis: accounting for money as it actually moves. So, if you have a stack of unpaid bills, these won’t show up as profit killers, because money hasn’t moved.

This forced choice may be where some of the money has gone. If your business is over about $5M / year, you are not allowed to file on a cash basis, so that may help you know where you sit.

Next, we consider what purchases go STRAIGHT to the balance sheet, and never hit the P&L as an expense.

Amortizing Assets. Picture that you bought a work truck for $35,000. The first year that truck is in service will only reflect a portion of the cash spent in the P&L, and the entire asset will be on the balance sheet. This is true for building purchases, office remodels, some websites and most equipment priced over a few thousand dollars.

Research & Development Costs. This expense doesn’t hit the P&L until the new product hits production. If you are doing R&D, you need to create reporting around it, so you can manage the cost like a small business within your business. R&D sits on your balance sheet as an asset, and you should be creating intellectual property.

Debt Repayment. Interest payments are an expense. The principle repayment is not. It decreases a liability of the balance sheet, but will not show up elsewhere. The purchase you got on the front end wasn’t income, either.

The financial statements are a huge piece to understanding your business. In many small businesses, it is the most reliable measurement tool in the building. However, if you only use the P&L, you are only looking at a portion of the picture. There can be gaping holes in “where did the money go.”

To help manage, you can create a few accounting reports that help you manage the business that include more than the P&L and Balance Sheet. We suggest creating a detail of your bank balance, current bills, aging receivables, and a few others depending on your product or service. This should help make financial management for small business an easier goal to achieve.

Essentially we concentrated on optimizing workflow within the sales system, beginning with a workflow discovery:

• How do customers find you? (The top of the sales funnel)
• What is their experience once they know you? (Middle of the funnel)
• When do you ask them to buy, and how? (Bottom of the funnel)

When our firm in charge of business management consulting, even as an outsourced consultant, we work to set up ways of measuring these portions of the funnel. This will help us see where things break down (if they break at all), and helps us identify potential points where we can hit the gas pedal if we want to accelerate our business growth.

The key to the sales performance measurement (and to take this moment to use some MBA-worthy words), is to set points of measurement for input; things we can control as an individual. How many note cards got sent (yes, old school, and personalized mail)? How many calls were made? How many referral sources have been visited? These are all “top of the funnel” activities that essentially help prospecting.

In today’s economy, and surely the high points of the conversation with Home Builders, focus is on getting new prospects to the pipeline. However, we have done a lot of business growth consulting around the middle of the funnel (their experience with your business.) We discuss issues like do you need to perfect telling clients how to buy? How about telling them what separates one firm from another (in a respectful-to-others way.) Do your clients or customers know the good questions to ask? If not, you can help inform them! If they are buying a remodel that involves major construction, getting a rental house is a part of the buying process. Things will certainly go wrong (it rains a lot here!). These are big hurdles, and it is up to the remodeling sales person to educate, even though not every step involves the re-modeler.

Sales and Marketing consultants all know what we are happy to teach: you can control your sales process. And you can improve it. Sales will accelerate your top line growth within the business.

And, it leads to our next question, is your operation prepared for growth?