Lori Stuckert

I Don’t Like Strawberry Rhubarb Jam

By Tom Grandy, Founder

I am now in my 76th year of life.  At this point I am relatively set on what I like to eat and what I am not interested in eating.  When it comes to jelly for my toast, grape is my favorite followed by red raspberry (with seeds) and apple. 

A few weeks ago, some friends of ours returned from a trip and blessed us with a variety of homemade jams they had purchased.  One of those jars was Strawberry Rhubarb jam. We valued their friendship, therefore, we thanked them for thinking of us through the gift they had purchased.  However, my thoughts were not as pure. I was actually thinking “Why would anyone produce, much less sell, Strawberry Rhubarb jam?  Furthermore, why would our good friends actually purchase it as a gift?  I could tolerate, and perhaps even enjoy strawberry, but Rhubarb!  Who even eats rhubarb and even if they did, why would they put it in jam?”.  The jar was set aside and I reverted to my usual grape in the refrigerator.

About a week ago my grape jelly jar was empty, and my loving wife of 53 years placed the gifted jar of Strawberry Rhubarb jam on the table. I like strawberries but even the idea of rhubarb repelled me. As a side note, I really don’t know if I have ever actually tasted rhubarb before, but I know what it looks like and I was pretty confident that if I had eaten it, it would taste terrible.  The idea of putting jam on my toast that contained strawberries and rhubarb sounded nauseating. However, in order to avoid an awkward conversation, I put at little on my toast, pretty much without comment.

My first thought, after having taken a bite of toast with strawberry rhubarb jam on it, was that the jar had obviously been mislabeled. Why?  Because it tasted good, really good!  Upon closer observation it seems the label was correct; it WAS strawberry rhubarb jam!  It tasted great!!!  The jar is now nearly empty. 

My thoughts then turned into a question. “What would my reaction have been if there were no labels on the jar and I just tried the contents? How many foods (or business ideas) had I missed in the past just because they didn’t sound good.”

Growing up I didn’t eat potato salad for the same reason.  It didn’t sound good.  When my mom came to visit, she asked my wife how she was able to get me to eat potato salad.  Her response was “I just put it on his plate, and he ate it.”  It was our first year of marriage, so I ate what my new wife put on my plate.  Bingo, I liked it!

So, what’s the point?  As a business owner, how many new ideas have we not implemented because they didn’t sound good. How many suggestions have we heard about at seminars, webinars, conferences or even read about that we never implemented because they didn’t sound good.   

I want to challenge you to do one of the following, or perhaps both:

  • Company Meeting with All Employees – More than likely your employees have some amazing ideas when it comes to improving customer service, efficiency or even profitability. Consider having a dinner meeting and ask employees for suggestions for improving the efficiency of the company or maybe overall working conditions. What new benefits might be implemented that would boost morale?  Listen to their comments and then try a few.  If they work great.  If not, nothing really lost.
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  • Suggestion System – This is similar to a company meeting but is simply a way for employees to make suggestions “as they think of them”. Place a box on the wall labeled Suggestions. Have paper and pencil nearby.  Routinely check the box and read the suggestions. If possible, talk with the person that wrote the suggestion to gain additional insight into their thinking.

Employees work in their respective areas every day of the week.  Many have great ideas for improvement, however, if no one asks them, they go unutilized!

Also, keep in mind there is a basic principle that always works.  “Reward behavior you want repeated.”  If you can work a reward system into the dinner and/or suggestion program an amazing thing will begin to happen.  More ideas will be submitted.  Don’t ignore any idea without some serious thought.  You might find out it’s like strawberry rhubarb jam, it might be really good.

Do your employees believe in your pricing?  If not, they will tend to underprice the customer.  Grandy & Associates video training program entitled Why Do We Need to Charge So Much? Team Training is a wonderful way to help employees understand what goes into that seemingly high hourly rate you charge.  The program is normally $139.95 but this month it on special for only $99.00.  Enter Coupon Code Why40 at checkout.  Order today.  As always, there is a 100% money back guarantee if it does not meet your expectations.

The Importance of Building Trust with Buyers

By Michael Schwantes, Creative Business Services

When people get ready to sell their businesses, there is a natural inclination to talk up their business to make it seem attractive in the eyes of the buyers. Whether a seller has been preparing to sell their business for years, or he or she receives an unexpected offer, this tends to be the case. It’s only normal that a seller will have the inclination to build up their business and make it seem as flawless as possible.

It’s an interesting dynamic to consider, because while sellers are motivated to convince prospective buyers to take action, they also need to remain honest. When sellers try to hide or cover up a company’s flaws, it can definitely come back to haunt them. After all, almost all buyers will be taking ample time to determine if claims are valid and to investigate the business for themselves.

It’s a Two-Way Street

Along the same lines, sellers will want to trust that buyers are reputable and qualified. After all, why waste time dealing with a prospective buyer who is not serious about buying or qualified to do so. Honesty is essential on both sides of the transaction.

Honesty and Transparency

Before signing on the dotted line, buyers will take a deep dive into a company’s stability, finances, and potential for growth. If along the way a buyer finds a flaw that was not disclosed, it will negatively impact the seller’s credibility and can jeopardize a deal. The fact is that if the seller’s honesty ever comes into question, even the best deals can quickly fall through. Unfortunately, deals can fall through even when business owners fail to disclose issues that they consider relatively minor. After all, it’s possible that a buyer will have a different interpretation of the relevance of those flaws.

So, what is the best way to proceed? When both the buyer and seller are transparent, it works to dramatically improve success rates. This means that all parties involved should seek to be open about the risks, but also be clear about potential solutions. When this goal is achieved, it always benefits business transactions.

How to Build Trust

If a seller finds out that one important thing was not disclosed, suddenly every single statement made raises skepticism and concern. As you might imagine, that will jeopardize the chances of almost any deal succeeding. That’s why sellers and their representatives should be clear about any concerns and put them on the table along with potential solutions.

Consider if the business could run into problems down the line and share those details with buyers, but also present possible resolutions. Think about if you’ve made mistakes in the past with the business that could circle back and become an issue for your buyer. But it is essential to be proactive about sharing not only problems, but also ways to solve those problems.

Again, be sure to be clear and transparent about those issues and also how they could be resolved. Try to put yourself in the buyer’s shoes and think about every single issue you would want to know about before purchasing the business.

Maximizing Success Rates

When the guidelines described in this article are followed, sellers will see their odds of success increase. Trust is an undeniably large part of the equation. Sellers need to go against any instincts they might have to hide information, and instead be as forthcoming as possible. After all, once trust is broken, little can be done to rebuild it.

One thing that business brokers and M&A advisors constantly see that works against deals of all sizes is surprises. While surprises may be welcome in other areas of life, the truth is that they have no place in the world of buying and selling businesses.

 

Does Your Business Have and Use a Budget?

By Tom Grandy, Founder

The vast majority of businesses do not live on a budget.  The fruit of not living on a budget is easy to spot.  The company spends more than it brings in and the debt spiral begins!  Credit cards are used to cover extra expenses when cash runs out.  When the credit cards are maxed out distributors are no longer paid on time and soon the line of credit is maxed out.  The final step is often taking out that second or third mortgage on your home.  If discipline is not used when it comes to money, bankruptcy will eventually be at the end of the tracks.  The irony is that this does not have to happen. 

Most business owners spend more money than they earn because they don’t know what their real expenses are.  That is where a budget comes in really handy.  The budget lists all anticipated expenses for the coming year, by month.  The budget also includes anticipated sales each month.  Simply comparing the estimated income to the estimated expenses will tell the owner if they are priced properly in order to generate a profit.  Wouldn’t it be kind of nice to know if you were projected to generate a profit 12 months ahead of time?  If the budget shows the company is not going to generate a profit this is the time to make changes before meeting with your CPA at the end of the year!

Another significant benefit of having a budget is to create a Budget vs. Actual Report each month.  Reviewing the numbers each month will tell the owner if they are on target or not.  If the estimated monthly profit was not achieved the numbers can easily be reviewed.  Were sales lower than expected or expenses higher than expected…or both?  If expenses were higher, which specific expenses were over budget begging the question, why?

Watching the numbers each month will not only tell management where the company stands.  It also provides lead time to make changes to turn things around.  If pricing or expenses need to be adjusted, it’s much better to know early in the year so adjustments can be made.

Having created a budget will also serve as a guide in terms of your spending.  Before any major purchases are made the question needs to be asked.  “Is the purchase of this or that part of the budget?”  If it is, great, spend the dollars. If not, a serious discussion needs to take place before the money is spent.

Remember

Any significant increase in the company’s expenses will necessitate changes be made in the company’s hourly rate in order to maintain profitability!

Let’s assume the company decides to provide health insurance for its employees.  One of two things is going to take place.  If the cost is simply absorbed, the overall profit of the company will be reduced by that amount.

The other decision would be to increase the hourly rate to cover the additional expense.  As an example, let’s assume the Service Department has three techs each of which produces roughly 1,000 billable hours per year.  That means the three service techs will charge the customers a total of 3,000 billed hours over the coming twelve months.  The cost of health insurance is $250/month per employee per month or a total of $9,000 (3 service techs x $250/month x 12 months = $9,000) for the three service techs.  To absorb the additional $9,000, the hourly rate charged the customer for service work would have to be increased by $3.00/hour ($9,000 / 3,000 billed hours = $3.00/hour).

Do other expenses change over the year?  Sure, they do.  Prior to the beginning of each physical year a budget needs to be created in order to review the hourly rates the company is charging at the time.  Remember, any increase in company expenses will either lower profits or be passed on to the customer in terms an increased hourly rate.  The choice is yours!

This month the ProfitSmart KPI Tracker is on sale.  Track the KPIs of your service technicians and find out how your Service Department is performing.  Normally $399.00 this month it is on sale for $299.00.  To get the discount, use the discount code:  Ps25.  Check it out HERE!

Business tips for New or Relatively New Businesses Part 2 of 3

By Tom Grandy, Founder

In Part 1, we covered several “tips” for new or relatively new company owners in the areas of labor pricing, Chart of Account, QuickBooks tips and the use of partners like your CPA.  This month we will continue our discussion covering several additional areas. 

  • Join A Mixed Group – It is strongly suggested your company become part of a mixed group. Input from peers outside of your company can be invaluable in terms of growing your company.  Remember, pride comes before the fall.  Be willing to receive outside suggestions, especially if they come from contractors that have been in business much longer than you have.
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  • Have the Office Manager Take $100/week Out of The Company Checkbook for Personal Savings – Saving money is tough, especially when the company is young. However, saving a little bit consistently can produce significant savings over time.  I promise you by taking $100 out of the company checkbook once a week will not cause the company to fail.  Saving $100/week results in $5,200 in savings over the year plus growth!  The stock market historically has an average return of 10%-12% over time.  Saving $100/week, over five years will result in savings in excess of roughly $35,000.  Over ten years the number grows to nearly $100,000.  The key is to have the office manager take the $100 out each week and place it in a mutual fund.  Tell them not to ask questions, just do it!  I can’t tell you how many contractors have come up to me at National conventions to tell me that is the best thing they ever did for themselves. 
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  • 100% Customer Satisfaction – There will be times when the company will need to pay out some money because of a dissatisfied customer. It always hurts when money has to be spent in that way.  The solution is to build 1% to 2% of the company’s estimated gross sales into the overhead, just like rent, utilities, insurance, etc.  The 1% to 2% percent then becomes part of the overhead costs and therefore part of the company’s hourly rate.  1% or 2% of $500,000 in gross sales is $5,000 to $10,000.  That is a pretty nice pool to draw from should the need arise.
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  • Build Credit Card Fees into Overhead – Credit cards are a fact of life. A huge percentage of customers are paying via credit card and the percentage is growing.  Some use credit cards because they lack funds.  Others do it to utilize the benefits/points offered.  No matter the reason, the company is going to have to pay from 1%-3% for accepting their credit card.  That’s expensive.  The answer is to build that cost into the company overhead and therefore into your hourly rate. 
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  • Some companies simply build 1% to 3% of their total gross sales into the overhead costs. 

The benefits are significant:

If the customer uses their credit card, the fee is covered in the rate.

If they don’t use a credit card, the company can offer a 2% discount if payment is made by a specific time.

If the customer fails to pay on time, there is a 2% late fee already built into the pricing.

  • Create a Totally Separate Payroll Checking Account – Out of sight, out of mind. When payroll taxes (Individual, State and Federal withholding taxes and company matching taxes) are left in the company’s operating checkbook, there is a tendency to want to use those funds for other purposes.  Taxes, all taxes, will need to be paid in full and on time!  Failure to do so can get very expensive, including jail time.  The answer is to shift all payroll dollars, including company matching taxes, into a totally separate payroll checking account.  When checks are written out of that account the individual’s withholding taxes, and the company matching taxes remain, and are therefore available when those taxes must be paid.  Shifting payroll dollars into a totally separate checking account reduces the possibility of misusing those funds.
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  • Create a Formal Collections Policy – Cash flow is critical and getting paid on time is a huge piece of that puzzle. It is suggested that the company create a formal written collections policy early in its life.  Once written, be sure it is utilized. 
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  • Get Deposits – When contractors are asked during seminars if they get a deposit on jobs, typically less than half the class raise their hand. Those that do get deposits, routinely get a third to fifty percent down.  Why don’t the rest of the contractors in the room get deposits?  They don’t ask.  Getting a deposit on a job achieves two things:
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  • Money up front, when properly handled, pays for materials and helps cash flow. It also allows the company to take advantage of any discounts distributors may offer for paying within 10 days of billing.
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  • Deposits greatly reduce the possibility of a customer having the work done by someone else (even though they may have signed a contract) should they get tired of waiting during the busy season.

Enhance Communication With Your Team

By Dave Ramsey CEO Ramsey Solutions

What we’ve got here is a failure to communicate.”

You might remember this quote from the old movie Cool Hand Luke. While it’s one of the most popular and often-quoted lines in movie history — and it might even make you smile — there’s nothing funny about a lack of communication within your organization. As a leader, it is your responsibility to intentionally and deliberately create a team culture where there is consistent communication at all times.

Communication is the grease that keeps the gears of your company moving, and without it team members feel detached and insecure. When they feel like they’re being left out, they can start to feel like they aren’t involved in a worthwhile venture. Just as bad, they begin to question their value to the company.

With that in mind, here are five practical steps you can take to create a culture of good communication within your business:

  • Avoid “mushroom communication” – People want to know what is going on and why things are happening, even when situations are going badly. Still, many leaders use what I call mushroom communication. This means they leave their team in the dark, and feed them manure. Bad idea!
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  • Overcommunicate – When it doubt, share more.
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  • Establish predetermined goals – Make sure your team understands goals and expectations laid out by leadership. Accountability is a great motivator, so put things in writing and require regular reports of their progress. Remember, a culture of uncertainty creates fear. And fear develops quickly when good communication is missing.
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  • Foster unity – A team isn’t a team unless it has shared goals and visions. Create a mission statement, and have everyone memorize it. Personal mission statements help ensure what you’re doing is consistent with your life and career goals.
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  • Practice thoughtfulness – Avoid knee-jerk reactions, and never try to communicate with your team when you’re angry or upset. Also, communicate in ways that will ensure people are educated and enlightened, not harmed or embarrassed. Remember the Golden Rule? Handle issues the way you’d want your own issues addressed. Otherwise, people will lose respect for you and question your integrity.

The greatest problem with communication is the illusion it has been accomplished. Communication should be attempted early, often and should be an everyday requirement on all levels in the workplace.

* Leadership and small-business expert Dave Ramsey is CEO of Ramsey Solutions. He has authored eight national bestselling books, including EntreLeadership, and is a host of The Ramsey Show, heard by more than 18 million listeners on more than 600 radio stations and multiple digital platforms.

What Are Your Flaws?

By Business Brokerage Press Inc.

As a business owner, your natural inclination is likely to be considering the strengths of your business and how to perform even better in the future. However, the truth is that sitting back and thinking about your flaws can actually benefit you in the long run. When you have a full understanding of where you are lacking, it will empower you to make the best strategic decisions for the future. These changes, in turn, will help you receive top dollar when you go to sell your business. 

Here are 4 areas you should be evaluating:

1. Your Products

How diverse are your products? If you rely upon the sale of just one product, that puts your business in jeopardy. You should be thinking about additional products you could add. This will also open you up to new opportunities for customers and revenue.  

2. Your Workforce

There has been much publicity about the current trends in businesses struggling to find staff. Further, there are a variety of trades, such as tool and die, where there is a shortage of skilled workers to begin with.  However, your staff members are the core of your business, and represent its wellness and ability to thrive in the future.  

3. Your Industry

You should always be on the lookout for trends that could negatively impact your business. Sometimes things are simply out of your control, and you might find that your entire industry is in decline. When this occurs, be sure to think about new directions you can take. If you sit back and just wait for things to change, the value of your business could slip away before your eyes. 

4. Your Customers

If you only have one or two core customers, that will typically lower the value of your business. Any potential buyer will quickly realize that the health and stability of your business is somewhat fragile.  While you may feel that you don’t currently have the time and resources to obtain new customers and clients, doing so will serve you tremendously when it’s time to sell.

When you work with a business broker or M&A advisor, he or she will help you to evaluate your company and look for weaknesses. However, oftentimes it’s challenging or even impossible to turn the tides when you are under the gun to sell right away. That’s why so many business owners decide to work with a brokerage professional years before they actually plan to sell. This enables them to correct any weaknesses years in advance and be fully prepared to present their business in the best light possible. 

Copyright: Business Brokerage Press, Inc.

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