Archive for the ‘Practical Advice’ Category

Have you ever patted yourself on the back for being a good at multi tasking? I have, plenty of times. But I am beginning to wonder if it is truly something to be proud of.

The fact is, multi tasking is often the wrong answer to the problem. The problem, of course, is that you have way too much to do. So you try to do it all at once.

For me, this typically means simultaneously checking my email, my Twitter feed, working on an article, doing research, and maybe sprinkling in some marketing work. The problem with this approach is that everything ends up taking longer. For instance, this post would take me maybe 4 or 5 times as long to write if I spend a minute on a couple of paragraphs and then check some email and then come back for a few more paragraphs.

The answer is simple. Instead of multi tasking, you should be micro focusing. This is not really that hard to do, even for multi tasking veterans like me (and you?). Micro focusing means spending time on just one thing and focusing on just that. Revolutionary, I know.

If you have a day that is full of tasks, do yourself a favor and separate those tasks out at the beginning of the day and give each a time limit. The time limit is very important. If you do not stick to it, your tasks will start to get muddled again and you will find yourself multi tasking. The more you plan your day out, the better. If you need some wiggle room, just plan in some miscellaneous time.

One thing that I found that really helped me to stick to this is to set a timer. I might give myself a half an hour to work on a blog post, for instance. When the timer goes off, time is up. If you find yourself constantly running out of time, it is because you haven’t been realistic about how long something is going to take you. Either that or you have been sneaking a look at Twitter again.

Give yourself a break and get more done by learning the power of micro focusing. You can still get the experience of multi tasking without all the downside. Simply move between tasks quickly. But while you are on any given task, give it your full attention.

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Hello, I am Bradford Shimp. I write this blog and run a web design and marketing company call Broad River Creative. Follow me on Twitter, but be sure not to check for my updates while you are working on something else.

photo credit: daveograve@

When business is going great, you likely aren’t worrying about what will happen if you have to close it down. If things are bad, it is probably already too late to salvage much. You need to plan in the good times for things that might go wrong. Specifically, as part of your business, you should have a way out that w0n’t wreck you financially or emotionally. Call it your fire escape.

We all know that we should have an emergency plan in case of a fire. And even though a house fire is highly unlikely, we all have fire alarms in our house. With nearly as many businesses closing each year as there are businesses opening, it is important to have an escape plan.

While it is true that sometimes the worst happens and it seems your business goes up in flames, often businesses suffer a slower death, or owners just decide to walk away. The fact is, you should have an escape plan in place from day one of your business. Don’t make the mistake of thinking that things will eventually grow to a size where you can take out a retirement or whatever else you want from the business. Instead, craft the business from the get go so you can take what you need from it and you won’t be destroyed if it comes crashing down.

Take a Profit

The first thing you need to focus on is profit. You want to build a profitable business from the start. The only sure way to do this is to commit to taking a real profit out of the business. If you don’t do this, you will probably play things too close and operate on a razor thin margin. Commit to taking a profit, and you will quickly see if you are bringing in enough sales, if the profit margin is high enough, and if your overhead is in line.

Your profit is not your paycheck. A paycheck is what you get for doing the day to day work. It is what you would have to pay someone else if you can no longer work, or don’t want to. If the money you are taking out of the business goes away after you stop working, then it is not a profit. And if you aren’t bringing in any additional profit, you aren’t yet in business. You just employ yourself.

A profit is a percentage of income. For each check that comes in, you need to be able to take a percentage out. You pick the percentage. Start low if you must, but build it up to a healthy number, maybe around 20%. Remember, this is not greed. This is not robbing your business, either. If you can maintain a healthy profit, then your business is healthy too.

Some of your profit can go back into your business. The rest needs to go to you for non-business related things. Start an IRA, for goodness sake. Don’t borrow money from yourself after you get things going. And if you have to, don’t borrow it from your profit. You should be taking baby steps forward, not leaps backward. Protect your profit and you will protect your business. You’ll also have something to show for it if things go horribly wrong, or if you decide it is time to retire.

Protect Your Assets

The sooner you incorporate, the better. Incorporation can protect you from frivolous lawsuits, help you with tax burden, and put up a wall between you and your business. If things go south with the business, you will have a better ability to hang on to your own wealth and assets. This could mean the difference between keeping or losing your house, so it is important.

There a several different ways to incorporate, all with unique advantages. Contact an expert, or research it out yourself. I suggest the book, Incorporate and Grow Rich, as a good starting point.

Protect Your Data

Sometimes, real disasters happen. Are you safe if your building catches on fire for real? What about a computer hard drive failure? You need to make sure you have access to all of your vital business data, in case of an emergency. The best way to do this is to make sure you are backing up your data off site. I have used a service called Carbonite to do this, and it is very easy.

The other thing you can look into is using online software instead of onsite software. If you use an online CRM, such as Batchbook, to store your customer data, you will be able to access it even if you need to get a new computer, or if your business gets hit by a meteor. I suggest doing your own hard back ups of any data you store with online services, just in case. But a reputable software company usually does a far better job protecting and keeping your data than you do.

Insurance

Double check all of your insurance policies. Are you protected to the hilt in case of an emergency? You should be. Your business is your livelihood, after all. Talk to an expert about what kind of insurance you need. Pretty early on, if you own your business, you need to think about things like disability insurance and health insurance. Cover yourself as well as your business.

Structure

Finally, sometimes you want to leave your business even when it is doing fine. This is called retirement, and it doesn’t matter how old you are. Always be ready to retire. This means, build a business that you can hand over. You can’t hand over a business if you are paying yourself half the going rate for your job. If you can’t get any profit out of your business while you run it, you can’t expect to get a profit out of it after you bring on someone else to run it. Thinking of selling? The better your structure, the better your systems, and most importantly, the better your profit and cash flow, the more likely you are to get a good price.

So the stronger your business is, the easier it is to walk away from it. If it can go on without you and you can still bring in a profit from it, you are golden.

You don’t want to have to run screaming from your business. Plan now. Put things in place that will let you walk away with something, whether you leave a crumbled and bankrupt business or a healthy and strong one. Don’t bet everything on future success. Make way for profit right away. And always prepare for worst. That way, you will be secure.

photo credit: laurenatclemson

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Bradford Shimp helps small businesses build better web sites at BroadRiverCreative.com.

This is part of a series of posts on what you can do to be more successful in your business this year. To get a free report full of success tips for your business, click here.

As a small business owner, it is very easy to shortchange your own business in favor of helping your clients. What I want to ask you is, “what if you were your next client?”

Taking time out to focus on your business is necessary. If you don’t get a handle on the details of your small business, things could easily spiral out of control. So do yourself a favor. Schedule in some time to focus on your business.

Do Your List

There are many things that you can do to improve things. This might include finally putting some procedures on paper. You probably have a whole list of things that you have been putting off. Get them done.

The Things You Can’t Do

There is another element to this, however. Say you run an HVAC company. If so, I bet your furnace is in tip-top shape for the winter. But how about your books? Your marketing? Not surprisingly, we tend to focus on our area of skill. This is actually a good thing. Too often, though, we don’t bring in other skills to help make our businesses better.

If you are a caterer, you probably don’t spend much time giving clients advice on their web site. If they need help, what would you do? I bet you would refer them to someone you know who does web sites. When you look at your own business as a client, maybe you’ll realize that it is time to refer in some other businesses and professionals to help.

Bring in the Professionals

You wouldn’t try to do things yourself that are out of your area of expertise for your valued clients. But for some reason, you have a tendency to suffer through your weak areas for your own business. Stop. Get some help. Bring in the professionals.

If you want to be the best business possible, you need the best help possible. This includes great help in accounting, legal, marketing, even systems development. Unless one of those is your own area of expertise, you need to be hiring out for those. Is it going to cost money? Sure it is. But it will also help you create a more solid business that will be much better at generating profit and cash flow. In other words, it is money well-invested.

If you were your client, you would treat yourself better. You would give yourself the same advice I am giving you. You would bring in the experts when you didn’t know how to fulfill a need. And in the end, you would have a tighter, more efficient, and more profitable business.

photo credit: Rocker_44

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Bradford Shimp builds web sites for small businesses at BroadRiverCreative.com. Follow Bradford on Twitter @bradfordshimp.

No one likes to have debt hanging over them. In business, if you don’t handle it right, it can become a dangerous distraction. The fact that you owe money makes the risks of business that much more real. Running a debt-free business is a dream for many small business owners. Getting to that point, however, is often difficult. And not being willing to take on any debt, ever, may limit your growth potential.

Debt is Normal

I am not advocating taking on debt for your business. I am just pointing out that it is normal. The nature of business compels many owners to take on some sort of debt. The problem with debt is not usually debt itself. The real problems occur in why you incur debt and how you react to having debt.

Incurring Debt

A healthy business takes on debt to grow. Whether for a big capital purchase, a building upgrade, improved infrastructure, the debt is taken on to pay for a one-time cost. In this case, you are always better off if you already have enough monthly cash flow to cover the debt payments. Taking on debt in hopes that it will help you grow enough to pay the monthly cost is not your best move.

An unhealthy business takes on debt to meet payroll, to pay a vendor bill, to purchase small office items. If you can’t pay your day to day bills, you have a problem in your business that taking on debt will not fix.

There is a gray area here, at least in my estimation. Some businesses are very seasonal and take on debt to get them through the off season. I would say this is a short term plan. Eventually, to be successful, you need to be able to store up enough cash reserves to make it through the off season. An even better business move is to add new products or services that will help you keep the money coming in all year long. If you prefer to take several months off, that’s your choice. You may feel confident in taking on debt to make it through, because you always pay it off. Once or twice on this is fine. But its not a healthy habit to get into. What if you have a bad year? Now you can’t pay off your debt and have to take on more. Far better to walk into that situation debt free. So reverse your habits and start squirreling a way some money to make it through. It may take several years to store enough, but once you do, you should be able to break the debt cycle.

Before you incur more debt, consider what it is for. If it is for regular business costs, you need to reorganize or fix your business. Get your cash flow and profit right before you worry about anything else. Again, this will take time. Just be sure to start walking down the path right away.

Dealing with Debt

Once you have debt, it doesn’t really matter how you got it. You still need to pay it off. Hopefully, you have a budget and a plan. If not, get one in place.

I personally think it is a mistake to throw every extra cent you get toward paying down your debt. It is an especially bad idea if you do not have a budget and if your costs of doing business tend to fluctuate. The first thing you need to worry about in your business is cash flow. Don’t drain your cash flow by tying it all up in paying down your debt. Have a planned amount that you pay each month and stick to that.

If you are on a plan for your debt, you can the focus on building your business and increasing things like profit and cash flow. Never make your business about your debt. Never think, “I need to get more sales so I can pay off this debt.” You didn’t get into business to pay off debt. You got into business to make a profit. So focus on that. Continue to pay yourself and everyone else. Chip away at the debt that you do have. At the same time, plan for future expenses and future dips in business. You should be building a cash cushion.

It would be a mistake not to build a cushion of cash because you are focusing on debt. That cash can help you avoid further debt, which is going to do far more to help your business in the future than paying off your current debt early. Lets say you have $50,000 in business debt. At the same time, you have a goal to build a $20,000 cash cushion. Once you build that kind of cash up, it is going to be very tempting to take it and throw it on the debt. The problem is if you do that you will still have $30,000 in debt and no cash cushion. Now something bad happens, and you need money. You are left with no choice but to take on more debt. Instead, you should keep the cash on hand and continue to pay of the debt as you planned, one month at a time.

I am not saying it is never a good idea to pay your debt off early. If you are in a position to do so, then take advantage of that. But if it is a choice between investing that money for growth or paying off a chunk of debt, I would always invest for growth.

Take the long term approach to your business. You want to be healthy for a long time. Get your business in such a shape that it doesn’t need to take on debt for regular costs and so it can handle new debt payments for wise capital expenditures. In the meantime, take a monthly approach to your old debt. As you get more cash flow and profit, you can always increase those monthly amounts. But do so only after you have gotten your business into the best shape possible.

How about you? How do you deal with debt?

photo credit: Photos8.com

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Bradford Shimp helps small businesses create web sites and web presence to bring in more leads and sales at BroadRiverCreative.com.

When trying to determine whether your business is successful or not you need to know what to measure. If you aren’t used to spending quality time with your numbers, you may think the easiest measurement of success in number and volume of sales. Unfortunately, sales numbers don’t do you a lot of good if you don’t understand the underlying metrics beneath those numbers.

To understand and measure where you are truly at, you need to find out what your profit is. Profit is more important than sales in the sense that it is the percentage of the sale that you end up actually making. You can have a lot of sales with very little, and sometimes zero, profit. You can also have fewer sales, but a higher profit margin on each sale.

How to Determine Profit

Determining profit is not hard if you are keeping track of your numbers. Using a good accounting software like Quickbooks makes it easy. That is, if you are recording your numbers correctly. There are two primary profit percentages that you should be interested in. They are gross profit and net profit.

Gross profit is what is left over after you pay all sale related costs. This primarily includes the cost of producing or purchasing the product. You can assign other direct sale related costs here, but the best thing you can do is study your industry to learn what the standard is. More on this in a moment.

Net profit is what is left over after all expenses, including taxes. This is the money you make in your business.

To determine profit percentage, you simply take your profit and divide it by total revenue. So, for gross profit, start with your total revenue for the year. This is all the money brought in via sales. Then, subtract out the expenses directly related to the sale, such as cost of product. This gives you your gross profit. Now, divide that number by the total revenue, and you will be given a decimal number. Convert this to a percentage by moving the decimal two spaces to the right. For net profit, simply subtract all expenses, including taxes, from your total revenue. Divide this number, your net profit, by your total revenue. Then convert that into a percentage.

The All-Important Percentage

Your actual dollar amount profit may be important you in a real world, money in hand, sense. However, the truly important number for your business is the percentage. You need to know what your gross and net profit percentages are in order to determine if you are running a successful business and to discover any tweaks that need to be made.

Find the Industry Standard

Once you have your percentages, you need to do a little detective work. It is important to find out what the standards of your industry are. The acceptable profit percentages vary from industry to industry. You need to be concerned with finding the most accurate numbers for your industry. For some, you will be able to find these numbers by searching online. Niche industries may have a harder time of it. You can try checking with an industry group. Barring that, just start asking your competitors and friends in the industry. Ask as many as possible in order to get an accurate number. You also need to determine how they come to their number. In other words, what expenses do they take out for gross profit, and which do the take out of net?

It is important to find your industry standards so that you can determine if you are on track or not. For instance, if your industry’s standard net profit is 10% and you are only bringing in 5%, you have to improve. If, on the other hand, yours is 12%, you are beating your industry and doing something right.

A Place to Grow From

Industry standards give you a goal to shoot for. If you can line up with these standards, you will likely be creating stability for your business to grow on. Once your profit is in the right place, you can focus on bringing in more and more sales. As long as your profit percentage stays where its supposed to be, you are building success.

If you numbers are lower than standard, that is likely a sign you are doing something wrong. Look for ways to reduce cost and increase profit. It is hard to maintain and grow your business if there is not a sufficient amount of profit coming in. Focus on getting your profit percentage to where you need it. The earlier you do this, the better.

Understanding profit as a measurement for success helps you in all areas of your business. Before you make a decision, think about how it will effect profit. This includes hiring decisions. You don’t want that profit percentage to sink too low. On the other hand, if all you care about is making your profit percentage bigger and bigger, you will eventually run in to trouble as well. You can artificially inflate your numbers by not adding infrastructure and employees. This will hurt you more than it helps you in the end, because your bubble will burst and you won’t be positioned to grow. Keep a steady profit percentage in line with your industry, and you can steer your business toward growth and success.

photo credit: geishaboy500

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Bradford Shimp helps small businesses succeed at BroadRiverCreative.com.