Sometimes it is a good idea to go back to basics if you want to evaluate what you are doing or achieving in you small business. Much time in a business is spend thinking about marketing, PR, sales and customer care issues, how to make them more effective for our customers and easier to use. But have you asked yourself lately why you need to worry about that?

In short, there are three motivations why you should be doing all of this:

• Acquisition of new customers;
• Re-activation of existing but dormant customers;
• Retention of existing and active customers.

If you remind yourself of these three reasons when you thing about any activity in your company. Even a change in your payment terms should be considered with these three reasons in mind. How will it effect my customer acquisition, will it help to get some old customers to order new product or service from me, is it likely to drive some existing customers away?

Customer focus may very well be the most important aspect to your success with your home business or your freelance work. Creating barriers is something you should only do towards your competition, never towards your customers or prospects.

How is what you do today going to help you with these three goals? — ST.

Recently I ordered services and was very happy to have found a supplier. We had agreed prices, scope and timescale of the project. Later I received the contract by email and started reading it. Everything seemed to be as agreed, until I got to the payment terms. There I found an unusual insertion:

We will charge 2% extra for PayPal payments.

Te motivation is quiet understandable, Paypal will charge you 2% to process your inward payment. But should you really charge your client extra for this? I would think not, since this is a great business turn-off. More business is lost through little charges here and there, it generates the feeling in the buyers mind of hidden charges. While at the same time the buyer will wonder why he/she should pay for the suppliers bank charges.

I was given options to send a cheque or pay by bank-transfer. This makes the whole situation even worse, since you would be inclined to send a cheque, which would take weeks to clear through the banking system - this was a international transaction. You would certainly not use the bank transfer option since it would cost even more. The whole problem was no made easier by demanding stage-payments.

It seems to me the solution here is to increase your prices by 2% and don’t talk about it, or enquire before hand which payment method should be used. One needs to remember that getting payed is of the utmost importance for any small business, so PayPal seems a good way to go in this instance.

Look at your payment terms and do not create unnecessary business barriers. — ST.

More and more of the work-force in large corporations work from home, or have a “hot-desk”, they share with others while they are in the office. This trend is driven by the ever present need to feed the profit hungry shareholders of these often public companies. But is this trend only some thing big business should consider, or has teleworking a place in the small business?

If it is then what would the advantages are for micro business to allow teleworking for it’s small work-force? Here are some reasons why you may consider to allow your staff to work from home or on the road, with only a temp-desk in your office:

• Efficiency - you may come to the conclusion that your staff member does not need to be in the office to do their work, bookkeeping staff for instance, customer care staff can also work from home. They would save the trip into the office, saving time and money while reducing carbon footprint.
• Cost-effective - consider how much office space you could save, with that money on rent, furniture, heating and electricity, again reducing carbon emissions.
• Recession-proofing - having lower over-heads/fixed costs during times of an economic slowdown helps your small business to survive.
• Growth of Business - you could stay longer in the same property while your business is growing, with the same above effects, plus savings on time, money by not having to move. No to mention the business interruption before, during and after the move.
• Lean & Mean - is not only something that big business needs to worry about, if they could they would run the whole Microsoft, GE, Barclays empires with ten people, in order to boost profits. Ultimately that is why you run your small business too.
• Enabling disabled workers - this point is often overlooked. We are concerned with not having a educated workforce, while highly educated but disabled people sit hat home without adequate work, that seems a waste to me.

I think it is sometimes important to remember how good it feels to get up in the morning and go to your small business without any real financial worries. Unfortunately this is not the reality for many self-employed, sole-traders and other micro businesses, that is a shame. Making decisions about how and where your work-force works is part of that process that will get you there in the end.

After working from home full-time now for over nine years, only going to the office for meetings has not only be a financial success but also liberating. — ST.

Resources:

• OnlineOffice - run your office, staff and business from anywhere.
• Business Link - one of the best guides I’ve seen.

It always amazes me to see how many businesses still charge by the hour - it is a business killer. How do you like it if someone comes to quote for a job and then tells you he/she is charging you by the hour. You will have all or at least some of the following thoughts:

• How many hours will it take, can I afford this?
• I don’t know this person, I don’t know how good he/she is at what they do?
• Great, I am taking all the risk here, he/she can take as long as they want and I’ll have to pay?

The truth is that charging by the hour is terribly customer unfriendly and is therefor very bad for your small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants.

By charging by the hour you are creating so many barriers to doing business that your chances of securing the order is very small, if you are competing with someone who offers fixed pricing you have virtually no chance of getting the order. So if you work in an industry that charges by the hour and you need more work you know what to do.

In my experience you can charge more, if you charge a fixed fee and get organized. I believe that more accountants and solicitors loose work because they charge by the hour, the client relationship sours and then break down altogether.

Get rid of your timesheet - fix prices and bill your clients upfront - your customers will love you. ST.

I talk a lot about outsourcing as a way to grow small business turnover and small business capability, but we should also talk about value co-production!

Outsourcing means several businesses working together, to service more customers than they could service by themselves. If you think only small business does this, think again. Almost all big car manufacturers, furniture manufacturers, and other big business do it always.

Value Co-production means that you, and your outsourcing partners, offer discounts to customers so they build their own product. You effectively sell a kit of whatever it is you manufacture. This is often done in the furniture industry, look at IKEA, Homebase, etc. When they talk about “flat-packs” they are talking value co-production, with benefits to the customer:

        1. Lower Price - in return for their own work input;
        2. Transport - the items often fit into in your own car;
        3. NOW factor - customers can take the good now, no waiting for delivery.

Some of the benefits for your small business are:

        1. Lower Cost - due to shortened manufacture cycle;
        2. Higher Manufacturing Output - due to shortened manufacture cycle;
        3. Higher Turnover - products become more competitive in price;
        4. Lower Transport Cost - due to smaller items being shipped.

This all will help to drive down overheads and help cutting costs. Is value co-production for you?

If you are a manufacturing business, it is certainly worth thinking about! ST.

I had many emails regarding my post “Is your competitor for sale?”, the responses show me that some of you certainly have a healthy megalomaniac instinct - good for you!

Here comes the BUT! You need to be careful, for bigger business does not always mean better business. While there is no limit to the size of a bootstrapping business - see Shawn Hessinger on “How big can a bootstrapper be?” - it never the less can be a risky strategy to grow through acquisitions. I put some basic pointer for your consideration below:

1. Businesses come with people and all the associated problems - so make sure the culture fits;
2. Target group should be identical to yours, i.e. serve the same customer base, so you get more turnover for both businesses;
3. Synergies - find them and make them work for you - by sharing resources you can lower the cost-structure in both businesses;
4. Distance - make sure you can easily be in both businesses, so keep it close;
5. Level of debt in the new business - make sure you can handle it easily, don’t risk your current business.

There are other points to consider, so good and trusted advice is absolutely essential. I guess here you will have to decide if you are a gambler (bad) or just a risk-taker (good). Since you made to this point I shall hope you are an entrepreneurial risk-taker.

So, if you are anything like me, you’ll be thinking “Screw it - let’s do it!” ST.

One way to grow your small business is to buy another business and merge the two together. When the going gets though, i.e. a recession - many of the non-bootstrapping businesses will be for sale or in trouble. This is the time for you to sharpen your bootstrapping pencil and think about opportunities that present themselves.

If you do not know what to look for here are some pointers:

        1. Customers complain about your competitor;
        2. Employees from your competitor apply for a job with your business;
        3. Competitors loosing the plot, i.e. unrealistically low prices;
        4. Court judgements against your competitor or disgruntled suppliers;
        5. Partners and directors resigning or leaving the business.

Be aware of potential pitfalls, especially if you have never done this sort of thing before. Get your accountant to help you evaluate the competitor and then make a move.

Don’t loose your business focus, however tempting the opportunity. It is easy to damage your business with an uncontrollable acquisition. ST.

When hiring people, what are you looking for? Knowledge about your industry, high IQ, many years experience? All these personal traits are important, but not as important as EQ - emotional intelligence - which means people who have natural warmth, are optimistic and can empathize with the plight of other people.

Who would you rather deal with, someone who seems cold and distant, or someone who understands your problems and can suggest solutions or ideas on a services/product level, but also on a more emotional and beneficial level. It is with everything else in life, we like dealing with friendly and warm people.

So when you hire, ask about faults, ask about being told off for getting something wrong, ask how they felt when someone else got told off at work? Listen to their answers, if they have no faults, if they never make mistakes, or think others are just not good enough, than they are obviously perfect.

Never hire perfect people, they are deeply flawed or inhuman, and nobody will want to deal with them, including you! ST.

It’s a fact, that so many people will tell you that starting a small business is a bad idea, should not really influence your decision making at all. An here I include the so called business gurus - just ignore them.

Can you imagine what happened when

• Alexander Graham Bell announced he wanted a phone in every house - Western Union called it an “electric toy” and “totally out of the question”;
• Henry Ford said he wanted one car in every family - most felt the horse was here to stay.

The same happened to me still in 1995, when most people thought the internet was going to disappear faster than it had arrived - I remember the abuse very well. So why do people get so negative about other peoples business ideas:

• Lack of Vision is probably the biggest reason;
• Envy is another big reason - driven by the inability to take a risk themselves and the fact that they can’t bear to see others succeed;
• Genuine concern for your well being - they thing your are taking too big a risk, you are naive, and so on.

Take advise on certain techniques on how to run your business, but do not take advise on if you should start a business or not. As these examples above show, you never know how big a business will get.

People make it big in business, while I think it not necessary to make it big, it may never the less happen and it could be your turn next. ST.

It is fair to say, that the only constant in life is change. While I always caution people, that change is not necessarily progress, it is also correct that change is what is creating new business opportunities every day.

It is living with this change and realizing the opportunities change generates that is the important process here. So how could a small business and start-up business, like SOHO-, SME, SMB-, Micro-, Lifestyle-, Home-, DIY-, Hobby-, Boomer- or Personal business, like professional, contractors, freelancer, self-employed, sole-trader and virtual assistants go about seeing these opportunities?

The answer sounds easy, but requires patience, you need to look at your chosen market segment from the out-side. You have to become a judge, not a participant. Look at all the trends and judge them, find ways to improve upon techniques and find out what people are talking about.

Don’t be blinded by your own business, if you already have one. You must realize, that you can ignore or unfairly discredit someone else’s idea today, only for them to come back and kill your business tomorrow. Fighting a trend is futile and a wasted opportunity.

If something you see is better, appropriate it, in business that is called “best practice sharing” or “benchmarking” - within reason of cause! ST.