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Tuesday, November 23, 2010

Choosing the Right Clients and Customers for Your Business

Especially in a struggling economy, it can seem like a profitable idea to jump at every business opportunity that comes your way — but resist the temptation. Just as your clients are shopping around for the best company to suit their needs, so should you be examining the type of clientele that is going to benefit your business.

In this instance, let's put the old adage "quality over quantity" to use. If your business is supported by revenue from only the best-fitting clients, let's call them "A Clients," your likely hitting your sales goals in a very efficient manner. However, if your client base is crammed with overly demanding customers who don't generate high revenue, your company could be at a standstill.

Being wary about turning away clients is a natural reaction, but modifying the Pareto Principle to apply the business world will help to reinforce the idea. The Pareto Principal states that 20 percent of the input generates 80 percent of the results. In business terms, this means that 20 percent of your clientele will result in 80 percent of your revenue. Those top tier customers are you’re "A Clients."

Segmenting Your Clients

Take a look at your client base and rank each of them into A, B, C, and D clients:
  • A Clients value your work and are willing to pay for it — on time. These are the clients who work best with your team and have a need for your specific business niche. They're high volume customers whose needs are likely to continue growing.

  • B Clients have most of the same qualities as A Clients, but fall short of perfection here and there.

  • C Clients leave a lot to be desired, but are still relatively profitable. They're a bit unreliable in terms of business and payment and their needs may not fit perfectly with the products and services your business offers.

  • D Clients should be avoided. They're overly needy, eat up your time and efforts and don't work well with your team.
Managing Your Clientele — the Good, the Bad and the Ugly

Determine which of your current clients are your A Clients and do everything you can to keep them satisfied. This relationship is a win-win situation so, maintaining these clients shouldn't be extremely difficult.

Because not all business pairings can be a perfect match, it's also necessary to keep a firm grip on the business provided by your B Clients. Pinpoint exactly which characteristics are holding them back from A Client status and see if you can make any adjustments on your end to make your business relationship run more smoothly.

As for the C and D Clients? If you can afford it, drop these clients all together. While you may be able to boost the client rating of some of these imperfect matchups — in which case, you should do so — the majority of these customers are probably hurting your business as opposed to helping your business grow. Here are the adverse effects of hanging on to bad clients:

  • You are who you work with: Your clients are a reflection on your business. Working with customers and other businesses with bad reputations can mean your own rep is in jeopardy.

  • Bad clients siphon off your time and resources: Spending your time working on accounts for C and D Clients means that you have less time to focus on your A and B clients. Since these are the customers that keep your business running, you want to avoid putting those relationships at risk.

  • C and D clients might put undue stress on your team: Often, these are the clients that can never be pleased. If your team continues to be negatively impacted, you might find that your valuable employees will search for less-stressful jobs elsewhere.
While it's easy to snatch up any and every potential client that walks through your doors, remember what your mama told you: "You better shop around."

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posted by Tiger Leasing @ 2:14 PM 0 Comments

Monday, November 15, 2010

Managing Your Business Credit Score

Business credit scores are vital to the growth of your company — especially if you're a small business. Without a good credit rating, your business may have difficulty dealing with suppliers and will likely get slapped with high interest rates — and that's if you can even secure a loan. By improving your business credit score, you are increasing the likelihood that your business will remain viable, and even grow, in competitive markets.

Among other factors, lenders use your business credit score to answer the questions:
  • Does your business have the funds to make the necessary payments?

  • Is your business likely to make the payments on time?

  • Does your business have enough collateral to repay the loan in the event your business fails?
With a low or nonexistent credit score, lenders and suppliers may determine that your business isn't worth the financial risk — which means, in terms of growth, you're stuck at a standstill.

Educate yourself on commercial credit

Though business credit scores and personal credit scores both help creditors weigh you as a financial risk, the two are not identical. While a personal credit score ranges from 350 to 850, a business credit score operates on a range from 0 to 100. In addition, business credit scores aren't kept as private as personal scores. Commercial credit scores can be requested and viewed by anyone.

There are three main business credit bureaus you should be aware of:

Each of these collects information from banks, finance companies, suppliers, other business owners and public records to determine your business credit score.

Know your business credit score

The first question you need to ask yourself is "Does my business even have a credit score?" Just because you have a business, doesn't mean you have a business credit score. Credit reporting companies require a minimum amount of information before they generate a credit report for a business. If your business isn't listed, check with your vendors to see if they are reporting your payment history. If not, it may be in your favor to trade-in your vendor for one who does.

Once you qualify for a business credit score, it's essential to continue monitoring your credit rating. Over time, your credit is at risk for errors and fraudulent activity. By catching these inaccuracies early-on, your business is less likely to suffer major losses.

If your firm is in the small business majority, you probably don't draw a hard line between business expenses and personal purchases. This isn't going to be the downfall of your business, but avoid relying completely on your personal credit score to grow your company. Ensuring there is, at the very least, a fuzzy grey line between the two ensures your business credit doesn't crush your personal credit and vice-versa. Additionally, as a result of the "credit squeeze," some creditors are refusing to use personal credit scores when making judgment calls on the riskiness of your business.

Improve your business credit score

By being fully aware of the factors that determine your score, you can effectively manage your credit rating. Here are a few tips to bolster your commercial credit score:

  • Make every payment and make them on time.

  • Keep older accounts active — a long history will work in your favor.

  • Open new credit lines gradually, not all at once.

  • Balance your debt-to-credit ratio by transferring balances from maxed-out credit lines to others with lower balances.

  • If you have any delinquent payments, work to make them right. Creditors are often willing to meet you halfway if you're in a jam.

  • If your credit score is low, don't continue to make the same mistakes. If you know it's going to be tough for your business to shell out a loan payment, try to finance using another option.
Your business credit score can't rocket to the high nineties overnight, but making good financial decisions over time will help you get the highest overall credit rating.

Additional information available here: Experian Business Credit Facts, AllBusiness

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posted by Tiger Leasing @ 3:19 PM 0 Comments

Wednesday, November 3, 2010

Upgrading Office Technology for Better Business Productivity

Long gone are the days when office fax machines, a business line, and a lone email account were the only tools necessary to effectively run your business. Take some time to examine which projects and clients you spend the biggest chunk of your day working on as well as where you think your valuable time is being wasted. You might find that updating the technological tools you use can increase your productivity and save your business money.

The Obvious Tech Update: Computer Upgrades

Remember when computers used to take half the morning just to boot? Thankfully, computer technology has advanced so you're up and running before you return from filling your coffee cup. However, if you're not taking advantage of faster, more efficient computers, you and your employees are sacrificing vital efficiency. Look at the math: If your employees waste just 5 minutes a day waiting on slow computers, which equates to about 3.5 days of lost productivity each year.

Serve Customers Using Better Communication Tools

At one time, a fax machine, a reliable post office and a direct phone line were all the tools needed to successfully communicate with your business clients and suppliers. However, now fax machines are all but defunct, nobody has time to talk on the phone anymore, and snail mail is just too slow. Technological advances have sped up communication, which means if your business isn't on-board, you'll be left in the dust - especially if your business operates across borders. There are a myriad of tools available to improve your customer relationships. Here are some industry favorites:
  • Skype: this video conferencing tool allows you to hold meetings without being in the same building — or even the same country.

  • Smartphone apps: If you travel often for business, Smartphone apps can help you stay connected through more than just email. With these tools, you can scan and fax documents, receive payments on orders, and login to your office computer … all from your mobile phone.

  • Instant messaging services: You no longer have to depend on simple AOL Instant Messenger for internal and client contact. A plethora of services like AIM Pro, Eyejot and KonoLive are available to aid in business communication.

  • File sharing: Forget clogging your clients' email inboxes with necessary files. Instead use tools like Senduit, Streamfile and Wikisend.

Use Technology to Create a Flexible Workspace
By outfitting your employees and your workspace with the technology that makes working from home possible, you may come out ahead financially. According to a Telework Research Network study, providing your employees with resources to telecommute half of the time can save your company up to $10,000 annually. For many businesses, telecommuting equates to savings based on:
  • Increased employee productivity

  • Lower workplace maintenance bills

  • Fewer missed workdays due to employee absences and sick time

  • Lower employee turnover rates

Employees also see the savings when they no longer have to pay for their commute, parking, food or work attire.

A Word of Warning

Business-related technology updates can save your bottom line in the long run, but some applications can actually waste time. To make sure gadgets aren't distracting you or your employees:
  • Disable all non-essential visual updates that pop up on your screen.

  • Manage alerts on your mobile phone so it doesn't continually buzz at your desk with non-work related updates.

  • Resist the urge to use technology as a multi-tasking tool. Working on multiple projects at once actually slows your productivity.

The most important thing to remember is that your business needs technology upgrades that are tailored to your specific needs. What works well for one company may hinder the efforts of another. Do you research to make sure you're investing in technology wisely.

Additional Information can be found here:
Green Business News, Technology for Small Businesses, Entrepreneur.com, Hongkiat.com

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posted by Tiger Leasing @ 9:43 AM 0 Comments