Grow Your Business

In this guest post for BizWizTV, Charlotte CPA, Chad Bordeaux, discusses two easy ways that small business owners can increase the value of their businesses. The value of a business is one of the most overlooked aspects of an entrepreneur’s growth strategy.

Chad is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Chad is also a primary contributor to his firms blog – Beancounter Ramblings You can find our more about Chad by visiting his profile here: Chad Bordeaux

In working with small businesses on a daily basis, I am constantly alarmed at how few of them are actually using the numbers in their business to drive the growth of their business.  It is rare that I meet a small business owner that can tell me exactly what his numbers were last month, much less one that knows what his key economic engine is use it to manage his Company.

In it’s simplest terms, your company’s economic engine is that one key ratio that your company can focus on that will have the most sustainable growth impact.  This ratio varies from industry to industry, and even from company to company within the exact same industry.

In Good to Great, Jim Collins detailed how Walgreen’s switched its focus from profit per store to profit per customer visit.    Walgreen’s business strategy was convenience.  They wanted to make it as convenient as possible for their customers to get to a Walgreen’s and to shop there.  This would result in many stores close together within a geographic area which had a negative effect on profit per store.  On the other hand, profit per customer made sense because it was a true indicator of the customer experience.    Another advantage is that it is much easier for store level employees to focus their efforts on the goal of profit per customer than profit per store.  Each and every employee that comes into contact with a customer has the opportunity to influence this ratio.

As stated earlier, the economic engine for your company may not be profit per customer – there is a good chance that it is not.  Some companies use a measure of employee productivity- such as profit per employee as their economic engine.  Nucor uses profit per ton of finished steel. Kroger uses profit per local population and Southwest Airlines uses profit per place.  Many restaurants use profit per square foot.   The first step is to determine what your key economic engine is and focus your efforts on it’s continual improvement.

Chad is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Chad is also a primary contributor to his firms blog – Beancounter Ramblings You can find our more about Chad by visiting his profile here: Chad Bordeaux

To keep up with employee shifts and changing needs, employers have looked for ways to offer new and different benefits. Some of them became government mandated and some of them corporately created. Today, as fast as the world is changing so must employee benefits.

One of the greatest complaints of employers is the cost of benefits now that medical has become the monster in the benefit room. What can organizations do to serve employees without breaking the bank? Join the information age.

Next Gen employees are information junkies and they have many information needs a corporation can meet with minimal cost.

Companies need to make available free podcasts or online self-study seminars for employees on among other things finances, wellness, marriage, and family. These are not those black and white movies from the 50′s on how to be a happy homemaker. This is raw information where employees can learn how to better manage finances especially in these economic times.

Wellness programs start with the mental side of dealing with stress, dealing with family issues and dealing with the scary times for those just beginning their work careers in today’s economy. Bosses are not the experts on these topics and sending employees to a one day, one size fits all seminar holds little value. Informational downloads can be appreciated at the employees leisure.

Not only will this offer new benefits to meet employee needs but it creates a culture of personal growth which is a great work culture that will foster organizational growth because the growth mindset has been established. Help the employees with their educational and informational needs and help your company create a culture of growth in the process.

I am hearing from some executives that growth in this economy just isn’t going to happen in their industry so what can they do to maintain the growth mentality in the organization? If you are in one of those industries that are significantly stagnant you must maintain the growth culture in other ways, such as knowledge growth, specifically in your managers.

The managers are going to always set the tone for the rest of the employees, whether it is a positive outlook, a negative outlook or a growth outlook. In order to keep your managers fresh, keep them growing and keep them in the right frame of mind, provide a book study that will improve their skills.

I’ve had a number of clients in the finance industry this year order my Russell’s Rules book for their managers to study and discuss in their weekly meetings. The rules are short, simple, to the point and have implementation action steps that are easy to do. By using practical application leadership books, you keep the knowledge base growing, the positive discussion active and the workforce happy with better leadership approaches being used with them.

Some basic steps for knowledge growth:

1. Make sure the book is something your managers will actually read.

I consider Peter Drucker one of the best leadership authors of all time, but unless your manager team is deep into the science of leadership and business, they will not finish a Drucker tome. Short, to the point and immediately applicable books might not make the best seller list, but your managers will make it to the back cover.
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Do you know where to focus your growth efforts?  Do you know what your break-even point is?  Do you know how your numbers compare to your peers – and not just your revenue numbers?

These are questions that I work on daily with small business owners.  Most business owner’s think in terms of one line item when they try to grow their business – revenue.  This is logical choice.  After all, if revenue is higher, you must be making more money, right?  Wrong.  While this may be the case in a perfect world, it often leads to business owners struggling for years to make ends meet when the mathematics of the business just do not work.  What can be done to fix the problem?  It’s simple.  We just have to change the number so that the math works.

We recently helped a client who had been consistently loosing money for seven years – at a rate over of about $175,000 per year.   When talking with the client, his solution was that he needed more sales.  If he could just get more sales, he would be profitable.    We sat down with him and did a thorough break-even analysis.  Using his current cost structures, it was going to take nearly $3 million in sales for him to breakeven.  He was currently sitting at $700,000.   The answer to his problem was not sales, it was his cost structure. Read more »