Dawn’s Stop Doing List

Stop cutting your prices to find more clients

Do mine your existing client base for new revenues and referred business. A 5% increase in retention of a profitable customer yields a 25-85% increase in bottom line. Engage and reward existing clients.

And ask them to partner with you to reach more of their friends. Eagles fly together.

Stop ignoring your gross margin by product

Do keep only those products that generate at least a 30% gross profit. The rest are bleeding your business dry. Don’t know what products generate at least 30 cents for every dollar of revenue?

Ask your accountant or bookkeeper. They should be able to show you with three clicks of the mouse. You don’t have to be a number cruncher. You just have to keep your eye on the drivers of profitability so your product line is working as hard for your business as you are.

Stop ignoring your gross margin by customer

Do remember that if you’re an average business, 1/3 of your clients are profitable, 1/3 are at break even, 1/3 are losing you money.

That means in most businesses a full 2/3 of their client base is killing their profitability. You can avoid this by identifying what gross margin is by customer.

Large clients are rarely the most profitable. Ask your accountant or bookkeeper to list out all your clients by revenues AND gross margin.

Highest revenue producing clients are rarely the highest gross margin producing clients. Which clients should you fire? Which top three are losing you the most money? Review it with your accountant.

They’ll see it right away. What if you could reduce the size of your business and make more money? When you eliminate unprofitable clients that’s what happens

Stop ignoring your existing clients

Do reward existing clients; make them strategic partners. Engage them.

Thank them. Some companies hold quarterly meetings and invite their top clients to help them navigate strategy to beat the competition Fedex does this through their Entrepreneurs Advisory board Small Business Grant Program.

Stop ignoring the monthly statements your accountant sends you

Do review the top 2 statements with your bookkeeper or accountant each month; your net income statement and cash flow statement.

Determine what’s working; what’s not working? Put 30 day goals together for profit and cash flow (keep it simple). Then put an action plan together.

What will you stop doing (three things), start doing (three things) next month to reach those goals. Rinse repeat.

Yes, it might cost you half an hour of your accounting professionals time, but isn’t that better than wandering in the cash crunch desert for years? Just do it.

Stop growing revenues without growing bottom line

Do remember; 15% net income is the goal. That means for every $1 your company sells, 15 cents has to drop to the bottom line after ALL expense are paid.

Lower than that, your business will not survive. If you don’t know where your net income is now, ask your bookkeeper or accountant. They’ll show you.

How do you increase net income? There are really only two ways; increase gross margin and decrease direct and indirect costs.

Accounting for the Numberphobic shows you how to do this. Buy the book, send proof of purchase to dfotopulos@gmail.com and I’ll send you my study guide for free.

Stop over servicing unprofitable clients

Do remember, every customer has to earn its keep. Large clients are rarely profitable. They negotiate hard on price then want all kinds of customization.

They also change deadlines which turns your world upside down. A larger number of smaller clients sometimes is healthy for your business and your sanity. Pay attention to small clients.

They are often your most loyal and most profitable. You should do a customer review at least once a quarter; like a temperature check. And then send them a thank you note for no reason. Just do it.

Stop under pricing your products or services

Do recognize your value and price according to your value, not a mark-up from your costs. Don’t know your true value? Ask your loyal clients “why did you buy from me instead of the competition”?

Their answer is the key to the value you provide. This includes how well you service a customer after the sale. Write it down.

Their answers will surprise you! Most small businesses under price their products. Do a better job of communicating the value you bring in the clients’ words and you’ll never compete on price again.

Stop assuming your accountant is going to “take care of the numbers”

Do remember, your accountant isn’t going to run your business any more than your mechanic will drive your car.

If you’re going to drive you need to learn the rules of the road; are you making a profit? Do you have enough cash flow?

Are you building wealth or destroying it? Accounting for the Numberphobic will show where to find these answers in record time.

Stop ignoring the pile of cash you’re already sitting on

Do remember, an outstanding invoice is cash waiting to be collected. Did you do the job? Now it’s time to get compensated for that.

You’re not begging when you’re asking when an invoice will get paid. You’re keeping the client accountable to a legal contract they agreed to before your project started or your goods shipped.

Too intimidated to call? Accounting for the Numberphobic shows you step by step with sample dialogues how to do this. Buy the book, then send me an email. I’ll send you the Numberphobic Study Guide. It’s my gift to you.

Stop ignoring the clients who owe you money

Do remember the longer a client waits to pay you, the greater the likelihood they will never pay you.

Once an invoice ages around 30 days and you gave the client 30 day terms, jump on the phone to collect. You can do it nicely, just make sure you’re persistent.

The client needs to know you’re not going away until they pay. It’s a better use of your time than beating the bushes for new business.

Make this a priority; not getting more clients. Manage the clients you do have more effectively including receiving timely payments and you’ll work half as hard and make twice the money. You don’t have to believe it. Test this to see if it’s true.

Stop ignoring outstanding invoices

Do remember, if you contracted with a client to ship goods or to perform services, getting paid for those is simply an exchange of value.

When you remind clients their invoice is due and your company needs to get paid, you’re not begging. You’re simply asking for compensation they agreed to when they hired you. Make sure your bookkeeper or accountant keeps track of good paying clients and clients that have slow payment histories. Sometimes it’s better to have fewer great paying clients than lots of poor payers. What good is ringing the cash register a lot if it never converts into cash flow?

Stop ignoring your accounts receivables aging report.

Do know this important report will laundry list all the clients who owe you money and for how long their invoice has been outstanding.

Any invoice that has “aged” over 30 days has a far lower probability of being paid. Any invoice aged over 60 days is at far bigger risk.

When a customer owes you money, your business is essentially giving them a free business loan! You’re not in business for that.

You’re taking on risk and deserve to get compensated for it. Have your accountant or your bookkeeper print out your accounts receivables aging report every week and look at it!

Then hop on the phone to collect what you’ve already earned. Don’t be obnoxious; just persistent. Your persistence will be rewarded.

And if they never buy from you again because they’re “annoyed” so be it. If you want to volunteer your blood and sweat, do so because you choose to, not because a client refuses to pay you.

Stop sticking your head in the sand over the numbers

Do remember that numbers are like brush strokes on a canvass; they paint a picture. If you’re going to run a small business, you need to know what image they’re reflecting.

Remember too, the numbers on your financial dashboard are forensic; they reflect activities that have already happened. Are you happy with the profit and cash flow your company is generating? If not, what can you do about it? Accounting for the Numberphobic shows you all the options you have.

Stop procrastinating over sending invoices to clients

Do know that most small business owners who have service busiensses take weeks, even months to invoice clients. That’s insane. Please don’t do this.

Before your head hits the pillow at the end of the day after you’ve finished a project, JUMP on generating that invoice.

The day you send it is the day the clock starts ticking. If you don’t think it’s important you get paid, why on earth would the client care?

Just do this. Make it a regular discipline. You’ll see your cash flow problems will be fewer and further between if you do this.

Stop pricing your products too low

Do know most small business owners are so scared of not making the sale the cut prices even below cost sometimes.

Crazy, yes? It’s better to sell less and make more profit. Just remember that. The game of small business is not won closing more business. It is won by closing more profitable business.

Stop pricing your services too low

Do know that if you’re a service provider like an electrician, if your direct labor costs on a job are not covered 4X by your gross margin, you’ll go bankrupt it’s just a matter of time.

Most tradesman think direct labor needs to covered 2X by gross margin. That’s not enough to pay all the costs associated with staying in business.

If your direct labor expense is $2,000, the gross margin on the job needs to be $8,000 in order for you to stay in business.

That means the price to the client has to be at least $10,000 plus the cost of materials. Craig Crabtree, CPA bangs the drum on this with service providers all the time.

Stop offering discounts you can’t afford!

Do know there’s a reason Groupon went bankrupt. The concept was to offer deep discounts to attract new buyers, build your list, then re-market to those buyers at full price.

What happened was these price sensitive shoppers never bought again at full price. Everyone put their profits on life support.

When you deep discount as your only or primary marketing strategy, you’re doing the same thing. Find out why clients buy from you instead of the competition.

Capture their stories of how wonderful you are, how you solved their problems, how your company saved the day. That’s what a new client is paying for.

That’s what makes you stand out in the marketplace. That’s what will enable you to compete against your competition on value, not on price.

Stop treating your accountant like IRS fire insurance

Do realize how smart your accounting professional is. They know all the ways you’re shooting yourself in the foot every month. They’re not telling you because you’re not paying them to.

They’re sending you statements you never look at when in fact those statements are more important for management decision making than they are for the IRS.

Invest one hour of your accountant’s time every month to review what’s working and not working in your company.

The accountant helps you file your taxes, but they’re really there to help your business beat the odds of failure. Remember, they’re sitting on all your data. They know. Trust me.

Stop treating your bookkeeper like a number cruncher

Do remember your accountant has probably seen hundreds, maybe even thousands of busines