You read and hear it all the time – Get investors, get a loan, use your house, call up all of your family members and ask them for money, sell your dog…
Well, maybe not sell your dog, but I honestly wouldn’t be surprised if someone did that.
While most of those suggestions might work, and obviously have worked for other businesses, here are some faster and more efficient ways to get cash in your business.
(You may be shocked to see some of the cash your business is lighting on fire to “keep warm”)
I know I was! – A few years ago in a business that I owned a part of, we were fed up with our sales being big, and our pockets being small. I took the time to go through every single little nook-and-cranny of the business and really take an honest view on what they actually did for us.
1. Make a list of everything your business pays money for – and read it 5 times.
I mean EVERYTHING, not just payroll and rent – and actually hand-write it on one of those things our ancestors would call a “notebook.” – no excel spreadsheets!
(If you need to pull reports to get the information, pull reports, then write it down)
By writing it down, you take a little extra time to notice details you miss when looking at spreadsheets, or reports from Quickbooks. It’s like paying cash for things – it stings more when you watch the money physically leave your wallet…
Rent, Payroll, Workman’s Comp, Taxes, Liability, Property & Equipment Insurance, Electric, Gas, Water, Trips to Walmart & Sam’s Club, Meals, Paper, Pens, Loans, Software, What you pay your CPA, Attorney, IT Company, Cleaning Service, Website, Advertising, Promotional Products, Fuel, Maintenance, Personal Expenses, Cost of Goods/Services….. all of them.
For some, the list could be a few pages, for others, it might not take up a full page.
List the amounts you pay every month for each, you don’t have to list individual transactions.
If they aren’t monthly, then just put an average monthly. If they are yearly, then divide them by 12.
Once you have the list written down, draw a line down your paper from top to bottom next to the list for a category called: “Makes or Costs.”
Makes = Makes money, regardless of what it costs, it brings a return on the money you put into it.
Costs = Costs money, regardless of how much cash you put in a duffel bag and throw at it – no return… the bag always runs away.
Put “MM” if it Makes Money, and “CM” if it costs money.
If you’re not sure – Then put “CM”
After that is completed, read the list 5 times, top to bottom, bottom to top, upside down, doesn’t matter – just read it 5 times.
Notice how you feel and what you think when you read the list – are there any items that make you cringe? Scare you worse than The Exorcist? Make you Dance?…
Put a Star, Asterisk, or whatever the kids are calling this: “*” these days…. next to each one that made you hesitate, good or bad.
Ask yourself – are they really necessary to the core functions and operations of your business? Or, are they add-ons?
You may have some “ghost” subscriptions hanging out, software you are not using, websites that don’t generate leads or cash, excessive amounts of office purchases, etc…
Get rid of them.
Then – remember ONE thing as you read your list – EVERYTHING is negotiable.
Everything.
In a business I sold a few years ago – we negotiated, asked for lower pricing, or found new/better quotes for everything.
Have your team members help you and let them know they can get a piece of the savings you generate – you aren’t negotiating salaries – but if there are team members who take 30 hours every week to enter expenses, then they need to find something else to do besides type expenses…
Insurance – We had a local provider across the street take a look at all of our insurance. Workman’s comp, liability, P&C – and for better coverage, we saved $20,000 – yearly!
Office Expenses – We called up a few office supply companies around our area, checked Amazon, looked through vendors, and put in a new purchase order process that saved 40%!
Payment Processing – We were running $50k per month through our credit card processor – one call, lower rates, saved $1000/yr.
Cost of Goods / Services – Through loyalty (limiting our outsourcing to a few vendors), we negotiated our pricing for an additional 30% savings – which made our gross margins jump!
Loans – we had loans on some of our equipment, we ended up selling 3 large pieces we thought were necessary, but realized they were more of a luxury – we saved 3% per year on our loans, and pocketed $40K by selling the equipment we didn’t need. Bankers like high interest and short terms – But they’re likely to work with you to keep your financing with them.
Software – At one point, we had around 7 different software systems “Zapped” (www.zapier.com) together – we cut that down to just a few systems (CRM, Accounting, Inventory). – Saved $600/mo.
Website – We developed our own sites, but ours wasn’t making us money, instead, it was costing upwards of $1,200/mo just to keep all the junk online. We found a new platform, consolidated into one site, re-launched – and became an e-commerce powerhouse for $500/mo. – Saved $8,400 per year.
Just on those 6 areas (I could go on) – we saved over $100K per year. Not by beating our vendors up, but by kindly asking for better pricing in exchange for loyalty. Or, getting rid of the expenses completely.
2. Develop, or Re-Develop Standard Processes for doing EVERYTHING.
And automate as much as you can.
Business Automation – What the heck is that? And, who makes the robots???
Business automation is just a fancy term for getting your business to operate smoothly and efficiently – whatever the methods – technology, software, training, processes, terminator robots…
By Automating, I mean processes, and by processes, I mean smart actions.
There isn’t a single software system on the planet that can completely automate a business – if anyone tells you differently… N’Sync Them! (Bye Bye Bye)
You still have to run your business, you still have to train team members, and you still have to sell, monitor, and tweak.
However, many of the processes in your business can get a new lease on life by taking a look at them and getting rid of the garbage.
Your business has tons of processes, some you might not even realize – even the process for taking out the trash…
You might not realize how much inefficient processes cost you –
Soooo – get that notebook back out, and write them all down – every one of them.
How do you invoice customers? What are your steps for sales? Following up with leads? Performing the work that you do? Creating Purchase Orders? Going to the bathroom……. maybe not bathrooms, but you get the idea.
Does each process require more than 5 steps? If so – simplify each into 5 steps or less, and make them to where anyone can understand them.
I had an office manager once who took 30 hours every week just to enter expenses, create invoices, and do payroll…
This was a few years ago, so not in the “notebook” ages…
It wasn’t the team member that was the issue – it was the process! – There were just way too many steps, and not enough direction on how to do what, when.
We got the processes down to 5 hours per week – so, we told them to go home after the first hour…
We didn’t really tell them to go home… But, after we streamlined the processes for maximum efficiency, our office manager was able to help with sales, follow up with customers, track orders, and train new employees – essentially 2-3 other job positions.
Using our new-found software and website – we were able to automate nearly every aspect of the customer process. Invoicing, purchase orders, outsourcing, following-up, emailing confirmations, delivery dates, and more. – All we had left was Sales and Customer Service, which were 5 steps or less.
We even had a process for taking out the trash…
Re-Evaluating our processes saved us another $80k per year, and allowed room for better bonuses…
3. Outsource to the RIGHT Partners
I’m a firm believer that you can’t outsource customer service – if you do, then it no longer becomes service. No one likes talking to robots…
You can outsource and automate contacts, emails, funnels, advertising, marketing… but not customer service.
Why? – because if you don’t know how to back up what you sell – then you shouldn’t be in business.
So, with that soapbox out of the way – What CAN you outsource?
I read a testimonial one time that said “I believe in doing what you do best, and hiring the rest…”
What if what you do best is typing, really fast?….
I interviewed a potential team member once who said the one thing they do best is organizing… “What kinds of things do you organize?” – “Oh, just stuff I guess… But I’m really good at it!”
At that point, my business was completely paperless – the only paper in the building was used to make airplanes and have competitions…
You can’t outsource everything – but you can outsource a lot to the right partners.
For example, I owned a promotional products company once that averaged $500k per year until the big push (that’s what i call the change, because there was a lot of push back 🙂 )
At one point, we had 20 people, 2 graphic designers, 2 office managers, production team, even a front desk person….
That business grew from $200k/yr – to $1.2 Million per year – in 3 years!
But, there was a huge problem – I didn’t know where all the dollars were going, I also thought I didn’t have the time to look because I was going door to door and making 80 calls per day selling, and training team members, so that we can feed 20 different people.
So, I got out a notebook, wrote it all down, and looked at what processes, products, and employees we had that weren’t making us money.
It didn’t take a nobel physicist to figure out that our in-house screen printing was inefficient – (We had a 100% guarantee that replaced any order, at any time, and a guaranteed 10-14 day turnaround time)
So, if anyone messed up an order of 2,000 t-shirts (wrong artwork, wrong colors, bad print, dust falls off the ceiling and lands on shirts…) – we were out $6,000! – it happens more than you think in that industry.
We outsourced all of our other products… – so why not screen printing?
“No way! You’re crazy! No one can do it like we do!”…… what if what if….
Well, I guess if our marketing message was that we create completely hand-crafted t-shirts from our garage using organic sheep’s wool from the farm next door and melted recycled crayon ink that you get donated from schools on screens made from woven spider silk…. COOL! …. can’t outsource that Authenticity….
But that wasn’t our message – our message was the right products, at the right time, guaranteed.
What if it works??
I sold all of our production equipment, we offered employees severances, other positions, and plenty of time to find other jobs, (most of our team was college students), the business made $80k from the equipment to put back into the business, and we partnered with 2 screen printing fulfillment companies and never saw a t-shirt in person again unless it was shipped directly to us to give to a customer at a store, or hand deliver to their business.
Our team of 20, went to a team of 6… – Sales Manager, Owners, Sales Team.
Doing that increased our margins by 30%, and customer satisfaction to 98%. Then, I used that $80k to pay off debt and implement a sales & marketing program which attracted the attention of 12 different business buyers, and sold the company.
You can outsource, but make sure its the right vendor.
4. Track Everything and Re-Evaluate Often
I know, no one likes watching paint dry – and sometimes looking at data & metrics can seem that way.
It’s a task that is normally very far down the priority list of most businesses….
BUT – once you start tracking everything, and comparing it (metrics), your business gains the superpowers of being versatile.
That new ad you bought in that publication didn’t make a dime, but cost $1,500? – Never doing that again. Was it the wrong audience? Wrong publication? Wrong Call to Action?… Did you put a Call to Action?
You don’t know unless you track it, and compare it.
On Shark Tank – they talk all the time about knowing your numbers, customer acquisition costs, gross margins, types of wine…
Do you know what your customer acquisition cost is? It’s not just for online businesses that pitch on Shark Tank…
Using the example of paying $1,500 for a publication advertisement: If ONE customer sees that ad and purchases from you because of it, then your acquisition cost of that ONE customer was $1,500! (plus whatever it cost to create the ad).
I hope you’re selling gold bars that cost you ten cents…. but – you wouldn’t know that unless you tracked it.
Tracking and Re-Evaluating allows your business to say “NO!” to all of the things that don’t make money – and your little running duffel bag full of money will come right back into your arms…
Are you strapped for cash?
What if I told you that Upgrade Business Solutions performs these tasks for you and our services typically pay for themselves in 30 days?
Contact Us and Get Started – Or, send me an email and let’s talk about it: tucker@upgrade.business
Happy Money Saving!
