How to Stop Your Emails From Ending Up in the Trash

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If you are like me you probably get a ton of emails everyday. Now, I will be the first to admit that this is my fault because I sign up for everyone’s “free report!” Well, if you are also like me you probably check the box next to the emails you want to delete and throw them in the trash with out reading them.So this brings me to my point today, and that is as more and more small business try to use internet marketing as a way to connect with customers how do you prevent a client from deleting your email without ever reading it? The answer is email filtering!

As I mentioned above I get a ton of emails from businesses and people all day and everyday. It really became overwhelming until, I started using an email filtering system. Most email systems like Yahoo, Gmail, Outlook, and others give you the ability to filter your emails into categories or priorities. This has been a great productivity and time saver for me because I only look at the priority mail first and save the other mail for a later time or day to look at, but how do you get your customers to make your emails a priority?

In order to maximize your emails and get your customers to filter you into their priority inbox you need to do several things and in order to better understand the strategies fully take a look at this article from Aweber’s help center on “How to get your emails filetered.” Now, regardless if you use Aweber or not this article is helpful in giving you some simple tips to get your clients to filter your emails and put you on their priority list.

To your success,
Coach Dave

What Kind of Choices Are You Making in Your Small Business

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Happy Friday everyone!

Today, I wanted to bring you a quick video from one of my mentors. John Maxwell is an expert on leadership and has written a number of best selling books. He also puts out these short videos in which he calls them ” A Minute with Maxwell.” I really like these short videos because in them he communicates a powerful lesson in just a minutes time. So, today I wanted to introduce to his “Minute with Maxwell.” Plus, I wanted to share with you this particular one he talks about because as a small business owner we do this everyday.

So, let me ask you, “What choices are you making today that will enhance your business?” Has the economy brought you done and have you blaming it for your lack of success? Trust me, I know how easy it is to fall into that trap, but as Maxwell says, “It is your personal responsibility for the choices you make.”

Think about that over the weekend and we will see you next week. Until then remember it is the choices you make that will determine your success!

To your success,
Coach Dave

Without a Financial Scorecard Your Small Business is Destined to Fail

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“If winning isn’t everything, why do they keep score?” – Vince Lombardi. That is one of my all time favorite quotes. Now, I know that there is debate on whether or not we should be a society that stresses winning over doing your best, but when it comes to business, unfortunately, doing your best is not going to keep the doors open. If you are not beating your competition and not making money then the likelihood of your business surviving is at stake. There are several ways you know if you are winning but the best way to keep track is to have a financial scorecard. What exactly is a financial scorecard and what does it mean for a small business? That is exactly what we are going to answer and my hope is to have you understanding enough after this post that you stop what you are doing and start your “scorecard!”

In business numbers are how you are judged and it doesn’t matter how many innovative products you bring to the market if you do not know your numbers you are going to struggle and could be destined to fail. Here is a simple way to look at what your scorecard is and I like to make things simple. Think of your scorecard as after each month, quarter, or year as if you are winning a game. If your sales are higher than your costs you are more than likely winning. Now, before you go saying, “well duh” there are a few more components that you need to consider, but the main point here is your scorecard is the life of your busy and how healthy and strong it is.

So, if your financial scorecard is the lifeline to your small business then what does it consist of? The financial scorecard consists of four components and they are; PNL ( Profit and Loss Statement), Balance Sheet, Cash Flow Statement, and your Budget.

Now that we know what areas consists of our scorecard let’s explore each one just a little bit more.

PNL (Also known as your Profit and Loss statement) – The PNL measures the financial performance of the business for a given time period. The PNL will consists of revenue line items and expense line items. When you have those two set up you then take your revenue and minus it from expenses to get your profit (REV-EXP=Profit). Pretty simple but most small business owners just look at their bank statements each month to see if it is going up or down. Spend the time to write out each month your revenue and expenses. Knowing what areas are bring in you more income or is costing you more will help you budget better and also focus more on either cost reeducation or revenue enhancing strategies!

Balance Sheet – The Balance Sheet is composed of three things; Assets, Liabilities, and Owner Equity. The equation for this is Assets – Liabilities = Owner’s Equity. The balance sheet is used to score the financial condition of the small business at certain point in time. The problem that most small business owners face is that their Liabilities tend to be higher than their assets, which leads to negative cash flow.

Cash Flow – I am sure you have all heard the quote “Cash is King” and it is very true in business, so theCash third component to the scorecard is the cash flow statement. We have all heard the statistics of small businesses failing in the first years of existence and one reason for that is the lack of cash on hand to keep the business afloat. It is important to know your “cash burn rate”, which is simply how much cash you are going through in a specific time period. In order to find out your cash flow and burn rate you need to do the following equation:

Income or Revenue
–
COGS( Cost of Goods Sold)
=
Exp/OH/Fixed
–
Owner Salary
=
Net Profit
+
Equity Inflow
=
Cash Position

It is important to set this up on a monthly basis because each month things change and so does your cash position. For example, one month sales might be 100k and the next month they may only be 50K but your fixed expenses and salaries did not change, which could allow you to have a smaller cash position. There are very few business who will not experience a cash gap at some time during a business year, so it is important to have the cash flow statement to plan accordingly.

Budget – The final and fourth component to the scorecard is the Budget report. It is important to forecast out your revenue and expenses. The budget helps you mange the planned future performance of the small business and also gives you insight as to how well you are predicting outcomes. A lot of times I see small business owners just guess on revenue or expenses because they say that how do I know what is going to happen in the future but this is the wrong thought process.
Let me give you an example, I am sure most of you have heard of Southwest Airlines, and some of you may know that they have put together one of the longest stretches of positive earnings for a public company. Now, remember this company is an airline and as most of who drive we see gas prices go up and down all the time, so then how do they predict gas prices in their business. Well, they hedge their bet. They have people who look at the markets and buy gasoline futures months in advance so that when the price becomes volatile because of some event they do not get caught up in it. As a small business owner you need to do the same. If you buy material know when the material is more expensive and buy more at the current levels. Hedge your bet and forecast into the future.

Alright, I kind of got off track and will probably do a post just on “hedging” in the future but for now go set up your scorecard and start keeping track. Know your numbers! Start having a MBN ( Manage by Numbers) approach to your small business.

To Your Success,
Coach Dave

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Knowing your Break Even will Help You Make A Profit

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Yesterday, I wrote a post entitled ” Are You Making This Mistake in Your Small Business” and I revealed to you a shameful mistake that I made and pointed out that I believe many small business owners do as well. Today, I want to talk to you about the main reason we do business. First of all, let me ask you a question, “Why are you in Business?” Now, I assume your answer is to make money or a make a profit. With that being said let me ask you another question and that is do you know how many units or services you need to sell to Break Even and eventually make a profit? If we agree that we are in business to make a profit then it is equally or even more important to know when the business will become profitable.


Let me tell you finding this number out for me and with my business has been the best thing that could have happened to me. Like I said in yesterday’s post they teach you this the first day in business school but I, like most of us, just pushed ahead because we are ambitious to make things happen and start our business. This is a mistake though because not knowing when the business is going to be profitable leads to the business failing. Knowing when you become profitable allows you to plan how much cash you will need to have on hand to stay afloat until the business can generate positive cash flow.

Going through this with my business has been a life saver. I know now exactly when I will start making money and can plan sales and lead conversion goals around the number of sales I need to make to be profitable. Before I just started each day doing random things that needed to get done and did not have a planned approach on how many sales calls and lead conversions I would need to make my monthly, quarterly, and yearly goals.

So how do you calcualte your Break Even point?

First, you need to figure out all your Fixed Costs (FC). These include line items such as, rent, marketing, salaries, utilities, operating costs, etc… These items are consistent month in and month out.

Next, you need to figure out your variable costs (materials). Typically this will be the cost of selling each product or the cost to produce.

Then you need to take the price of your product or the average selling price of all your products if you sell more then one and make an assumption of how many sales you can make in a time period. For this exercise let’s say a year.
Now multiply the total number of units times the price of the product to get the total sales.

Below you will see the equation

Total sales(TS) -(VC)=Gross Income

Then take your gross income and divide that by Total sales to get your gross margins
GI/TS

To find your Break Even point you then do the following step:
(FC)/Gross Margin

Here is an example:
FC 5422
VC 200
Product Price 19.95

Units sold 100

Total Sales 1995

Gross Income 1795

Gross Margin 90%

Break Even Sales 6026.95

BE Transactions 302

In this example you can see that my fixed costs are $5422 and variable costs are $200 (you base the VC on # of units sold so for this example I used 100 units and each unit costs me $2 to sell)

Then do all the other calculations and you get to the following result.
I need to sell 302 units at the current price to get a total sales of $6026.95. Once I hit that level everything else is going to be profit.

So, can you see how helpful it is to know your Break Even point. Listen, if you ever want financing or investors that is one of the first things that they are going to ask for.

Go figure yours out now and if you need help you can contact me.

Stay tuned for the next post where we talk about your “Score Card!”

To Your Success,

Coach Dave

Are You Making This Mistake With Your Small Business?

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Okay, I am a little ashamed to admit this but I made one of the biggest mistakes that most small business owners make. The thing that bugs me even more about making this mistake is that in business school this is taught almost day one and I still did it. Well, lucky for me I decided to start working with a business coach to help me through some of the struggles I am facing with my business. More on that later, but have I got your curiosity to see if you are making that mistake in your small business? Alright, I won’t keep you waiting any longer. The biggest mistake most small business owners make is that when it comes to figuring out their Break Even Analysis they forget to include into the fixed costs section a line item that has the owner’s salary!

Yes, you heard me correct. Most small business owners when starting out figure that as long as they calcualte and cover all the fixed costs, which typically include things like rent, operations, marketing, employee payroll, etc. that the business can survive and they are making it. Well, after going back and seeing that for the past year all my calculations have been based entirely on just having enough members of my Working Mom Workouts site to cover all the fixed costs minus a salary for me has made me realize that my entire marketing and advertising strategy needs to change. Once I added in a monthly salary for me the number of clients I ned to have paying me a monthly subscription has gone up 2-3x of what I originally projected. So, let me ask you again, “Are you making this mistake in your small business?” If so, don’t beat yourself up over it, in a follow up post to this one I am going to show you how easy it is to calculate your Break Even Analysis with your salary in it, so that you have a true picture of what it takes to have a successful business!

To your success,
Coach Dave