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#6 – High employee turnover

When you lose employees, customers are affected – they deal with less experienced people who don’t know your business or the customer’s needs as well as long-time employees.

There’s a concept from Harvard Business School called The Service – Profit Chain. It says that employee satisfaction leads to customer satisfaction. Customer satisfaction leads to revenue growth. And revenue growth leads to profit growth.

So the chain starts with employee satisfaction. High employee turnover is often a sign of unhappy employees. That is why this is such an important early warning sign. Plus the costs of training people so they’re fully productive are significant.

#7 – Costs rising faster than sales

Costs rise for a number of reasons. As your sales rise, so will your costs. If they don’t, why do you need that cost at all? So rising costs are expected. However, it’s a bad sign if costs are rising faster than sales. You have less and less profit on each dollar of sales.

#8 – Disproportionate purchases from one vendor.

Sign #5 was being too dependent on a single customer. We don’t want to be dependent on any vendor either. This applies not just at the enterprise level, but within product categories as well.

If you’re too dependent on any one vendor in any one category, your vendor may have too much leverage in your business. They can pass on cost increases to you that you may not be able to pass on to your customers.

So it’s important to diversify your vendor base or at least have a back-up plan for needed supplies. Maybe you still use your vendor, but you know who you would go to if need be.

#9 – Unwarranted increase in receivables

It’s great to make sales, but not if you don’t get paid! That’s worse than not making the sale at all because it costs you money to make a sale. Slow paying customers also create problems because you can’t pay your bills with receivables; you need cash!

This is one of the biggest challenges facing small businesses right now. Their customers are paying slower, which means receivables are growing. Make sure you’re the squeaky wheel – you have to keep after them, make some noise, so you stay high on the list. Consider offering a discount for early payment or, even better, change your terms to cash-on-delivery if possible. And best of all, ask for prepayment. But that’s a whole other show!

If you can’t afford to offer a discount, make sure you’re charging a late fee and notifying your customers regularly of their balance due. Get on the phone and call them. See when they will pay and then follow-up if they don’t.

#10 – Unjustifiable inventory build-up

Depending on your business, inventory may be even less liquid than receivables. First, you have to sell it; then you have to collect on the sale.

Inventory that’s not turning over is dead-weight. So if your inventory is building up too fast, your business will likely experience a cash crunch at some point. Get slow moving inventory out the door, even if you have to give it away!

How does that help, you ask? Because space is costly for any business. And shelf space is an incredible asset for retailers. Having a product sitting there as dead weight costs any business a little bit; it costs retailers a lot!

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Thanks so much for reading our post today. Join us next time when we ask, “Do we need to take the social out of social media?” Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00349-031209.mp3

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There’s Gold In Them There … Customers!

(Image in today's post by asifthebes)

That creates an opportunity.

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So we’re putting a 180 degree spin on the old advertising slogan – buy now, pay later. This year, we moved to buy now, pay now. Let’s just take one more step – pay now, buy later.

Old ideas, new popularity

The old idea of “layaway” was used more this year than it had been for some time. K-Mart even built an ad campaign around it. It’s not as easy for retailers to administer as buy now, pay later programs – like when you use your credit card – but in today’s economy they’re just happy to make any sale.

Another old idea is also seeing newfound interest – the Christmas Club. Your parents may have done it; your grandparents almost certainly did.

The Christmas Clubs of old didn’t pay a lot of interest and they carried restrictive rules about early withdrawal. Good for those not disciplined enough to leave it alone. Not desirable should a true emergency arise.

Create-your-own Christmas Club

But you don’t need a Christmas Club Account to fund next year’s Christmas presents. You can create your own – probably using a Money Market Account or a Money Market Fund.

Assume that you plan to spend $2,000 next year for Christmas presents. Right now, you could find a Money Market Account that pays around 2 percent, according to bankrate.com. 

If you were to invest $220 every month, starting in January, you would have your $2,000 by the end of September. Get ready to shop in October, with cash in hand!

You won’t earn much interest because rates are so low right now. But look at it this way – you won’t be paying interest on next year’s Christmas presents either!

Your Club Account … not just for Christmas anymore

A Christmas Club Account is just a fund dedicated for a specific purpose. You can extend this concept beyond Christmas. What if you …

• funded next year’s property taxes in advance? It’s your own escrow account!

• set money aside to pay your insurance annually so you get a better discount?
• paid for your next vacation a little bit at a time before you go? Talk about stress relief!

Getting a kicker

You can do this for any, and every, major obligation or opportunity you have. And here’s the kicker …

For major expenses that are several years away, you can set money aside in an account that may pay higher interest.

Generally speaking, the longer you can wait to get your money back, the higher the rate of interest you’ll earn. For example, if you’re funding a car purchase three years away, you may be able to put money in a 3-year CD.

The key is to match your investment time frame to when you will need the money for the obligation or opportunity.

One caveat

Of course, if you have outstanding debt, especially credit card debt, you’ll probably want to pay that off before you start funding other obligations – even if that means postponing, or cutting back, on discretionary expenses like a vacation.

We got used to easy credit – buy now and pay later with interest. We suggest paying now and earning some interest so when you buy later you’re money ahead!

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Thanks so much for reading our post today. Join us next time when we ask three questions that lead to a brighter future. Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

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Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00296-122908.mp3

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(Image in today's post by kiss kiss bang bang, CC 2.0)

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It does refer to seasons. We’re in the Midwestern United States. We’re heading into fall which, of course, means winter is just around the corner. Squirrels are busy hoarding up nuts so they will have the food they need to sustain them through the winter months.

Hot and cold, boom and bust

Like the seasons, our economy moves through times when things are hot and times when they’re cold. We experience booms and busts.

It’s interesting, though, that our friends in the southern hemisphere are just heading into spring. Things are heating up there while they’re cooling down here! It reminds us that most businesses do best during the boom times, but some actually prosper when times are tough.

Almost every business has products or services that will do better when the economy isn’t doing as well. With your offerings, which ones will save your clients money? Those are the items you should promote now as consumers seek to stretch their budget.

Your cash stash

Speaking of stretching our budgets, just like squirrels hoarding nuts for winter, we should all make sure we have an emergency cash reserve. Financial planners recommend keeping between three to six months of living costs stashed safely away for ready access.

In recent times, some have suggested a Home Equity Line-of-Credit could be substituted for this cash reserve. Only you can decide if that’s the right option for you; however, with what’s going on with banks and the credit markets, it may pay not be your best option for your crucial cash stash.

If you own a business, you should also look at your working capital. Is it adequate to take you through a slow season? If not, look for ways to cut your costs so you can shore up your cash hoard.

Purchasing out of season

The seasons also create opportunities for us when we’re purchasing. For example, if you live where we live, you’ll probably get a better deal right now on a lawn mower than a snow blower. Timing your purchase when demand is down on these bigg ticket items can save you money.

Tougher times also create opportunities for us as consumers. Businesses still have bills to pay. They want to keep the doors open. So they may cut deals now that they would never consider in good times.

Purchasing in season

With other items, you’re better off buying in season. Retailers will often lure you to their stores by drastically discounting these items. For example, isn’t turkey cheaper right before Thanksgiving than any other time?

Smart Money has a great article about the best time to buy everything. Planning when to buy is just as important as what you buy. Buying on impulse less often will save you bigg money more often!

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Next time, we ask, “Are you a victim of your own success?” Until then, here’s to your bigg success!

Subscribe to The Bigg Success Show in iTunes. 

Subscribe to the Bigg Success feed.

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We know … we know … pick-up lines are for social settings. However, a great opening line helps you professionally as well.

Listen to the show to hear our opening line. It doesn’t translate well to print. Mary-Lynn also shares the “cheesiest” pick-up line she ever heard.

The paperboy who became a billionaire
W. Clement Stone sold papers as a kid. He became a billionaire by selling insurance door-to-door. He documented what he learned in his great book, The Success System That Never Fails.

Picture this – you respond to a knock at your door. You open it to see a young man pointing to a list of names. You recognize quite a few of them – they’re your friends and neighbors. All this has happened within a split second as he begins to speak:

“I believe this will interest you also.”

He didn’t tell them his name or say, “Hello.” He didn’t ask them how they were doing or talk about the weather. No! He had tested … and tested … and tested.  He knew this was his best opening line. It was part of his success system.

Let’s look at three essential components to a great opening line.

#1 – Take the “you” view.
You have to think from the other person’s point of view if you want their attention. You’re probably familiar with the acronym WIIFM – what’s in it for me? Immediately address it because everybody is so busy.

#2 – Engage them.
W. Clement Stone’s opener is intriguing, isn’t it?

You ask yourself, “Why does he think that I’ll be interested? Why were my friends and neighbors interested?”

It’s a disturbing comment! That’s one way to engage people. You may also ask a disturbing question. “Ever notice” how Andy Rooney, with 60 Minutes, does this? Can you hear his voice?

One example of a disturbing question is to ask something that doesn’t ring true. We recently did a show / blog entitled Does It Pay Be Smart?

You say to yourself, “Well, of course it does! So why are they questioning it? What‘s the rest of the story?” Go ahead … check it out …. you know you want to!

You can also engage people by telling a short story that is humorous, gripping, or inspirational.

#3 – Appeal to their emotions.
Let’s go back to the W. Clement Stone story. Picture him at your door again. He delivers his opening line – “I believe this will interest you also” – as he points to his list of your friends and neighbors.

Do you start to worry that you might be left out? That fear of being excluded gets you into the conversation.

This great opening line worked wonders for retailers
Michael Gerber wrote the phenomenal book, The E-Myth Revisited. The “E” stands for entrepreneur, by the way. He talked about opening lines that sales clerks use.

When you walk into a store, if you’re greeted by a clerk, what do they say?

“May I help you?”

How do you respond? Perhaps something like …

“No, thanks … I’m just looking.”

Gerber advised his retail clients to change the question to:

“Have you visited our store before?”

That’s still a simple “yes” or “no”. However, if the customer said, “Yes”, the sales associate would respond:

“Let me show you our specials for regular customers.”

If the customer said, “No”, the clerk replied:

“Let me show you our specials for first-time customers.”

Doesn’t seem like much of a change, does it? The results were anything but small …

Sales increased 16 percent, on average!

What’s your opening line? What works for you? Leave your suggestions in our comment’s section.

Our Bigg Quote was made over 2,500 years ago by Pythagoras, the mathematician and philosopher.

“Do not say a little in many words but a great deal in a few.”

A great opening line will open doors for you. Next time, we’ll discuss how to tap into your hidden potential. Until then, here’s to your bigg success!

Related Post:

Timeless Principles: W.Clement Stone’s Success System