Soap Warehouse Blog

Well the Summer Solstice has just come and gone so this means half the year is already pasted us by. What have you accomplished in your business and what is still on your to do list that you haven't even started?

It is not too late to begin even some major business projects that will still add to this years bottom line. And do not let this busy time of year stop you from doing a fast 30 minute evaluation.

Get out our business plan, your business calendar, your to do list and any of the other helpers you have made to use as a method to gauge your progress so far.

Print out a year to date comparison from your accounting software like Quickbooks and see how you are doing. This is something you should already be doing every month. Are you ahead of last year, or the year before, are you where you projected you needed to be?

With these tools go over the positives and negatives and use them to change or update your business plan for the upcoming six months.

Are you doing the necessary social media connections that you should be doing to bring in new organic business? Not enough time, then try to delegate some or all of these tasks.

Is your referral program bringing you the number of jobs you planned so far? If not how can you improve it or expand it?

Are you noticing too many of our quoted jobs are going to your competition?

Is your pricing structure not giving you the profit you need?

If you need to review some of our past blog posts to create the tools you should be using here are some to check out:

What is a business plan. http://info.soapwarehouse.biz/blog-0/bid/102796/What-really-is-a-Business-Plan-and-Why-should-I-make-one

Building Success in 20 min's a day. http://info.soapwarehouse.biz/blog-0/bid/92822/Building-Success-in-Twenty-Minutes-a-Day

How to monitor your Social Media Footprint. http://info.soapwarehouse.biz/blog-0/bid/71888/How-to-monitor-your-Social-Media-Footprint-in-10-minutes-a-day

Referral Programs, why they work. http://info.soapwarehouse.biz/blog-0/bid/63253/Referral-Programs-Why-they-work

How to use and analysis a referral program. http://info.soapwarehouse.biz/blog-0/bid/79408/How-to-use-and-analysis-a-referral-program

Competitor Comparison to see where you stand. http://info.soapwarehouse.biz/blog-0/bid/78895/Competitor-Comparison

How to avoid pricing mistakes. http://info.soapwarehouse.biz/blog-0/bid/60013/How-to-avoid-pricing-mistakes

I hope this year has been a good one for you so far and if not I hope some of these ideas will help you make improvements. Have a great day.

Now for many this is the start of your slow time or winter break and you may think you have nothing much to do but sit around and wait for the temps to get warm again next Spring. Well you are sorely mistaken if you want to improve and even build your business throughout the Winter months. Here are some steps to make sure your New Year is a good year.

1. Do your budget for the New Year. See what you spent this past year. What was more than you expected? Less? Can you make changes next year that will gain you ROI? Stop doing things that are losing you money. If you can't stop them totally, then change them so they won't be the money pit to your budget they are now. As I mentioned in a previous post, now is the time to shop around for phone service, insurance, equipment for next year. Be sure to include a 5% increase from what you spent this year on every line item in your budget. This way even if the cost of a few things don't go up during the course of the year the ones that do can have funds moved from others without undo stress of looking for that money. It may not be perfect but it will help. 

2. Work on your collateral marketing materials, purchase new clients give-a-way items, update, improve or start a customer referral program. Did the items you handed out last year get you new customers? What worked and what didn't? Don't beat a dead horse and by another 1000 imprinted rulers if you did not earn back their cost. Try something new instead. Got an item like your business card magnets that got to a 600% return on their cost? Double your order for this year and hand out even more!! Good tried and true items for this are: Business card magnets, Note pads, Pens, Clips magnetic or other wise for papers or bags, calendars, and other useful household items like rubber disk lid openers.

 3. Up date your web site. Up load newer B&A photos from this years jobs you haven't had the time to get done. Potential customers may visit your site 3-5 times before deciding to call or fill out your on line form for an estimate. Seeing that you are working, adding new photos and gaining more testimonials may sway that person to go ahead and try you instead of someone else. Adding a blog and keeping content current gets you better SEO. If you do not have a testimonial page or area on your site yet, ADD ONE. nothing convinces a potential customer more than reading statements from satisfied customers. Add video to your site. Action segments do not have to be long and having a professionally produced video will look even better. We use a company called iMotionvideo.com. You can either buy single videos one at a time or like us join their video membership club and have a new video produced each month.

4. Update your customer contact list, e-mails and phone numbers. Check to see if any past customers did not use you this year and try to contact them to find out why. You can send out an email survey to all those contacts to see if they moved, didn't think they needed service this year, went with someone else due to price. Send out a E-mail message saying you missed them last year and hope they are doing well. Be sure to send all new customers a Thank You message, Newsletter or New Years savings offer to try and pre book as much work as possible now for Spring. Remember give added value offers not percentage off offers for best results. For example: Book your Spring house cleaning before Feb 1, 2013 and get a free gutter cleaning, or window washing or mail box cleaning. What ever you think is incentive enough for your customers to schedule now instead of waiting until Spring. Make sure you evaluate what worked or did not work last year and possibly increase your enticement. Update or improve on your customer referral package. Send out cards or e-mails offering free services, gift cards, etc for new contact information of friends and family. When these new contacts buy be sure to full fill your referral promises quickly to promote additional referrals coming in.

5. Plan now to network by attending local and National industry events in the coming year. If you go ahead and schedule them into your yearly calendar you can know how much business you will need to book before and after them to still make your monthly budget numbers. Many events local and National are heald in these first few months of the year to get the largest attendance possible. Also explore improving or expanding your business with new offerings by learning or becoming certified with new skills. Check out the industry organization web sites, forums, and on line industry magazines to find these opportunities. If you stop learning you stop growing as a person and a business.

I hope all of you get some much needed family time off this Winter season but also be sure to follow these suggestions and you will have plenty of business to keep you busy all this year.

Many small business owners just decide one day, for what ever reason, that they want or need to work for themselves and up and start a self business. But sooner or later there will come a time when this single person business will be asked for or need a business plan. Maybe it is the bank for a loan or to open an account or a CPA that files your taxes, but no matter the reason why, every business owner should make a plan to help them manage their business during its life.

If you do not have one already the governments Small Business Administration is a good place to start to get a template of what should be included in a plan. http://www.sba.gov/category/navigation-structure/starting-managing-business/starting-business/writing-business-plan. And if you are really new to business and just jumped right into it you might even want to back track and take a look at the steps of starting a business they offer as well, http://www.sba.gov/thinking-about-starting. You may find you have missed a few things you should still think about doing.

A business plan is just a road map of where you are to where you want to end up. It will include things like your mission statement, the who, what, where and how of your business. What type of work you will perform, in what locations, who is your prospective customer, what prices are you expecting to charge or how you will calculate your pricing, what equipment you will buy, at what cost, will you spread this cost over a set number of years, will you do all the work yourself or hire employees, how will you deal with these employees, and what your expected profit will be in a set period of time from the start of your business.

Now many business owners think that they only need to make a business plan once, when they are first starting out or to fulfill a loan requirement for a banker, but a good business owner will review and adjust their business plan as the years go by as their business grows and evolves. For instance when just starting out you may have worked alone and mainly did house washing, but over time you added employees, these grew into multiple crews and you found you enjoyed cleaning and staining decks, while doing house washing, more than washing homes and your business shifted to mainly deck work. With this change your business plan should also be changed and rewritten. In fact many business plans are made to cover a finite amount of time after which a new plan is expected to be made to cover a next set amount of time. There are other places and groups available to help you with this, like SCORE http://www.score.org/resources/business-plans-financial-statements-template-gallery, Bplans.com or even Microsoft Office. Even here in your own industry there are groups that have done the work for you or will help you, such as http://www.powerwash.com/articles/pressure-washing-business-plan-power-wash-contractor.html. Also free examples to watch and learn from on youtube.com, just search "how to write a business plan".

So during this month of December, being National Business Plan month, I encourage you to make or revisit your business plan.

I have spoken in the past about customer service, referral programs, attending networking events and getting commercial jobs, but the one thing they all have in common to bring your business success is in learning how to do the follow up.

The hardest thing after the initial terror of first contact is in the follow up, but that is where your business can be made or lost, right there.

Not every person that starts a pressure washing business or any business for that matter is a natural born sales person. Most would just like to be called, asked to do a job and then just go out and do it. But the calls are not just going to magically come in, most job opportunities must be created and nurtured by you, the business owner for them to happen.

It is always surprising that business owners go to the trouble to attend an event, exhibit at a trade show, send out a marketing piece that yields them business cards, filled out contacts or questionnaires and then they do nothing or little with them.

In too short of time these contacts will be lost or tucked away to never be used to generate the business they were intended to and why? Because these owners failed in the follow up. Follow up does not have to be scary, complicated or difficult. It only takes a simple call or short contact first as a refresher to start you on the road to more jobs and profit.

As soon as possible after you get the contact make your first follow up. Best if it in within the first 24 hours. It can be very brief and doesn't even have to ask for a job commitment. A simple "It was nice to meet you." Even if left as a phone message or in an e-mail, along with a promise to get with them soon about their shown interest in your business. Here is a great time to mention exactly what was discussed to help bring your contact back upm in their mind. Then once the promise is made, that becomes your next opportunity for follow up.

Remember the person you met also met many other people and businesses at that same time and just this short reconnect will bring you back up into focus in their mind and put you ahead of others when you do make your next contact. It takes 3-4 times of contact before most people will consider using you, even if they are interested in both your service and business in particular.

Next contact should be made giving the specifics about what you discussed with this potential new customer as promised. Here you can spell out the benefits of your service, who else you have worked for, and the positive results (the same ones this person is after), along with the cost. You do not have to start out with a special offer, unless one was promised or discussed at the first meeting. You may be successful right away with the customer paying full price for your service, so do not offer any deal until later if needed. Why give money away for no reason.

Once you have given them the information do not ask for the job, allow them to feel in control and let them have some time to go over the information you have given them. But you should not give them long or leave it open, you need to set up when and how the next follow up will happen. Will it be with you calling them again in the next two days? With you sending them an e-mail after the weekend? Try to make the next action still under your control. If they insist on being the one to contact you back, go ahead and agree but state that if you do not hear from them by a certain time, such as the next 7-10 days, that you will be contacting them again for the follow up. Statistics show that as many as 80% of new business is lost due to the lack of follow up by the potential customer.

The next contact is when you should ask for the business that was discussed that you provided the information on. It should be some thing like "Mr. Hall, are your ready to book the "service" we discussed on "date"?" If they say no try to find out what is the reason for their delay? Time isn't right, cost is too much, scope of work not exactly what they need right now. This is the time where you answer questions, make suggestions and if necessary make a special offer if cost is a factor, or offer a free service to go with the planed on, like cleaning the sidewalk or stairs with the house wash.  Even with a special offer put a short limited time for this opportunity to happen. You do not want someone to come back months later when you are busy and other customers are paying you full price asking for you to take the time to do a discounted amount of work. Tell them you can do this job this week because an opening has come up for this price but if they wait until a weekend or later in the month they will have to pay full price, reminding them that they do not have to be home for you to work.

Follow up is not just for new customers it is also important with your current customer base. Statistics show that as much as 60% of client loss is simply due to losing touch. The customer can't find your number, remember your business name to look you up from last year or they saw a competitors ad when ready for service again and doesn't want to take the time to contact you about matching it. It is ideal to try to touch your clients at least once every three months during the year, or in the 30 days just before the service they bought before would be coming up to be performed, such as Spring cleaning, Summer deck or pool deck cleaning, Fall gutter and roof cleaning. At least twice a year is the minimum you should try to make contact. Money is in the "Follow Up".

While follow up takes discipline, it is not hard and does not have to be frightening. Spending a little time putting together some simple keep in touch marketing campaigns by mail or e-mail, to foster your business relationships, with both prospects and clients will more than pay for themselves. Good luck with your follow ups.

The backbone of any service business, right after the labor force, is the equipment.

And the best way to monitor and mange that investment is by keeping good records including all maintenance needed and done. I think every business should keep track of their equipment maintenance and here is an inexpensive way to do it, to make and keep a log book or binder.

When you first purchase a new piece of equipment it comes usually with loads of printed materials most of which, guys I know, will loose or throw out within days of getting it. And I know most of us could care less about the extra pages written in Spanish or other language, but file those away too, you never know when you may have hired an employee that could use it. 

So the first rule is to look at each piece of paper, to see what exactly it is and use it to create an individual maintenance plan for that specific piece of equipment.

You will get the bill of sale listing the name of the equipment, model number, and other information like motor size, dimension etc. You will need to make a few copies of this; the original needs to go with the method of payment you used to make the purchase, like a check or attached to the paid credit card statement for regular bookkeeping but you should also have it other places as well. You will need a copy to place with your tax records so you will have the info and value for your accountant to figure your taxes for your equipment deductions, a copy should go in your insurance file in case it is ever lost, damaged or stolen and to be sure you level of coverage is high enough for all your equipment on hand and last a copy should go into your maintenance log book. It is also a good idea to list on or attached to the receipt how and where on this piece of equipment it is going to be marked or identified as yours. Good rule is to permanently etch into it a specific code. I personally like the, Initial(s) followed by the last 4 digits of a SS or Tax ID number format. My personal one I use is LMC3285 or for Soap Warehouse SW3660.

Next is the registration card, DO NOT THROW THIS OUT. Not every item will have one but this card can be more important than the paid receipt. Make sure you fill it out completely, make a copy of it (front and back) and mail it back to the manufacture. This way you will be made aware of any recalls, defects or warranty issues by the company. This also identifies you as the owner of the equipment for insurance coverage and starts the warranty period. If you wait or forget to send it in you may not be covered for warranty repairs. A copy of the card should stay in your log book attached to the manual.

The owners manual. The one thing guys never seem to want to completely read. If it is small (a folded page or two) make a copy and you can place it in a file with other equipment instruction papers but no matter what the size you will want to be sure a copy of the entire manual gets placed in the log book for easy reference. Best if placed in zippered binder folder so it will not fall out or be damaged. This way at any time you can reference the manual on how to change a part, trouble shoot a problem or refresh yourself on how to use a seldom used item or equipment feature.

Next READ THE MANUAL cover to cover, taking note of important information you will want handy, like type of oil an engine may need, make a list of sizes of belts, hoses and other replaceable parts you may need to change or replace often. It would be smart to go ahead to order, to have on hand, at least one of each replaceable item now while it is still easy to get the part, to have it readily available. Consider these parts purchases as just the additional cost of the initial equipment purchase, you can even deduct it just like the equipment itself. This way a small break down will not leave you high and dry and unable to finish a job looking or waiting for a part. Also once a part is used, immediately find and purchase its replacement. Nothing is worse than having a machine you love break down after years of service, to find out a simple part you would need to get it working again is no longer available, forcing you to purchase a replacement under pressure. If later if you sell this equipment you can include the spare parts in the sale as a bonus or feature of the sale.

While reading the manual you will find out information, like how often the oil needs to be checked, added or changed, ex: Top off after first 10 hours of use, Check oil every 100 hours of use, Change with new ND SAE 30W every year or 1000 hours of use. This is the type of information that you will use to create your maintenance schedule in your log book.

Now you should be able to get by with just a 1" or 2" three ring binder to use for your log book. But for the businesses that have gotten so big that they have multiple rigs, vehicles and crews you may want to look at and invest in some Maintenance Software Programs in addition to having a binder with each rig out in the field. Some can cost thousands and others just a few hundred dollars from easy on-line downloads.

List of items to buy:

• 1" or 2" three ring binder(s) - Can be one for everything or one for each rig, trailer or truck unit you have.
• Pack of page dividers, what ever kind you like. Enough for one for each peice of equipment.
• Zipper binder pockets for manuals, come in different sizes, buy as needed.
• Pack of assorted binder pockets for receipts for short term storage, normal page size.
• Package of three ring page protectors 25-50 should be plenty to start.
• A 8x10 or 8x11.5 calendar for the current year (you can probably get this free from some advertiser or vendor).

Set up the binder the way that is easiest for you to use, alphabetically by item name, type of item, small items to largest, by location ex: which trailer or truck it is on. Punch holes in the folded edge of the calendar to fit the binder rings and place it in the very front of your binder. You can fold over and change to each month as needed through out the year. Put the name of the location followed by equipment name in the tabs of the page dividers. Put one of the log sheets (see sample below) in a page protector behind each tab, followed by a binder pocket to place receipts for parts and repairs until you can enter them and move them to their permanent location, the zipper binder pocket with the manual is the last thing before the next equipment item divider page to start it all over again.

Now each log sheet (see sample provided) has the name of the equipment, make and model. The place purchased, the date purchased and date equipment went into service. The next section will list the next scheduled date for maintenance, date when serviced, what was done, who did the work and how much it cost. There is also a place to list parts, by name and number as well as space to list where to call to purchase the part, and normal cost of item so you don't have to waste time looking for it. Depending on how many entries must be made, each sheet could cover more than one year or you can plan on replacing a new sheet each year per item.

The very last bits of information are the dates the equipment went out of service and when this items was sold if applicable with selling price, which may be needed by your accountant. Once the item is taken out of service or sold you can remove that section out of your binder to file into your other office files.

With this binder you will be able to see at a glance all your equipment in service, look up and plan dates on your calendar when to do maintenance and keep records of the costs for maintenance. You will still have to enter the scheduled dates on to the calendar and the figures into your bookkeeping records or software program but this way it will be easy to find the information you need.

Pick a certain time of the week or month to check your calendar to schedule to do the next upcoming needed maintenance for your equipment. This way you can make sure your equipment will always be available and in top condition for scheduled work.

If you would like a copy of this Excel Log book sheet, contact me at info@soapwarehouse.biz subject: Maintenance log sheet, and I will send you a copy of this page that you can customize for your business.

Now twenty minutes a day does not sound like much and I am sure you hear advertising claims every day asking you to spend just 20 minutes a day to achieve some goal like; weight loss, firmer abs, more money, etc. Well in a way I too will be promising you more money, because it has been proven that if a small business spends over 15 minutes each day on marketing they will increase their revenue significantly, more than if they even focused this same amount of time in one lump, such as 90 minutes a week. The key is consistency and receptiveness.

First by spending time each day you will create a habit to take this small amount of time out of your day. Second if you are marketing more frequently the chances will increase dramatical that a likely consumer will try your business due to this fact.

Now if you think you can't very well do much in just 20 minutes, here are some ideas of what you can accomplish in this short amount of time.

Order new or additional business cards. Business cards are one of the least expensive, with the largest chance of ROI, of almost ANY marketing item. For the new year think about making a slight change to a card to help track the effectiveness of your card campaigns. For instance, have a card with a slightly different order of information, orientation, size or color imprint of your phone or web site address just for cards you give to current customers for referrals. Make a card with a different tag line you only give to Building Management or Realtors or plan to hand out at a show or event. Cards can be ordered very cheaply from places like Vistaprint.com so that you could have 4-5 different ones available to hand out at any time. Just be sure to keep the feel of the cards and your logo the same so that no customer is ever confused as to who you are and whom they are contacting.

Open a separate Facebook page for your business, away from your personal one. It takes very little time and is a newer option that will make you look more professional and make it easier to gain, interact and relate to your customers.

Even if you do not text, like I don't, open a Twitter account for your business. It takes just a few minutes to link it to your Facebook business account so that when you post on one it also appears on the other. You can also link posts to LinkedIn.

Have a LinkedIn account if you do a lot of B2B business. Since this is more of a business vs. only a personal social media, you will gain better business contacts and SEO with it with these types of customers.

Post often to your Facebook business page or Twitter. With help from programs like TweetDeck, you can spend the 20 minutes scheduling a week or more of posts at just one sitting and then do other things for your 20 minutes on the other days.

Make a blog post some where at least once a week. If you do not have a blog area on your own web site you should really think about making one, but if not you can still blog. Use the blog feature found at many of the industry on line forums, on LinkedIn and other web sites. As long as you are consistent with your tags and links back to your own site or Facebook business page this type of organic SEO will help and build over time.

Become a member, look for and answer consumer questions at web sites like Yahoo answers at http://answers.yahoo.com/ or www.ask.com/. You can look in the categories you want to be associated with to find questions you want to answer. Once you start answering and get likes to your answers you will build an on site reputation and can even have questions e-mailed to you to be answered. Being helpful with out looking for gain can bring you customers from your area.

Search for and buy a new or reliable give-a-way marketing item. There are some great sites out there that you can subscribe to for sales, product alerts and ideas for items. We use 4imprint.com a lot.

Send out a newsletter. It doesn't have to be long. Just make sure you are giving your customers some free tips, home help or advise, no sales pitch needs to be included. Mention up coming events you will be attending, like a home show, link to interesting sites your customers may enjoy, mention a certification class you took or industry event you attended. Once your open rates are up then the occasial sales offer will more likely be opened and acted on.

Send out a targeted e-mail for a specific reason or campaign. With a well segmented customer e-mail list, sending short targeted e-mails with messages or offers will take little time but can generate huge benefits. Once a month send all your customer's birthday message, customer anniversaries, off season offers etc.

If you do not already have a well segmented list, spend your 20 minutes at least once a week making some using the resources you have available, Quickbooks, Salesforce or other CMR software.

I hope you start spending your 20 minutes a day working on marketing for a profitable New Year.

Happy Holidays to you all. Hope you all had a profitable year and we look forward to working with you in the New Year. 

Now for many this is the start of your slow time or winter break and you may think you have nothing much to do but sit around and wait for the temps to get warm again next Spring. Well you are sorely mistaken if you want to improve and even build your business through out the Winter months. Here are some steps to make sure your New Year is a good year.

1. Do your budget for the New Year. See what you spent this past year. What was more than you expected? Less? Can you make changes next year that will gain you ROI? Stop doing things that are losing you money. If you can't stop them totally, then change them so they won't be the money pit to your budget they are now. As I mentioned in a previous post, now is the time to shop around for phone service, insurance, equipment for next year. Be sure to include a 5% increase from what you spent this year on every line item in your budget. This way even if the cost of a few things don't go up during the course of the year the ones that do can have funds moved from others without undo stress of looking for that money. It may not be perfect but it will help. 

2. Work on your collateral marketing materials, purchase new clients give-a-way items, update, improve or start a customer referral program. Did the items you handed out last year get you new customers? What worked and what didn't? Don't beat a dead horse and by another 1000 imprinted rulers if you did not earn back their cost. Try something new instead. Got an item like your business card magnets that got to a 600% return on their cost? Double your order for this year and hand out even more!! Good tried and true items for this are: Business card magnets, Note pads, Pens, Clips magnetic or other wise for papers or bags, calendars, and other useful household items like rubber disk lid openers.

 3. Up date your web site. Up load newer B&A photos from this years jobs you haven't had the time to get done. Potential customers may visit your site 3-5 times before deciding to call or fill out your on line form for an estimate. Seeing that you are working, adding new photos and gaining more testimonials may sway that person to go ahead and try you instead of someone else. Adding a blog and keeping content current gets you better SEO. If you do not have a testimonial page or area on your site yet, ADD ONE. nothing convinces a potential customer more than reading statements from satisfied customers. Add video to your site. Action segments do not have to be long and having a professionally produced video will look even better. We use a company called iMotionvideo.com. You can either buy single videos one at a time or like us join their video membership club and have a new video produced each month.

4. Update your customer contact list, e-mails and phone numbers. Check to see if any past customers did not use you this year and try to contact them to find out why. You can send out an email survey to all those contacts to see if they moved, didn't think they needed service this year, went with someone else do to price. Send out a Holiday Greetings E-mail message saying you missed them this year and hope they are doing well. Be sure to send all new customers a Thank you holiday message or New Years savings offer to try and pre book as much work as possible now for Spring. Remember give added value offers not percentage off offers for best results. For example: Book your Spring house cleaning before Feb 1, 2013 and get a free gutter cleaning, or window washing or mail box cleaning. What ever you think is incentive enough for your customers to schedule now instead of waiting until Spring. Make sure you evaluate what worked or did not work last year and possibly increase your enticement. Update or improve on your customer referral package. Send out cards or e-mails offering free services, gift cards, etc for new contact information of friends and family. When these new contacts buy be sure to full fill your referral promises quickly to promote additional referrals coming in.

5. Plan now to network by attending local and National industry events in the coming year. If you go ahead and schedule them into your yearly calendar you can know how much business you will need to book before and after them to still make your monthly budget numbers. Also explore improving or expanding your business with new offerings by learning or becoming certified with new skills. Check out the industry organization web sites, forums, and on line industry magazines to find these opportunities. Many are available during these slower Winter months. If you stop learning you stop growing as a person and a business.

I hope all of you get some much needed family time off this Winter season but also be sure to follow these suggestions and you will have plenty of business to keep you busy all next year.

With this month being National Financial Wellness Month I asked a friend of mine Mr. Don Schwerzler for an article that addresses an issue that all small family business owners should hope to face, succession planning. Here is his article:

Succession Planning:
Who needs it? And when do you start?

 BY DON SCHWERZLER

Mercer Dye designs general aviation facilities such as hangars, industrial buildings, and some really good-looking airport terminals. He first began working with his father in the construction business in 1975. An art major in college, Mercer had already tried his hand as an artist for a couple of years before his wife “advised” him to get a real job. Mercer relented, but not so reluctantly, because he genuinely enjoyed working with his father. The two of them landed significant construction contracts with Delta Airlines and Hangar One, among others, and the business grew like crazy. Throughout the 80’s and early 90’s, father and son rode a wave of prosperity in general aviation, and in 1993, Mr. Dye retired and left the business to his son. Mercer changed the name of the business from Dye Construction to Dye Aviation Facilities to reflect his new focus on design and consulting. Today, he’s recognized as one of the best in the field.

If ever there was an example of a smooth and easy succession, the Dye story is it. The father establishes the business, brings his son in early and retires while he’s still active enough to pursue his passions. The son borrows on the father’s corporate relationships and track record to market his new direction – a new emphasis that suits his artistic bent and his personality. There are no other family members involved and the succession from one generation to the next was a walk in the park.

But then there are those other family businesses where the succession story better resembles walking through a minefield. When a business ages, and the number of family members in the business swells, succession issues will mount and threaten the well-being of the company if not addressed early enough. Consider the case of a 50-year-old manufacturing company in the southeastern U.S. The patriarch and founder of the business died when he was 78 and left control to his wife, who at 93 years old has outlived many of her children and even some of the grandchildren. She still has the largest office and the final decision. All around her in the corporate offices and out in the plant are thirty-plus children, grandchildren, cousins, nieces and nephews… all part of the business and all pretty sure that they deserve a piece of the pie. Succession issues in that company are a dominant part of conversation at every gathering – business and family. Lines of leadership are fuzzy and people outside the business – including clients – know there is trouble inside the business. You could easily say that succession planning in that company is long overdue.

Issues that arise around succession can get out of hand even when they are addressed early on, but much more so when they are left to sort themselves out for too long. Every family-owned business is different and succession planning is not a perfect science. There are many different dynamics and complexities to consider and there are no guarantees for making everyone happy. But successful succession planning is not an impossible task, and it doesn’t have to split families apart. There are advisors and counselors who can make sense of mayhem and guide companies through the process, no matter how large the family or how long they have waited to get started. But waiting too long to get started can most definitely exacerbate problems.

So when is the best time in the life of a company to begin the succession planning process? A good argument could be made for beginning on the day the company is incorporated. But that is rarely done, of course. In the early days of a business, owners pay most attention to growing the company and give little thought to succession. It’s just not on their radar screen. Typically, the first thoughts about succession occur when children reach their teens and consider or begin working at the company – or when the owner gives serious consideration to retirement.

Knowing exactly when to begin the succession planning process is perhaps a matter of instinctive timing, something that entrepreneurs are good at in other areas of the business. Timing is what usually makes an entrepreneur successful in the first place… knowing when to enter the market, when to build capacity, when to borrow, etc. Knowing when to seriously pursue development of a succession strategy is something entrepreneurs will intuitively know and feel at some point in the company’s growth.

A good case in point is a very successful cold storage and shipping company in Jacksonville, Florida. Paul and Julie Robbins are a husband-wife team who founded Caribbean Cold Storage in 1993. Both worked in different capacities in the shipping industry before they discovered a niche and began providing a full range of refrigerated shipping and materials handling services. Paul capitalized the business by selling his Harley-Davidson motorcycle for $10,000 and borrowing another $7,000 on a credit card. It was a risk, but the Robbins saw an opportunity and followed their instincts to quick success. Within eight years they were honored twice as Inc. Magazine’s No. 1 fastest-growing inner-city business.

During their first few years of meteoric growth, Paul and Julie were focused on the business without giving a lot of thought to succession. Julie’s sister and brother-in-law have been in the business for years but it wasn’t until Paul’s son by a previous marriage and Julie’s niece entered the business that Paul and Julie “felt a need” to pursue development of a succession strategy. The couple also has a son, Zachary, who is only eight but already considered a part of the long-term plan.

“Ultimately, we would like to set the stage for Zachary to come into the business,” Paul says. “But the younger ones are already coming up. Kelly (niece) and John (son) are both active and want to stay in the business. That’s what got us started thinking about succession. I’m very happy with where the business is today, but we have to plan our next stage of growth and succession planning is a big part of that.”

Both Paul and Julie have passions outside the business. They love to travel and play golf, and they enjoy being together because they are also best friends.

“It won’t be hard to let go at all,” Paul says without hesitation. “The first emotional curve you go through as an entrepreneur is that it is my baby, but you have to realize that you started the business so that eventually it would create wealth, a balanced life, and financial freedom. We have created a culture here but we have also created value. The company is operating at a level that I’m comfortable with. I see bigger and better things for it but I’m not the guy to take it to the next level.”

In other words, Paul Robbins feels the timing is right to begin sewing up a succession strategy. Like his other business instincts, this one seems to have all the ingredients for success. Without realizing it, he is meeting all the criteria that succession planners and counselors recommend. He did not wait until the last moment to develop a plan. He did not assume that the children will take over the business and has made certain they want to be there. He has not been secretive about the company’s future plans. He understands that succession planning is complicated and that the succession process is more important than the succession plan. He has brought in outside expertise to guide the family and the business through the process. And, he and Julie are giving a lot of thought to their retirement years.

It’s never too early to begin succession planning, but in most cases, an owner will know intuitively that it is time to kick it into high gear. It just feels like the right time to get started on that next stage of the company’s life and plan for the passing of the baton. In Paul Robbins’ case, he looks forward to stepping back from the primary operational role in the company and taking a more visionary role. That doesn’t mean he loses his entrepreneurial spirit; in fact, it has already opened the door for new ventures.

“I’m already involved in a start-up technology for our industry that will be as revolutionary as Microsoft was in computers,” Paul says. The technology, actually a gel material installed in the ceilings of refrigerated containers, enables shippers to maintain the temperature of cold or frozen cargo for five or six days without mechanical refrigeration. “We’re in the process of funding it and taking if from a virtual to an operating company. We received the patent on July 6 and we have a 5-year plan that is being circulated to investors.”

So who needs succession planning, and when should you get started? The answer, of course, is that every family business can use it and the sooner the better. Companies that wait until a catastrophic event (death of an owner, for example) forces change in leadership will find themselves operating in a disruptive environment, and that’s never good for business.

In the final analysis, like a lot of other decisions in family owned businesses, starting a succession planning process will probably be an intuitive, gut-level decision. And in most cases, that’s the way it should be.

I thank Don for his words and his cases that he brings to us in this post. This and other valuable information can be found on his web site http://www.family-business-experts.com.

Please check it out to learn more.

During this month of Business Planning in December, we will take a look again of how to use a customer referral program and how to analysis its progress or failure. I know this will be a long post, but please bear with me.

First of course is to all ready have a referral program in place. Next if you have been using more than one type of reward or style of gaining a referral these must be segmented out.

Next you must count the number and type of responses you got from these referrals and how much you monetarily gained from each type.

Once you have this data you will be able to make predictions for the coming year and institute changes that could improve your results.

Let us take the following results as an example to be able to follow how a referral evaluation might be done.

Say company ABC PowerWash serviced 250 customers during the past year.

Of those 250, 200 where residential and 50 commercial. And of the residential 75% where repeat customers from some time in the last three years 45% in the last 12 months.

And with the 50 commercial customers half are contract customers that you see on a monthly or at least on a quarterly basis with the rest being new or only the occasional once or twice a year customer.

Of the 200 residential customers only 20 (10%) participated in any kind of referral program the entire year: an average of 5 per quarter.

10 handed out your cards and got you 16 new customers from them, with you giving your old customers a $25 credit card gift card as a thank you. Total spent in gift cards $400. Say these 16 jobs brought you an average of $800 per job with a 20% profit that would have been $2,560.00. Thus it cost you 6.4% of your profit to get this work, 2560/400= 6.4. Or 2560-400=2160/16=$135 profit per job.

Now in the next few months (90 days) if you tested out a new incentive offering half of your customers a $50 card instead of the $25. If in this case you saw an increase in the number of booked referrals from the higher card offer you would be able to see if the amount of increased business was worth the expense.

For example you offer the next 20 customers (10 of each offer amount): 2 customers got you jobs at the old $25 rate but 5 customers (1/2 of those offered) got you jobs at the higher $50 per rate. Leaving the average job cost and profit the same let us look at the numbers.

2 x $800 = $1,600 x .20 = $320-$50= left you $270/2 or $135 per job for your profit.  The same 6.4% cost of return that you had this past year with this same offer. Now let us look at the referrals offered at the higher card amount.

5 x $800 = $4,000 x .20 = $800 / $250 card cost = or 3.2%. You might think that was better but look at the total profit per job, 800-250=550/5=$110 profit per job after paying out the cards. But did you lose in the long run? If you go with the set amount that only 2 out of every 10 customers will take the $25 card and give you a referral, that means you will miss the other 3 at the $110 profit for each.

You need to figure out if those potential three new customers a quarter that will cost you the extra $25 per job in profit at the initial job is worth it to you. Could be if you have lots of open time and you need that $330 cash flow for your family. Plus if they become a returning customer or better yet become a free word of mouth referer. So you increased the number of old customers that participated from 20% to 50% but did slightly reduced your profit per job from the year before for these initial jobs with the higher offer.

Now let us look at the other 10 residential referrals from last year that you had. 6 had given you names of a friend or family member that booked a job because you offered them a free service on their next years business (they had turned down the $25 card offer prior to your $100 offer), that was to say, you offered them what you would have normally charged a customer $100 for (but costs you $40 to provide) to be free at their next visit. 

Again let us use the same average price and profit for these jobs. So 6 jobs x $800 =  $4,800 x .20 = $960 / $240 (the actual cost to you) = 25% of the cost came out of your profit. This looks like a much larger cut out of your profit, but look at the profit per job, 960-240=720/6= $120 profit per job. It is actually better than the $50 gift card, since the out of pocket expense is $10 different, $40 vs. $50. While you might think giving away free services wouldn't be smart you can see it could be better on the bottom line by bringing you more work. But since they had already turned down your $25 card offer for the free service is this offer of free service something you want to keep? No real way to tell.

So as stated earlier for the next three months you offer half your customers the $25 card and the other half $50 gift card and don't make the $100 free service available at all and you still got the 5 new customers. Since you have no idea how many of these 5 (or more) you would have gotten if you had kept the $100 value offer you will just have to use the ROI of $110 per job as the result. Your next 3 month test may have to be the $50 card vs. the $100 free service offer.

Now to the last 4 referrals from the previous year. These where from customers that you had not given any incentive too (maybe you had already given them a great deal, or the job was very small and you did not want to invest any more of your profit into them) but because of your work they had referred new customers to you any way, six in fact. So the cost of a referral program was nothing, and profited you $960, but these customers consisted of less than 2% of your total client base, which is the national average of unsolicited word of mouth referrals.

Now to the commercial jobs. Of the 50 as stated above 25 are contract customers that get special pricing and you gained only two new customers as direct word of mouth referrals from them. Both were non incentive referrals since there was no incentive referral program in place for the commercial customers. So the profit you gained from these new customers was say $3,000 total for the year. Of the other 25, 12 where occasional customers which brought you no referrals and next 11 where new ones you had spent time finding, visiting and getting yourself at a cost of over 50 man hours during the year. The final two were the new referrals your contract customers brought you equaling your 50 total commercial customers for the year.

So let us say you are thinking about expanding your referral program in to your commercial side to see what could be the benefit. You also choose to try the $50 gift card as your incentive. In the next three months this was your result: of 12 customers offered, you got 2 new referrals, one being a new contract customer and the other will probably only be an occasional once or twice a year job. Already you have gained the same number of new referrals that you got in total the previous year. If the one contract customer will give you a profit of $200 per month and the occasional job bring you and estimated $550 of profit for the year you gained 12 x 200 =  $2,400 + $550 = $2,950 / $100 (gift cards) 2.9%, or 2950-100=2850/13 (jobs)= $219.23 average profit per job. And since the previous year you only got the two new contract customers by the free word of mouth method you can look at the $3,000 they brought vs. the estimated if the trend holds of 2 new customers a quarter to bring in around $6,600 over they year. 12 + 9 + 6 + 3= estimate of 30 jobs x $220 average profit = $6,600 estimate. This could be over twice the amount you received with no referral plan in place. It could be more or less depending on when they come on board and if they are monthly or only an occasional customer. And if you can handle the increase in your work load.

I hope these examples has you looking over your referral plan and running tests to see what profit increases and improved cash flow you can make this next year in your business. Happy New Year.

Do a Competitor Comparison Chart to see where your business stands in your market.

First list who your competitors are by name and address. Do they compete with you in just one area, for just one service or type of customer? Do you only have competition with one other business for one service by five for another? You might want to switch your service emphasis more to the one with less competition for a possible larger profit?

Not all of you competitors may be easily recognizable. They may not be listed in the yellow pages, have a physical office, or even have applied for a business license that you can reference.

Look in your own mail for coupons for those advertising to do your services, keep your eyes open for signs, vehicles, other print advertisements. Check on line by doing a search by service name and location name. For example: "Roof Cleaning" + "Snellville, GA". I just did and got over 4,000 results, basic "pressure washing" was even higher, 6,780. But more specific services like "exterior house washing" + "Snellville, GA", got only 49 results. So who's name keeps coming up? Those are your competitors.

Just because some may be small does not mean that they are not a threat to you. Nor does the fact that your area might have some big players mean that there is not enough business for you all. What you need to find out is what each player is doing so that you can do it better and gain a larger and hopefully a more profitable share of what is out there.

Here is an example analysis grid. Make changes to headings and cell sizes as needed. For example: Many may not need a selection row. Fill out the me section to compare. You may also have to break down some cells in to sub cells, like "Service" in to multiple services. You might also first fill in what the competitors have to be better able to fill in ours to match "apples to apples". Do not be afraid if you find that you have something no one else does. That may not be bad at all but in fact a great marketing and value point for new customers.

Table 1: Competitive Analysis 

After you finish filing it out you will have a better understanding of who your competition is, what a customer may see in them and how to improve your postion to these customers to gain their business.