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How to Put Your Sales on Auto Pilot

Attracting new customers is an art and a science. The same can be said for selling more to existing clients.

While you need to do both, many small businesses ignore the low hanging fruit of the latter – growth through existing customers who have proven they are willing to pay for your product or service.

Recurring revenue is one of the most valuable ways to create more opportunities. It’s like auto pilot for sales. Here are some examples to consider.


If you sell products that wear out but are used consistently, you can create a subscription service for just about anything. Examples?

• My disposable contact lenses are replenished automatically from my vendor, charged to my credit card, and sent to my house every three months. I don’t think about it and the store gets my loyalty without worrying that maybe next time I’ll try a different provider.

• My local bookstore sends me the latest releases in paperback from a list of authors I have set up with them. I don’t need to keep track of which author is releasing what or when. I read everything they write so I get what I want in a timely fashion.


If you sell services that are repeated regularly over a particular time frame, you can book them as a type of subscription. Examples?

• My plumber needs to clean my UV water system and related filters every six months. These are booked a year in advance and charged to my credit card so I don’t need to watch the calendar and book an appointment, have cash on hand or write a cheque. When my plumber comes, he can pitch me on an upgrade or other services. I’m usually the one adding services by asking him to look at a non-critical fixture or component.

• My car dealership offers a discount to customers who pay for regular maintenance in advance. This not only insures they won’t go somewhere else for an oil change, but just as importantly, they get to look at cars regularly and sell clients on other issues that might be discovered during inspection and test drive.

• Appliances in my home deserve regular service but because the vendors are waiting for a phone call, I need to “get around to it,” and I often don’t – despite the value of having the work done. They should have me on a subscription service program.


If you sell products that aren’t necessarily consumable, there are likely ways to add reoccurring revenue to the product sale. Examples?

• My local musical instrument store offers a maintenance program at the time of purchase as well as lessons to get me started. With lessons, I go from buying an instrument in a single transaction to returning weekly for lessons – accessory sales are bound to tag along.

• My kitchen retailer offers cooking lessons and a subscription to the spice of the month with corresponding recipe ideas, as well as a coffee of the month to keep me coming back and engaged.

Reoccurring revenue opportunities do not need to be extravagant. Think outside the box about how the customer interacts and uses your product after a sale and find ways to make the transaction – and the benefit to the customer – sustainable over time. This also creates more predicable cash flow and a better relationship with clients.

Last but not least, when you choose to sell your company, a high value will be placed on recurring revenue statistics such as sales per customer and long-term retention.

How to Avoid Trademark Trouble

I watch the growing legal dispute and business interruption of the world’s largest company with an unwelcome feeling of familiarity.

Apple Inc. is in a trademark dispute over the use of “iPad” in mainland China with a struggling company called Proview Technology. I’ll leave it to you to explore this particular situation if you are interested, but here are some thoughts on how it may apply to you and your business. I’ve seen this play out before.

Many businesses trademark such things as brands, products and tag lines as a protective measure to prevent other companies from using the same name and benefitting. It is, after all, their asset and they want exclusivity. This allows them to sell their products in the countries where they want to do business.

What they often don’t realize though, is that trademark ownership can also influence their ability to source finished products from a particular country.

In order to have a product you own made in, sold in or exported from a particular country, you should have legal right to the brand.

For example, let’s say you manufacture luxury belts in Canada but also have lower-priced versions of them produced in China, allowing you to be competitive at a wide range of price points. You sell in Canada, the United States, Germany, France and Britain, but are only having products made in China, not sold there.

You still need to own your trademark in China as well. That’s because the absence of a trademark there could open the door for a Chinese company to trademark the same name, and then sell under that name in China. Just as important, once a company did that, it could prevent you from having products made in and exported from China under that name.

So, even if you don’t intend to sell in a country but do intend to have your product made there, a trademark is crucial protection against an interruption in your supply chain that will affect all of your markets.

I was given similar advice many years ago by a trusted friend who then went on to acquire a business that did not own its trademarks in China, in spite of the fact that it was manufacturing. and selling there. Another Chinese company did own the trademark, and held my friend ransom. It took years and a lot of money for my friend to acquire the trademark.

While I am using China as an example because of Apple’s situation, this issue is in no way specific to that country. I have a friend who sold his products through a distributor in Germany. When he decided to assign the distribution to another German party, my friend found that his original distributor had already acquired the trademark in Germany. Moreover, every sale that distributor made along the way had reinforced the legitimacy of the ownership.

Companies can’t “squat” a trademark as is often attempted with website addresses. In order for the trademark ownership to be renewed regularly, legitimate business transactions have to be proven with the trademark in use within a given time frame. In China, that’s three years. It is even less in most countries.

Furthermore, a trademark normally can only be assigned to product categories that a holder does business in or is closely tied to his or her business.

For example, I once “shared” a brand name with a fire-extinguisher company, which we both separately trademarked. Since my product had nothing remotely in common with fire extinguishers, we co-existed in peace. What trademarks try to protect is consumer confusion over offerings or brands that are too similar. The works of one company should not inadvertently benefit the other.

So businesses as small as the ones I have seen can run into trademark trouble in both producing and selling their wares.

If even a company like Apple can run into trademark issues in China – not to mention a similar situation n 2007, when Apple settled out of court with Cisco Systems Inc. for the right to use the “iPhone” trademark which Cisco owned at the time – it would be smart for you to give some thought to what you own, and where, and who you team with, so that your selling and sourcing can grow as you envision. Acquiring a trademark in a country is quite economical, especially when compared to the cost of a broken supply chain or inaccessible market.

Before You Enter a Business, Plan Your Exit

Exiting, or selling out, your business to a third party can be the most profitable and exciting thing you can do in business. What’s often unspoken, however, is that not every business that gets built is sellable – and winding down can be tricky for some.

If your business has lost money during startup – who hasn’t? – or during tough times or through a failed expansion, those losses have likely been financed by debt. A line of credit, where no principal payments are required, is a common strategy for providing working capital during these times. You’ve probably personally guaranteed some debt or invested personally. Maybe you are dragging your feet on some bills?

No matter how you have managed to keep things going, if your business isn’t recovering, you need to be thoughtful if you decide to close.

Ideally, the fair market value of your assets, when liquidated, will be enough to pay off all your bills and outstanding obligations to employees and the government.

Also, don’t forget lease obligations that may be on your income statement every month as an expense but is actually a long-term obligation that needs to be settled – including the rental of facilities. Not all small businesses recognize these obligations on the balance sheet, although they should.

Unfortunately, assumptions made on the resale value of inventory or equipment on your balance sheet can be aggressive. You never really know what something is worth until you sell it and, if you do so in distress – in a hurry – its full valuable may not be realized.

So what looks possible on paper doesn’t add up in reality.

Alternatively, if you sell your assets to close your business and have money left over, you will still need to file a year-end statement and pay corporate income taxes. Don’t forget payroll deductions, employee benefits and GST/HST remittances as well.

Not everyone is so lucky. Bankruptcy is unavoidable for some – about 130,000 businesses went bankrupt in Canada in 2011, 8.2 per cent fewer than in the previous year.

These are cases when the money owed cannot be covered by asset sales and debtors will be left unpaid. Hopefully, conscientious operators have reduced this exposure as much as possible, and shielded employees and their families to the extent that they can.

Even bankruptcy won’t shield you from all obligations such as, in some provinces, workplace health and safety insurance premiums and other taxes payable.

Your financial statements don’t tell everything about your business but they also do not lie when it comes to the metrics you need to watch as your business delivers its goods or services. Make sure you are keeping a sober eye on the reality of your balance sheet and cash flow. Don’t let your passion for the business cloud your objectivity on its ability to survive.

I’ve done my own bookkeeping since my first business, and have found tremendous value in reviewing month-end results, even in micro-businesses, so I can take corrective action as soon as I see trouble. If this doesn’t interest you, find a part-time bookkeeper to keep your books up to date.

Planning on getting out of a business is as important as the plan to get in. The ideal time to create this strategy is before you open the doors. You owe it to yourself to understand the implications and procedures with which you may exit the business. Selling to a third party at a huge multiple is the goal – but your planning needs to consider alternative outcomes.

Often, entrepreneurs are too far behind before they realize they are in trouble. By then, their options may be limited.

So be pro-active about your exit:

-- Build a plan for both startupand exit.

-- Keep score using monthly financial statements.

-- Be objective and react accordingly to ensure to get the happy ending we all strive for when we take on these endeavours.

Monthly Payment Plan Offerings from Small Business

Making it as easy as possible for your customers to say yes is important for any business structure – including diversifying the number of ways a customer can pay for purchases.

Whether you are in retail, wholesale or services, you probably already offer a broad spectrum of payment options – cash, cheque, credit card or debit.

But even though it’s common among larger companies, one option that many small businesses still overlook is offering a monthly payment plan for larger purchases. It is amazing the flexibility that you can offer a customer when a monthly payment option is listed along with full price.

Whether it is for my insurance, vehicle, mortgage or renovations, monthly payments allow me to acquire wants and needs conveniently in line with my incoming cash flow. Your business can build business by doing the same.

Instead of handling it in-house, it’s often better to form an alliance with a third-party financing company that can offer even more flexibility than you can.

A financing company may have much more robust programs, including six- and 12-month, no-interest, no-payment plans and longer terms. I’ve done that in the past in my businesses; with these “special offers,” I would sometimes be required to pay a commission on the sale, but that was worked out in advance so I could factor that into my selling and monthly payment price.

It was a popular option for many of my customers, and helped my business significantly increase the sell-through on higher-priced products. The win-win came from the fact that customers got something they could afford to pay for, just not all at once. I sold more and got paid in four days.

One of the downsides of these deals is the paperwork. If you hand the loan application to customers and ask them to fill it out, you can see their faces drop. It’s a pain.

Since the entire purchasing experience should be a pleasant one for the client, I suggest you do the following:

1. Contact your account manager at the finance company you are dealing with, and ask for some tips on what parts of the form are critical to be filled out (these forms often request information that is never actually used).

2. Ask the finance company for the minimum criteria for approval at certain price points. It is much better for you to pre-qualify a customer before you get to the form so that expectations for approval are realistic. You want avoid the negative experience of a customer being turned down. When in doubt, suggest a customer arrange a co-signer.

3. Fill out the form for your customers by asking them questions from the application. This is much more comfortable for them and insures that the form is completed neatly, in full and properly on the first go round.

4. Make sure you get a quick turnaround on the approval so you don’t miss the momentum of the selling process. Many companies and can approve instantly or within an hour.

No matter what kind of business you are in, consider expanding financing options for your customers on large purchases. Using a third party to do so will keep you focused on your core business while giving your customers more options.

How to Boost Trade Show Success

Expensive. That's the first thing that comes to my mind when I think about trade shows.

That doesn't mean, however, that they can't deliver a wonderful return on investment. The key to success is how hard you are willing to work before you leave home.

It has amazed me over the years how willing many businesses are to spend big bucks travelling to and from and exhibiting at trade shows, with little other than a hope of traffic, orders and success. Sure you book some appointments, but do you pull out all the stops?

Running My First Business Felt Just Like Raising a Child

I gave birth to my first business when I was 19. Other entrepreneurs tried to warn me: The sleepless nights. The constant feeding and care. The total dependency. The lack of downtime. The effect on social activities. The constant worrying.

I thought I would feel a sense of ownership – like what I had belonged to me.

Instead, I felt an unconditional commitment – a sense that I was working on something that would be much bigger and better than me. My business was its own living and breathing thing, closely related to me, but not mine.

If my business needed me to sacrifice, I did. If it had me up at all hours, I got no sleep.

Soon, it was walking and talking and exploring new directions. It was asking questions, going through growth spurts and, sometimes, acting downright silly.

I must admit, it embarrassed me a few times in public.

It would surprise me in good ways and bad. It kept growing.

Before I knew it, it was off learning and achieving things that didn’t require as much of me.

Other people started to help look after it, give it what it needed and get it through tough times. They taught it things I didn’t know.

These people treated the business as if it were their own. They let me sleep in every now and then. The extra care and attention worked like a lever to let it expand and be all that it could be.

Before I knew it, it had graduated and merged with its soulmate. Everyone shared in the benefit and the celebration. It was starting a new life on its own.

Looking back, I really didn’t know the amazing effect my first business would have on my life and those of others, but I’m a proud papa. There is really no way to describe it if you haven’t done it. If you have, there is no feeling like it.

Unlike a real child, you must rationalize its likelihood of success and be willing to adjust accordingly.

But like a real child, it taught me many things I never realized I needed to learn. And it made me want another.

The parallels have frequently occurred to me along the way and have been echoed by others who have travelled down a similar path.

If you’ve ever wondered what running a business is like, maybe this is something that might help explain why entrepreneurs feel such passion for and commitment to their endeavours.

Divide the Lines Between Family and Business

Having run seven businesses over 20 years, I swore I would not let family members get involved in or inherit any of my enterprises. So far, I have held true to that commitment – but then again, it's still illegal to hire eight-year-olds or those younger, so I haven't so far received much pressure from the kids.

It seems to me that most businesses are way more complicated than they seem to be on the outside. The same holds true for families. Mixing the two must be harder than keeping them separate. Most entrepreneurs struggle not to take work home with them. It must be tough when you are taking employees home with you.

With that said, I have worked with, for and around lots of family businesses that seem to survive and thrive.

So, with the caveat that I am an outsider looking in, here are my thoughts.

If you are in a family business, you need to pretend that you are not.

The brother you hired is an employee at work and a sibling at birthday parties. Sure, you'll talk shop outside work like you would with any co-worker, but don't share privileged information, especially about other employees.

A wife with shares is a shareholder at work. An uncle who has invested is an investor or lender at work.

If other employees get a whiff that a paternal relationship translates into special privileges, you will not only lose their respect, but will introduce a morale disease that will be hard to cure.

Poor performance by relatives is grounds for dismissal under the same conditions as for any staff member. Family members need to apply for and be interviewed for a job and have their performance reviewed in the same manner as all of their co-workers.

Family members need to know and be treated as if they are earning their keep, not enjoying some birthright. They should be paid a fair market wage and benefits and not treat the business like a piggybank with inappropriate expenses.

I have seen this overcompensated for at some companies. That's not helpful either. Discrimination is discrimination, in both directions.

I'm a big fan of periodically letting outsiders into my business to see what I am missing. You may want to hire a human resources consultant for a quick audit and interview with employees in and out of the family to get the inside scoop. There are firms that specialize in family business-strategy development.

When it is time to sell some or all of your company, family members should compete for that opportunity along with outside entities who will help to determine a fair market valuation. Shares should be bought, not gifted. Loans associated should be well-secured with default criteria and countermeasures – outside financing is preferred.

Establish your long-term intentions with family members well in advance, so there are no surprises or disappointments.

While kids or other family members needn't be shut out of your business altogether, having them function as individual entities is critical. Remember, not all family members will want to be or will be successfully involved in the business, and you don't want your family damaged any more than your business.

I'd much rather have a business go bust than my family. Keep it clean and objective. As much as possible, keep it separate.

Why, and How You Should be Collecting Customer Data

A customer database and purchase history is a must-have for every small business. If you don't have one, you need to get started right away because you have put off building an enormous asset for long enough.

It's well-known that it is a lot more effective to sell to the customers you already have than to find new ones. But if you don't know who they are, how to reach them or what they have already bought and like, you will just have to wait. – and hope. And that’s no way to grow a business.

When I started a service business in 1993, I used handwritten repair tags and receipts. It was low-tech, for sure, but, I kept that data and entered it into a cheap version of Simply Accounting at night.

Soon we progressed to a low-cost and basic point-of sale-system on my Tandy computer with monochrome monitor and kept collecting and entering the data. The business later expanded into retail which outgrew the service business, but we were already in the habit of collecting addresses and phone numbers, so we kept going. We added a new data field called e-mail, and kept going.

Before we knew it, we had an opt-in database of thousands of customers, and a history of what they had bought and when.

Do you?

My plumber needs to visit me twice a year to service our water-treatment system, but because he doesn't collect customer data, it is up to me to remind and book him. If he did, I could be on a long-term service contract, with calls booked months in advance. The next time we talked, all he’d need to do is up-sell me on some extras. My regular business would already be in the can.

I like shopping close to home and my favourite two indie retailers use a cash register. They don’t have a database. So they don't have any way to tell me about the latest offering relating to my last purchase or about an upcoming sale. Instead, they have to hope I drop in on my own or see an expensive ad.

Imagine the customer-service benefits when you can reprint a receipt on behalf of customers who have misplaced theirs and needs one for warranty purposes.

You don't need to be Amazon to know what your customers bought and what to recommend. You just have to start small and simple and keep it going.

Not only will leveraging customer info support sales every day of the year, but your customer database will be a valuable asset when you sell your business.

Maybe it's time to trade in your cash register for a laptop and cash drawer. I bet the majority of your customers will want to be in the loop on interesting developments in your business, as long as you communicate effectively and responsibly.

Whip Your Business Into Shape with LEAN

If your business hasn’t been exposed to LEAN Principles and best practices, then you’re paying for waste you don’t need. It's likely the most expensive kind too – time, space and inventory – but if you think that can’t be redeployed, think again.

The practice of transforming a business into a LEAN enterprise is not a new one. Henry Ford started it, Toyota perfected and globalized it and now it is a must-have competitive practice for many companies.

Feeling Flush: What To Do With Excess Cash

Small businesses may consider themselves lucky if they find themselves in a position of having excess cash.

But how they manage it can have serious consequences, even if they do nothing.

Before doing anything, however, you need to have an accurate understanding of whether you really do have extra cash to play with.


April 2014

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