customers

Business Lessons from a Paperboy

I was a paperboy when I was a kid and I also mowed some of my neighbors’ lawns. These are two activities that have become extinct in modern times. I was fortunate to learn some good business lessons from these entrepreneurial endeavors.

The value of money : If I worked not only hard, but did a good job then I made more money. I learned the value of money, how to save up for larger purchases, spending money wisely, and also saving for the future. Unfortunately, kids and adults nowadays tend to ignore these basic financial principals and choose impulsive, debt-incurring decisions.

Customers are interesting: Each customer is unique and interesting. Some more than others, but if you take the time to learn about your customers then you will find out about their lives, families, interests, personalities, and unique characteristics. Positive interactions create a wonderful experience and help to make your job or business responsibilities easier to handle, especially on a rainy day.

Responsibility: Take responsibility for your actions. There are many things that are out of your control, but many things that are. Be accountable to yourself and others even when it is the hard thing to do.

Sometimes bad stuff just happens: The owners of the newspaper I delivered newspaper for decided to replace us all with adults. I believe we had some notice of the transition, but we had no control. It was just like a corporate layoff or having your largest customer go bankrupt.

I could probably list another dozen or two lessons from my experience as a paperboy, which have stayed with me through all these years.

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How to Resolve Conflicts with Less Stress

Conflicts are inevitable and happen in all aspects of your life, including disputes with your customers, disputes as a customer, with family, neighbors, and in any situation. However, there are ways of minimizing conflicts and to also resolve them fairly and quickly. Here’s how:

Resolve at the lowest level: A perfect example is when a customer at the grocery store is not satisfied for some reason and they immediately ask to speak to the store manager. Quite often, the easiest way to have resolved the issue would be to let the cashier know the issue first, then customer service if still not resolved, then finally with the store manager.

Don’t make threats or take drastic action: As soon as you say that you are going to contact your attorney, then you just escalated your issue to a whole level higher, and the relationship will most likely be damaged forever. Ironically, I think that this threat has been overused anyway and nobody really cares all that much. Another example is to demand a raise from your employer and if not given one, then threaten that you will leave. Why not either ask for a raise, if you deserve it, or ask your boss what you can do differently to receive a raise?

Avoiding conflicts: Avoiding conflicts does not mean trying to make everyone happy because that is not possible, and you will make yourself unhappy and exhausted in the process. Do not avoid conflicts just to avoid conflicts or just to be nice as sometimes the truth hurts, although you should make sure that you say it in a charitable way. A good practice is to always strive to determine how to conflict proof your decisions.  For example, if you know that you are going to make a change to your business practices, then let people know ahead of time, when possible. This can involve alerting customers to price increases, billing methods, payment methods, and timing of providing a service. The key is to communicate with people in a smart, proactive, truthful, and thoughtful way.

Put it in perspective: Is the conflict really that important or even worth pursuing? Weigh the pros, cons, and the actual cost of entering a battle.

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The Overlooked Business Asset

What is the most important asset of a business? Here are a few choices:

  1. Customers
  2. Employees
  3. Technology

They are all important, but there is one missing element. Relationships. Strong relationships are what make a business successful. It’s not a new concept and it’s been around since business started. Let’s look at each one:

Employees: Most employees do not just want a job, but a place that they enjoy working at. Strong relationships start with appreciation and gratitude for your employees and a team-based approach. When you have great relationships with your employees then productivity increases, loyalty forms, and customer service is improved.

Customers: Every business should strive for strong, lifetime relationships with their customers. However, this means that you should do business with people that you enjoy doing business with. As a byproduct, strong relationships foster win-win results, including an increase of business activity, loyalty, and referrals from friends and family.

Technology: Technology can help to foster relationships by keeping you more connected with your employees and customers and making their experience more enjoyable.

Based upon anecdotal evidence and especially the thoughts of business gurus, the concept of relationships seems to be very true. Also, what greatly impacts a business and is overlooked even more is the condition of our personal relationships. Look around and see for yourself.

One caveat. Do not form vain relationships with people just because of what they can do for you or from a view of utility, but rather as an act of charity.

What I Learned as a Paperboy

When I was 11 years old up until age 13 I was a paperboy. As far as I know they don’t exist anymore in North Jersey, and I was one of the last paperboys to deliver The Record until they replaced us all with adults. It wasn’t until I owned my own CPA firm that I realized how many business lessons and good habits I learned during that time.

Customer Relationships: I had pretty good relationships with my customers even though most of them never met me before I delivered their newspapers. Most paperboys in my area delivered newspapers on the same two small streets where they lived. Mine was three and four blocks away, which seemed liked miles when you were a kid. Whether my customers liked their newspapers under their mat, on their mat, in their door, or in the railing – I delivered it according to their preference. I remember one customer that wanted their newspaper inside their front door and once I opened the door a cloud of cigarette smoke combined with warm air would come rushing towards me. Their house was so warm that there was condensation on their storm door.

Getting Paid: Most small business owners, and especially service-based businesses and professionals know how painful it can be to ask customers for money, especially when their account is overdue. Every Friday night I would make my rounds to my customers and collect what they owed and would hopefully receive a tip. If my memory is correct, Sunday only delivery was $1 and every day customers were $2. If I received more than $.50 in tips from a customer, then that was a big deal. The best time was during Christmas when the tips were much bigger and I earned more than the $25 weekly average. For the first Christmas, my customers didn’t know me too well, but I still made about $75 in extra tips, but during the next Christmas I made about $300!

Connecting with People: I really liked my customers and each was unique. I remember one family that was kind of quiet, but realized that they had lizards as pets. Once we started to talk more (I owned an iguana), the relationship changed. It’s not all about the money, and connecting with people gives your business much more meaning.

You Can’t do it Alone: The Sunday newspaper was a really large paper back then, almost like a large encyclopedia.  Since my route was several blocks away, and I could only fit a few of the Sunday papers in my newspaper bag, which was hung on my bike, I had the help of my mom on Sunday mornings. We would load up the newspapers in the back of her old Buick station wagon and I would deliver them right from the car and walk or run to each house. I am sure that my mom’s station wagon used up more gas than what I earned for the day. I think that I was half asleep, but my mom would encourage me to “speed it up.” We all need people to help us out and to encourage us.

Being a paperboy was such a rewarding experience, and I wonder how many of my old paper route customers are still living on those same streets. I’m sure most aren’t around anymore, but I will always remember them.

Do You Have Too Many Customers?

What do you think is better, 100 customers or 200 customers? It might actually be the lower number, and I’ll explain why.

Let’s say that a small business provides landscaping and maintenance services for both businesses and for residential customers. Most of the customers are within a reasonable driving distance from the main office, and the total amount of customers they have is 200 (50 businesses and 150 residential customers). In order to serve their customers the business has 10 employees and several business vehicles.

After reviewing the amount of services provided to each customer, the owner realizes that it is either unprofitable or only slightly profitable to service a small residential customer, especially if they are more than 15 miles away.

Furthermore, the owner realizes that if an employee performs work for a business customer it tends to be much more profitable because only several are being serviced in one day for a total of eight hours of service performed. For residential customers, only four hours of service is performed after factoring in travel time, plus there are additional costs of travel. Also, the work for business customers tends to be steadier and provides overall higher revenue.

What is one possible solution? The owner may decide that it makes sense to only service business customers. By decreasing the number of customers from 200 to 100, it means that 50 more business customers were acquired, while discontinuing service to 150 residential customers. If each business customer usually receives $5,000 of services per year while each residential customer receives only $1,000, then revenues will actually increase by 25%, while actually decreasing costs.

All you have to do is substitute the type of business with your own, such as computer consulting, printing, medical practices, all types of contractors, and you will get the same results. I believe that serving too many customers even leads business owners to feel that they are busy all of the time without having anything to show for it.

How Healthy Are Your Sales?

There are many ways of measuring risk, but did you know that your sales concentration may be placing an unnecessary risk to your business? This also applies to sales professionals as well.

I have seen it over and over again, whereas a small business relies heavily on one or several large customers, and then the customer disappears. Sometimes multiple large customers disappear at the same time. Either they go out of business, cut-back due to a slowdown, have management changes, or other various changes happen that are beyond their control. This will all impact your business as your sales now plummet.

As a good rule of thumb, you don’t want to have more than 10% of your sales from one customer. It creates more risk than necessary because you never know if or when things will change. There is an adage known as Murphy’s Law that states, “Anything that can go wrong, will go wrong.” Additionally, you don’t want to rely heavily on one referral source for new business either. Murphy’s Law applies here as well.

What should you do to minimize your risk? First, never build your business around one or a few customers. This may be the case when a business is relatively new, but over time it is a huge risk. Secondly, assess sales per client to acknowledge who the large customers are. And thirdly, you need to market your business to decrease your risk of serving a few large customers.

A healthy business is constantly looking for ways to reduce risk. This not only decreases your chance of set-backs, but increases your odds of insuring ongoing success.