Not selling anything--just free daily tips, information and advice to help you run your small business, all from personal experience starting-up, operating and expanding businesses over a lifetime.
Your business can benefit from doing a little test. Have a friend call your business and report back to you. Or have them make an appointment, or come into your shop and see how they're treated by your employee.
Businesses big and small use mystery shoppers to check up on the operation. How was the phone answered? Was the employee knowledgeable? Was the experience helpful to the caller/customer/client?
By doing this little check-up, you can improve your relationship with customers and the general public. The feedback can be eye-opening.
I am not suggesting that you go out and hire a professional mystery shopper. A trusted acquaintance can get results that will be useful to your business.
Example: Marisa runs a hair salon. She decided to check up on her receptionist--how the employee made appointments, suggested salon services and products, and generally handled customer concerns and questions. Marisa asked three friends to call. Two reported back that the receptionist promptly answered the phone, cheerfully took their information, fielded many questions and was knowledgeable about services. The third friend reported that the receptionist curtly said that she was very busy and couldn't take the time to go into detail on products for sale. With these mixed reports, Marisa looked at the receptionist's work schedule and knowledge of products sold off the shelf. She made one change--pass all calls about products to Marisa herself who was familiar with product details. This helped the operation run more smoothly and contributed to the bottom line.
A professional mystery shopping business can charge big bucks for their services. But small businesses can get good results using friends and acquaintances to do an informal job.
Example: Joe owns and manages a small restaurant, open for breakfast, lunch and dinner. He is on site for dinner, but not for breakfast and lunch. He made arrangements for several friends to report back to him after having breakfast or lunch. Everyone who reported back on lunch gave good results, but just about everyone who ate breakfast had nothing good to say about their food experience--the omelet was runny, the sausages were cold, and the bacon was burned. Joe replaced the morning cook. When he checked again, everything had improved.
Sometimes, a little mystery shopping can ferret out an under performing employee. Other times, it can confirm that you have a smoothly running operation.
Example: Eugene is a busy chiropractor. He has an older lady who handles the reception desk and other duties. He asked several friends to call and report back to him their experience. They were instructed to ask about shoulder/leg/back pains and how these might be addressed by chiropractic, together with questions about charges, evening appointments, and more. All reported back positive results. Eugene took his receptionist out to dinner and gave her a raise.
Checking up on your operation can help you run a better business. When problems are uncovered, solve them immediately. Later, check again.
You can "mystery shop" your operation easily and inexpensively. I've hired mystery shoppers in the past, and I've done mystery shopping myself--what you look for is an honest opinion from a disinterested shopper or caller. Their report can improve your operation in ways you might not be seeing yourself.
Monday, August 25, 2014
Friday, August 22, 2014
Your reputation
Free daily tips, information and advice for small business
from personal experience in business--been there, done that.
Your reputation is everything in business. It spreads, good or bad.
As they say, bad news travels all the way around the world while good news is just waking up. You don't want bad news.
You build your reputation every day.
Example: Steve runs a small rental business. He rents carpet cleaners, power washers, concrete mixers, even lawn mowers, power tools and other things needed by homeowners and contractors. When a homeowner called saying she couldn't get the carpet cleaner to work, Steve jumped in his truck and went to the home to solve the problem. He took along a replacement machine--just in case. When a landscaper brought back a lawnmower saying that the blade was not sharp, Steve replaced the blade with a new one and wiped out the rental charge.
You can handle problems in different ways. Each customer complaint, however, should be handled quickly. Doing so protects your reputation by building customer confidence in you. This goes a long way toward assuring a good future relationship.
Example: Elena runs a small health food store. She sells organic vegetables, packaged foods, sandwiches and wraps to go, vitamins and supplements, and more. When a customer returned a bunch of carrots saying they were woody, Elena refunded the cost and gave the customer a gift certificate in a small amount to be used on anything in the store. The customer used it right away, spending many times the value of the gift certificate.
By going the extra mile, Elena helped the customer through a disappointing experience. The reputation of the store was protected.
Example: Betsy operated a one woman public relations firm. She was a whirlwind of activity with clients. One called to complain that the news release Betsy had provided didn't get picked up by the local press. Betsy went into action. She called several contacts, got the news release published and turned the situation around--building customer confidence and preparing the way for future business.
Carefully guard your reputation. Use every complaint as an opportunity. Show your customer that you care about their problems, that they can depend on you, and that you always follow through.
Your customers expect you to stand behind your goods and services. But no matter how alert you might be, mistakes happen and difficult situations arise. These are opportunities to show your stuff, gaining the confidence of your customer and assuring a continuing relationship--including referrals.
from personal experience in business--been there, done that.
Your reputation is everything in business. It spreads, good or bad.
As they say, bad news travels all the way around the world while good news is just waking up. You don't want bad news.
You build your reputation every day.
Example: Steve runs a small rental business. He rents carpet cleaners, power washers, concrete mixers, even lawn mowers, power tools and other things needed by homeowners and contractors. When a homeowner called saying she couldn't get the carpet cleaner to work, Steve jumped in his truck and went to the home to solve the problem. He took along a replacement machine--just in case. When a landscaper brought back a lawnmower saying that the blade was not sharp, Steve replaced the blade with a new one and wiped out the rental charge.
You can handle problems in different ways. Each customer complaint, however, should be handled quickly. Doing so protects your reputation by building customer confidence in you. This goes a long way toward assuring a good future relationship.
Example: Elena runs a small health food store. She sells organic vegetables, packaged foods, sandwiches and wraps to go, vitamins and supplements, and more. When a customer returned a bunch of carrots saying they were woody, Elena refunded the cost and gave the customer a gift certificate in a small amount to be used on anything in the store. The customer used it right away, spending many times the value of the gift certificate.
By going the extra mile, Elena helped the customer through a disappointing experience. The reputation of the store was protected.
Example: Betsy operated a one woman public relations firm. She was a whirlwind of activity with clients. One called to complain that the news release Betsy had provided didn't get picked up by the local press. Betsy went into action. She called several contacts, got the news release published and turned the situation around--building customer confidence and preparing the way for future business.
Carefully guard your reputation. Use every complaint as an opportunity. Show your customer that you care about their problems, that they can depend on you, and that you always follow through.
Your customers expect you to stand behind your goods and services. But no matter how alert you might be, mistakes happen and difficult situations arise. These are opportunities to show your stuff, gaining the confidence of your customer and assuring a continuing relationship--including referrals.
Thursday, August 21, 2014
Partners in business
Free daily tips, information and advice for small business
from personal experience--been there, done that.
You will find this useful if you are considering taking on a partner in your business. Two people joining together to form a business is sort of like a marriage.
Partners must be compatible with each other, appreciate each other's company, and complement each other.
Example: Clayton ran a small carpentry business. He had many years experience building fine cabinetry in residences, offices and clinics. Business was good, but Clayton wanted to expand. He, his employees and his shop could handle more jobs, but he knew he lacked the "outside" skills--meeting new people, attending events, selling his services. He found a potential partner in Bill. They enjoyed their conversations and respected each other's mind set. Bill had a successful career behind him selling window treatments to residential clients, decorators, and office managers. Clayton and Bill formed a partnership based on all the new business Bill could bring to the cabinet shop over the course of a year. If targets were met, Clayton and Bill would own equal parts of the ongoing business.
Look for partners who bring talents that complement your own. If you're good at production but not so good at selling, do as Clayton did. A careful phasing-in period can be important to iron out the details.
Setting up a partnership in an existing business is one thing. Setting up a partnership as a brand new operation is another.
Example: Gary had run several successful businesses. Looking around, he saw a new opportunity in real estate--small apartment buildings. Money was not his problem, but Gary realized he would need a detail oriented partner. He began a search--asking business friends, interviewing several possible candidates, and, finally, homing in on a young man named Jose. Jose was bright, energetic, ambitious, a "self starter" and had held several different jobs in the construction trades while in high school. Best of all, Gary and Jose had compatible personalities. Gary proposed an equal partnership, starting out with a small apartment house. Gary would handle the business end (banks, lawyers, taxes, etc.) while Jose would handle maintenance, customer complaints, and search out additional properties they might acquire. The partnership was successful. Gary and Jose worked together, relying on each other's experience and talents.
Care must be exercised in setting up a partnership. Two partners who do the same things get in each other's way. Two partners who complement each other have a good chance at success.
All my examples are taken from personal experience--only the names are changed. For more than 30 years, I ran my own businesses, and for ten years I headed the Business Owners Institute in New Jersey--all the while writing about small business. I have learned the hard lessons of small business--what works and what does not work. And that is why I write this daily blog.
from personal experience--been there, done that.
You will find this useful if you are considering taking on a partner in your business. Two people joining together to form a business is sort of like a marriage.
Partners must be compatible with each other, appreciate each other's company, and complement each other.
Example: Clayton ran a small carpentry business. He had many years experience building fine cabinetry in residences, offices and clinics. Business was good, but Clayton wanted to expand. He, his employees and his shop could handle more jobs, but he knew he lacked the "outside" skills--meeting new people, attending events, selling his services. He found a potential partner in Bill. They enjoyed their conversations and respected each other's mind set. Bill had a successful career behind him selling window treatments to residential clients, decorators, and office managers. Clayton and Bill formed a partnership based on all the new business Bill could bring to the cabinet shop over the course of a year. If targets were met, Clayton and Bill would own equal parts of the ongoing business.
Look for partners who bring talents that complement your own. If you're good at production but not so good at selling, do as Clayton did. A careful phasing-in period can be important to iron out the details.
Setting up a partnership in an existing business is one thing. Setting up a partnership as a brand new operation is another.
Example: Gary had run several successful businesses. Looking around, he saw a new opportunity in real estate--small apartment buildings. Money was not his problem, but Gary realized he would need a detail oriented partner. He began a search--asking business friends, interviewing several possible candidates, and, finally, homing in on a young man named Jose. Jose was bright, energetic, ambitious, a "self starter" and had held several different jobs in the construction trades while in high school. Best of all, Gary and Jose had compatible personalities. Gary proposed an equal partnership, starting out with a small apartment house. Gary would handle the business end (banks, lawyers, taxes, etc.) while Jose would handle maintenance, customer complaints, and search out additional properties they might acquire. The partnership was successful. Gary and Jose worked together, relying on each other's experience and talents.
Care must be exercised in setting up a partnership. Two partners who do the same things get in each other's way. Two partners who complement each other have a good chance at success.
All my examples are taken from personal experience--only the names are changed. For more than 30 years, I ran my own businesses, and for ten years I headed the Business Owners Institute in New Jersey--all the while writing about small business. I have learned the hard lessons of small business--what works and what does not work. And that is why I write this daily blog.
Wednesday, August 20, 2014
Catalogs today
Free daily tips, information and advice for small business
from personal experience starting-up, solving problems, and growing several businesses.
Catalogs have a long and colorful history. For more than a hundred years, catalogs have brought the world to the doors of Americans.
Well, the world has moved on. Catalogs today still put products in front of prospective customers. Catalogs are on the Internet and in your mailbox.
Example: Ralph runs a furniture store. It's been in his family for many years and enjoys a good reputation in the area it serves. Ralph saw a market for American made furniture that he wanted to tackle. He contacted several small furniture makers--from single operator furniture designers to Amish family operations. Gradually, Ralph homed in on selections. He posted his catalog on his website and he mailed his new catalog to a growing list of prospects. It worked. Not only did his current customers come to the store more often, new customers signed on as well. And they referred others.
Some people are attracted to one-of-a-kind products and designer limited edition pieces. Businesses can successfully expand into these markets.
Example: Gweneth owns and operates a garden center. For years she expanded into greenhouses, growing many kinds of annuals and perennials, herbs and vegetables. She served both the wholesale and retail markets. Competition grew increasingly stiff, and pricing became very tight. She decided on a major change. Today, she grows daylilies and hostas in the fields, and the greenhouses are filled with orchids and unusual green plants. Her catalogs are mainly on the website, but a few are printed and mailed to a select clientele. The printed catalogs have attracted the attention of collectors and specialists in the plants she grows. Gweneth maintains an inventory of the older catalog issues which people order from her--a small market in itself, but it helps defray the catalog costs.
Catalogs can be used in many businesses. Products include women's fashion, trendy housewares, furniture, unusual plants, cigars, chocolates, coffee, teas and more.
Not all businesses will find catalogs cost effective. With a website, it's easy to test out for yourself whether or not catalogs work in your business.
Printed catalogs are expensive to produce and mail. But you can put a catalog on your website relatively cheaply--making it colorful, attractive and useful in expanding your reach.
from personal experience starting-up, solving problems, and growing several businesses.
Catalogs have a long and colorful history. For more than a hundred years, catalogs have brought the world to the doors of Americans.
Well, the world has moved on. Catalogs today still put products in front of prospective customers. Catalogs are on the Internet and in your mailbox.
Example: Ralph runs a furniture store. It's been in his family for many years and enjoys a good reputation in the area it serves. Ralph saw a market for American made furniture that he wanted to tackle. He contacted several small furniture makers--from single operator furniture designers to Amish family operations. Gradually, Ralph homed in on selections. He posted his catalog on his website and he mailed his new catalog to a growing list of prospects. It worked. Not only did his current customers come to the store more often, new customers signed on as well. And they referred others.
Some people are attracted to one-of-a-kind products and designer limited edition pieces. Businesses can successfully expand into these markets.
Example: Gweneth owns and operates a garden center. For years she expanded into greenhouses, growing many kinds of annuals and perennials, herbs and vegetables. She served both the wholesale and retail markets. Competition grew increasingly stiff, and pricing became very tight. She decided on a major change. Today, she grows daylilies and hostas in the fields, and the greenhouses are filled with orchids and unusual green plants. Her catalogs are mainly on the website, but a few are printed and mailed to a select clientele. The printed catalogs have attracted the attention of collectors and specialists in the plants she grows. Gweneth maintains an inventory of the older catalog issues which people order from her--a small market in itself, but it helps defray the catalog costs.
Catalogs can be used in many businesses. Products include women's fashion, trendy housewares, furniture, unusual plants, cigars, chocolates, coffee, teas and more.
Not all businesses will find catalogs cost effective. With a website, it's easy to test out for yourself whether or not catalogs work in your business.
Printed catalogs are expensive to produce and mail. But you can put a catalog on your website relatively cheaply--making it colorful, attractive and useful in expanding your reach.
Tuesday, August 19, 2014
Keeping in touch
Free daily tips, information and advice for small business
from personal experience starting-up, solving problems, and growing small businesses.
You already know the value of keeping in touch. You call friends. You stop in to see a relative. These are personal friends.
What about business friends? These are people who have depended on you--your products and services. These people are your customers and clients.
A single word from you can go a long way in business. Literally. Keeping in touch reminds your customers/clients who you are and the good experience they had dealing with you. And they spread the word, bringing you referrals.
You can keep in touch in many ways. Here are some reminders.
Facebook is the new kid on the block, along with other social media possibilities. Facebook is a very effective way to reach out and keep in touch. You should be snapping pictures every day of your creations (artists, artisans, chefs, bakers, landscapers, etc.), the inside of your store or office (racks of clothing, cases of jewelry, equipment set-ups, etc.), the street scene outside (flea markets, parades, car shows, etc.). Selfies can be fun. Post these pictures on your Facebook page, not every day, but a couple of times each week.
Emails sent to your regular customer list can be effective in announcing sales and other events. Too many emails can be a turn-off, however. Emails should be about your client or customer and THEIR interests, not yours. Keep it brief, and don't send them too often.
Blogs can be a very effective way to keep in touch. I know many business people who write a blog once a week. I write this blog every weekday morning. Blogs can be a way to personalize your business. Concentrate on things that the reader is interested in--more information about a particular subject, new things happening in your industry. A blog meant for customers/clients is NOT a personal diary. Keep your material fresh, optimistic and simple.
Newsletters are more involved. Some are placed on websites, others are printed and mailed. (Yes, some businesses still mail newsletters, but today most newsletters are on the websites.) Unlike short blogs, newsletters tend to be more formal and they are longer, covering several different subjects. They can be useful in communicating difficult subjects. Attorneys, tax experts, consultants, medical specialists and others find newsletters to be an effective way to explain in depth the ways in which they can help clients--and attract new attention.
Phone calls are personal, and they can be annoying. A phone call from someone you know and have dealt with in the past can be an effective reminder. Use phone calls sparingly. Phone calls to a list of people you don't know and who don't know you are definitely a turn-off. And recorded phone calls are a no-no. But phone calls to remind people of appointments, upcoming sales and special events can be very useful--and appreciated.
Keep in touch, but do it smart. You don't want to come across as a nuisance. Keeping in touch with short reminders, colorful pictures, and clear explanations of some aspect of your business can grow your business.
Done right, your customers/clients will appreciate being reminded of who you are and what you can do for them. And they will refer others to you.
To grow your business, you want to extend your reach in the community you serve. Keeping in touch is a valuable method to put in your business toolbox.
from personal experience starting-up, solving problems, and growing small businesses.
You already know the value of keeping in touch. You call friends. You stop in to see a relative. These are personal friends.
What about business friends? These are people who have depended on you--your products and services. These people are your customers and clients.
A single word from you can go a long way in business. Literally. Keeping in touch reminds your customers/clients who you are and the good experience they had dealing with you. And they spread the word, bringing you referrals.
You can keep in touch in many ways. Here are some reminders.
Facebook is the new kid on the block, along with other social media possibilities. Facebook is a very effective way to reach out and keep in touch. You should be snapping pictures every day of your creations (artists, artisans, chefs, bakers, landscapers, etc.), the inside of your store or office (racks of clothing, cases of jewelry, equipment set-ups, etc.), the street scene outside (flea markets, parades, car shows, etc.). Selfies can be fun. Post these pictures on your Facebook page, not every day, but a couple of times each week.
Emails sent to your regular customer list can be effective in announcing sales and other events. Too many emails can be a turn-off, however. Emails should be about your client or customer and THEIR interests, not yours. Keep it brief, and don't send them too often.
Blogs can be a very effective way to keep in touch. I know many business people who write a blog once a week. I write this blog every weekday morning. Blogs can be a way to personalize your business. Concentrate on things that the reader is interested in--more information about a particular subject, new things happening in your industry. A blog meant for customers/clients is NOT a personal diary. Keep your material fresh, optimistic and simple.
Newsletters are more involved. Some are placed on websites, others are printed and mailed. (Yes, some businesses still mail newsletters, but today most newsletters are on the websites.) Unlike short blogs, newsletters tend to be more formal and they are longer, covering several different subjects. They can be useful in communicating difficult subjects. Attorneys, tax experts, consultants, medical specialists and others find newsletters to be an effective way to explain in depth the ways in which they can help clients--and attract new attention.
Phone calls are personal, and they can be annoying. A phone call from someone you know and have dealt with in the past can be an effective reminder. Use phone calls sparingly. Phone calls to a list of people you don't know and who don't know you are definitely a turn-off. And recorded phone calls are a no-no. But phone calls to remind people of appointments, upcoming sales and special events can be very useful--and appreciated.
Keep in touch, but do it smart. You don't want to come across as a nuisance. Keeping in touch with short reminders, colorful pictures, and clear explanations of some aspect of your business can grow your business.
Done right, your customers/clients will appreciate being reminded of who you are and what you can do for them. And they will refer others to you.
To grow your business, you want to extend your reach in the community you serve. Keeping in touch is a valuable method to put in your business toolbox.
Monday, August 18, 2014
Selling yourself
Free daily tips, information and advice for small business
from personal experience starting-up and growing businesses of my own.
No business will make it unless someone sells the soap. Or the advice. Or whatever it is that inspired you in the first place.
Business is selling.
Owners who shy away from selling are ignoring their own childhood and adolescence. You learned to sell every step along the way.
All of us sold our parents--you had to go to that concert, you had to borrow the car. We tried to sell our teachers--I couldn't find that book, my little brother tore up my paper.
These were valuable lessons. Some worked. Others, not so much. But all were valuable learning experiences.
Example: Walker got his law degree, passed the bar exam, and tacked a brass plate on his storefront door. Then he waited. And he waited. It's one thing, I told him, to have great credentials, but it's quite another thing to rein in paying clients. Every client expects a lawyer to be smart, educated, and resourceful. That's the minimum. But when they walk in your door, it's all about them. What can you do for me? It's not about you, I said, it's about the client. Walker joined the local chamber of commerce as well as several networking groups. He offered to lead free discussions at senior centers, local organizations and other groups. There, he talked about simple concerns of people in the audience: what to do when you get a traffic ticket, how you handle an elderly relative, what to do if you get sued. Soon his phone began to ring, and his law practice began to blossom.
As a business owner, you must put yourself out there to meet people. All sorts of people. You never know which person will become a customer/client--and refer others to you.
Shy? Many find face-to-face contact to be intimidating. But you can do many things to promote your business without the face-to-face contact.
Example: Freida loved to bake. Something about creating cookies and cakes fascinated her. She opened her small bakery and waited for people to beat a path to her door. Some people stopped in, but business was slow. Customers gave her baked goods high marks, and they returned--from time to time. Freida was disillusioned, until she found ways to promote her bakery and turn it into a destination. She began holding events for kids. She set out a fresh sample table every day. She put her bakery on Facebook. She began holding baking classes--teaching people how to bake, giving them tips and information. All this activity created a buzz in the community--and beyond. At all these events, she handed out business cards--not the usual standard size, but postcard size cards with colorful pictures of scrumptious cookies and cupcakes, biscotti and brownies, layer cakes and fruit pies--along with her address, phone, hours, and her Facebook presence. Her reputation spread, and customers passed the word around, bringing others.
Sell yourself by getting the word out about what you can do for others. It's not about you, it's about them. Sell yourself by getting others to think of you when their needs arise.
Always pay attention to referrals. The people who attended Walker's talks on the law will remember him and pass the word around to their friends and relatives. And the people who attended Freida's baking sessions will talk about it to others. Satisfied customers/clients will do the selling for you.
Selling the soap (or the advice) can be done in many ways. Concentrate on what works for you and your business. When a method works for you, figure out ways to do more of it. Selling yourself becomes easier when you focus on the ways you can help other people.
from personal experience starting-up and growing businesses of my own.
No business will make it unless someone sells the soap. Or the advice. Or whatever it is that inspired you in the first place.
Business is selling.
Owners who shy away from selling are ignoring their own childhood and adolescence. You learned to sell every step along the way.
All of us sold our parents--you had to go to that concert, you had to borrow the car. We tried to sell our teachers--I couldn't find that book, my little brother tore up my paper.
These were valuable lessons. Some worked. Others, not so much. But all were valuable learning experiences.
Example: Walker got his law degree, passed the bar exam, and tacked a brass plate on his storefront door. Then he waited. And he waited. It's one thing, I told him, to have great credentials, but it's quite another thing to rein in paying clients. Every client expects a lawyer to be smart, educated, and resourceful. That's the minimum. But when they walk in your door, it's all about them. What can you do for me? It's not about you, I said, it's about the client. Walker joined the local chamber of commerce as well as several networking groups. He offered to lead free discussions at senior centers, local organizations and other groups. There, he talked about simple concerns of people in the audience: what to do when you get a traffic ticket, how you handle an elderly relative, what to do if you get sued. Soon his phone began to ring, and his law practice began to blossom.
As a business owner, you must put yourself out there to meet people. All sorts of people. You never know which person will become a customer/client--and refer others to you.
Shy? Many find face-to-face contact to be intimidating. But you can do many things to promote your business without the face-to-face contact.
Example: Freida loved to bake. Something about creating cookies and cakes fascinated her. She opened her small bakery and waited for people to beat a path to her door. Some people stopped in, but business was slow. Customers gave her baked goods high marks, and they returned--from time to time. Freida was disillusioned, until she found ways to promote her bakery and turn it into a destination. She began holding events for kids. She set out a fresh sample table every day. She put her bakery on Facebook. She began holding baking classes--teaching people how to bake, giving them tips and information. All this activity created a buzz in the community--and beyond. At all these events, she handed out business cards--not the usual standard size, but postcard size cards with colorful pictures of scrumptious cookies and cupcakes, biscotti and brownies, layer cakes and fruit pies--along with her address, phone, hours, and her Facebook presence. Her reputation spread, and customers passed the word around, bringing others.
Sell yourself by getting the word out about what you can do for others. It's not about you, it's about them. Sell yourself by getting others to think of you when their needs arise.
Always pay attention to referrals. The people who attended Walker's talks on the law will remember him and pass the word around to their friends and relatives. And the people who attended Freida's baking sessions will talk about it to others. Satisfied customers/clients will do the selling for you.
Selling the soap (or the advice) can be done in many ways. Concentrate on what works for you and your business. When a method works for you, figure out ways to do more of it. Selling yourself becomes easier when you focus on the ways you can help other people.
Friday, August 15, 2014
Other people's money
Free daily tips, information and advice for small business
from a lifetime of personal experience--been there, done that.
Money is always a problem in small business. There is never enough.
Your business plan is in place. And things are moving in the right direction.
But the business is not generating cash as fast as you would like. You might need other people's money so you can grow faster--or expand into another business entirely.
Example: Jim was in the home improvements business. He worked job by job, installing doors and windows, putting up siding, and roofing jobs. He used the 9/10 mechanism to borrow money. It works like bonds--I give you $9 and you pay me back $10. Jim approached friends, relatives, acquaintances with this simple proposition. Each person would loan him $900 and he would pay them back $100 a month for ten months. This is not cheap money, but when the bank turns you down your alternatives are few. Jim found one person who agreed to give him $9,000 to be repaid at $1,000 per month for ten months. Jim was careful to keep all accounts separate, using the loans to buy tools, equipment and materials for specific jobs. When a job was done and his customer paid him, he set enough money aside to pay off the 9/10 loan.
Example: Robert was also in the home improvements business. He worked with his customers to finance each job. He required one third payment upfront, one third payment when an agreed-to milepost was reached, and the final one third payment when the job was completed. This method can be used in other types of businesses as well. Just remember that the profit for the job comes in that last payment.
Example: Leland was a young man in a hurry. He was a landscaper. One of his on-going jobs involved taking care of the yard around a small apartment building. The owner of the building was impressed with Leland's work and asked Leland if he wanted to buy the property. Leland jumped at the chance, but told the owner that he could not afford it. Maybe yes, maybe no said the owner. He showed Leland how to take over the property with two mortgages--a large first mortgage at normal interest and a second short-term mortgage at a higher rate of interest. Income from the rent rolls would cover the mortgage payments. With time, Leland would own the building. If he did not make the payments, he would be in default and the owner would take back ownership of the building. Leland is still a landscaper but with a difference--he owns the building where he cuts the grass and trims the shrubbery. And he has his eye on another apartment building in the same neighborhood.
Using other people's money in business is quite common. It takes many forms, but the mechanism is concept is the same. Put it to work and home in on the specific arrangement that helps you start-up, grow and expand.
When your supplier delivers and hands you an invoice due in 30 or 60 days, you are using other people's money. It's a matter of trust that you will pay your bills on time. That simple concept of trust is at the heart of using other people's money.
from a lifetime of personal experience--been there, done that.
Money is always a problem in small business. There is never enough.
Your business plan is in place. And things are moving in the right direction.
But the business is not generating cash as fast as you would like. You might need other people's money so you can grow faster--or expand into another business entirely.
Example: Jim was in the home improvements business. He worked job by job, installing doors and windows, putting up siding, and roofing jobs. He used the 9/10 mechanism to borrow money. It works like bonds--I give you $9 and you pay me back $10. Jim approached friends, relatives, acquaintances with this simple proposition. Each person would loan him $900 and he would pay them back $100 a month for ten months. This is not cheap money, but when the bank turns you down your alternatives are few. Jim found one person who agreed to give him $9,000 to be repaid at $1,000 per month for ten months. Jim was careful to keep all accounts separate, using the loans to buy tools, equipment and materials for specific jobs. When a job was done and his customer paid him, he set enough money aside to pay off the 9/10 loan.
Example: Robert was also in the home improvements business. He worked with his customers to finance each job. He required one third payment upfront, one third payment when an agreed-to milepost was reached, and the final one third payment when the job was completed. This method can be used in other types of businesses as well. Just remember that the profit for the job comes in that last payment.
Example: Leland was a young man in a hurry. He was a landscaper. One of his on-going jobs involved taking care of the yard around a small apartment building. The owner of the building was impressed with Leland's work and asked Leland if he wanted to buy the property. Leland jumped at the chance, but told the owner that he could not afford it. Maybe yes, maybe no said the owner. He showed Leland how to take over the property with two mortgages--a large first mortgage at normal interest and a second short-term mortgage at a higher rate of interest. Income from the rent rolls would cover the mortgage payments. With time, Leland would own the building. If he did not make the payments, he would be in default and the owner would take back ownership of the building. Leland is still a landscaper but with a difference--he owns the building where he cuts the grass and trims the shrubbery. And he has his eye on another apartment building in the same neighborhood.
Using other people's money in business is quite common. It takes many forms, but the mechanism is concept is the same. Put it to work and home in on the specific arrangement that helps you start-up, grow and expand.
When your supplier delivers and hands you an invoice due in 30 or 60 days, you are using other people's money. It's a matter of trust that you will pay your bills on time. That simple concept of trust is at the heart of using other people's money.
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