6 Lessons for the Small Business Owner
Originally published: 02.01.12 by
HVACR Business recently celebrated its sixth anniversary in business. We’ve learned a lot along the way and thought some of the lessons learned along the way would be helpful.
Lesson Number 1: Be Prepared. As a small business owner you have to be more prepared for everything because you simply don’t have the resources of larger companies. And, there’s no landing net. Whatever fall you take, the landings always seem to be a lot more like a crash. Part of that preparedness has to do with the time frames in which you are able to make decisions. We make decisions quickly and it helps move our company into the best possible position for a given circumstance. It’s not always true, but most often important decisions slow down and filter through layers of management at larger companies. As a business owner if you can eliminate or avoid this slow down your company should benefit. Being prepared and thinking through issues that can impact your company can soften the landing and help insure our survival and growth.
Lesson Number 2: Cash. You’ve heard our very own Ruth King say this dozens and dozens of times in her column:
“cash is king”. And, she’s right. For me, cash falls into several categories. First, sales, it starts the process. Next, you have to perform work, delivering the equipment or the service. And then you have to collect. Many of you collect payment at the time the equipment is installed or service is performed. This means your accounts receivable column looks terrific. However, if you’re terms are net 10, 15 or 30 there are going to be slow pay accounts. My advice is to get aggressive and start collection the day after you “should” have been paid. Accounts don’t mind dragging payments out, so don’t feel guilty calling and asking where’s the check?. After all, you have signed paperwork – right?Lesson Number 3:
Save. Saving some cash every month is literally money in the bank. This is no different than how you manage personal wealth. Be disciplined enough to set a percentage of each months net profit into an account. It’s the best business safety net ever – period. Many of us who suffered through 2009 can attest that savings can make the difference between going out of business and staying the course.Lesson Number 4:
Negotiate. Being a better negotiator can earn and save you six and seven figure sums over the life of your business. And no matter what contract or sale you are reviewing you can almost always negotiate a better deal for your company. (I have found just one exception to this rule – the U.S. Post Office. On our P&L they are the single largest expense item. They don’t negotiate. Ha) But, I digress. Over the Christmas Holiday we moved our office. We investigated dozens of locations and found one we thought would be just right. The only catch It was a build out – always more expensive than moving into existing space. However, we learned the building was under new management and new ownership that was eager to rent empty space. Over the course of a 45 day period we were able to negotiate a lease with everything we wanted, designed to our specifications with zero out of pocket costs, three months of free rent and rates that are significantly below the market. Someone recently told me “You don’t ask, You don’t get”. We asked – repeatedly.Lesson Number 5:
Competition. Know them, chat with them, understand them. But never, under any circumstance talk about them in a sales call. It’s not about them, it’s about your company and your products. As long as you have the customers attention why waste a second saying a word about “them”? I’ve seen it happen,and unfortunately sales people can’t help it. They want to grind the ax. When your competition does this, you know you’re really hurting them. It’s like the ref raising his arms on a touchdown. If they are talking about you, you are scoring! If your sales people are disparaging competitors, it’s time to slap them on the wrist, but more importantly you need to invest in training for them so they stop embarrassing themselves and your company. The biggest tragedy is that they are losing sales for you. No customer wants to hear it. The customer wants to know how you can solve their problem, not what you think about your competitors.Lesson Number 6:
Sales. There is no substitute for making sales calls and building relationships. If your sales team falls short here your business will show clear signs on the p&l. The old adage is right on the money. Sales make everything better. Excuses why sales people can’t get appointments have been around forever. One of the saddest things about them is they haven’t changed in 50 years! But, motivated, resourceful salespeople always find a way to see existing customers to sell them more, and they also find ways to meet and educate new customers. If you’re a business owner and not sleeping well at night I’m 99% certain it has to do with underperforming sales. Get your people on the road and in front of customers. Soon you’ll be sleeping like a baby.
Terry has over 23 years of experience in the advertising and publishing industries. He began his career with a business-to-business advertising agency. Prior to forming Hutchinson Tanker Ltd. and HVACR Business in January 2006, he spent 20 years with large national publishing and media firm where he was the publisher of several titles in the mechanical systems marketplace.
In addition to his experience in advertising and publishing, Terry has worked closely with numerous industry-related associations over the years including AHRI, AMCA, and ABMA. He has also served on the Board of Directors for the American Boiler Manufactures Association (ABMA) and as chairman, for both the Associates Committee and the Marketing Communications Committee of ABMA.
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