Another year, another lesson… I’ve operated small businesses for most of my career. As we get set to close the book on 2022 and open a new chapter, I thought I’d share some lessons learned over the years. I hope the suggestions below help manage your company more effectively in the coming year.
Lesson Number 1: Be Prepared. As a small business owner, be more prepared for everything because you simply don’t have the resources of larger companies. And, there’s no safety net. Whatever fall you take, the landing always seems to be a lot more like a crash. Part of that preparedness has to do with the time frame 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 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 slowdown, your company should benefit. Being prepared and thinking through issues that can impact your company can soften the landing and help ensure your survival and growth.
Lesson Number 2: Cash. You’ve heard this from Ruth King 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 the 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 the paperwork – right?
Lesson Number 3: Save. Saving some cash every month is money in the bank. This is no different than how you manage personal wealth. Be disciplined enough to set a percentage of each month’s net profit into an account. It’s the best business safety net ever – period. All of us who suffered through the pandemic can attest that savings 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 United States Postal Service. On our P&L they are one of our largest expense items. They don’t negotiate, heck I couldn’t even find anyone to speak with….) We’re considering moving our office because like many companies we have more employees working remotely. We’ve investigated dozens of locations and found several that would be just right. We’ve found landlords very willing to negotiate. From existing space to build-outs, everyone in our area is eager to fill vacant space. Someone recently told me “You don’t ask, you don’t get”. We’ve been asking.
Lesson Number 5: Competition. Know them, chat with them, understand them. Stay away from talking about competitors in a sales call unless specifically asked to address an “us versus them” scenario. It’s not about them, it’s about your company and your products. As long as you have the customer’s attention, why waste a second saying a word about them? I’ve seen it happen, and unfortunately, salespeople can’t help it. They want to grind the ax. When your competition does this, you know you’re hurting them. It’s like the ref raising his arms on a touchdown. If they are talking about you, you are scoring! If your salespeople 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 of it on the P&L. The adage is right on the money. Sales make everything better. Excuses about why salespeople 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 approach existing customers and 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 is the owner of JFT Properties LLC and publisher of HVACR Business magazine. He has more than 25 years of experience in the advertising and publishing industries. He began his career with a business-to-business advertising agency. Prior to forming JFT Properties LLC in January 2006 he spent 20 years with a 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 NATE and ABMA.