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 In my 18 years of consulting I have heard it all. Everything
from competition to managed care as reasons why its hard to
create the business of your dreams. New customers are needed
to keep any business going but it is how you and your staff
manage these customers that determines your success in
business.
In every business that I have gone into over the years, what
amazes me most is the amount of lost income from poor
handling of the major income generating areas of any
business. I will cover four of them.
The actual amount of lost income can be calculated. I will
describe where you are very likely losing large amounts of
money and why. These areas if handled will help you lose
less money in your business or in other words, make more
money.
Where am I losing money in my business?
Business owners are always looking for ways to increase
revenue but we seldom address the areas where buckets of
money may be slipping from your fingers. It is common to
look at the cost of handling a situation in your office, but
little attention is paid to the fact that not handling a
weak area of your business is costing you way more than what
it may cost to solve the problem.
You need to be able to measure the top basic areas and the
way to do it is with statistics. How can you evaluate how
close you are getting toward handling any weak area of your
business or enhance an area already doing well if you are
not using statistics? Operate off of statistics.
Most business owners commonly fail to look at what they are
currently losing from weak business management and poor
training of staff. Here are four of the key areas of lost
income within the organization.
1.You can lose money with poor reception control.
Ideally, with proper reception control at the front desk, on
the phone and certain procedural actions in place you can
achieve a higher percentage of closed customers. To the
degree that the control at the front desk is missing or the
customers are dictating when they will come in or not, you
will be losing money. A good receptionist is key to
directing the incoming traffic, whether via phone or in
person to the proper staff member quickly and with good
control. This is quite honestly an easy fix and can improve
your bottom line quite markedly.
2.You can lose money from having a poor collections
ratio.
Depending on your business, once you make the adjustment in
your production for other plans such as managed care, etc.
you should be collecting 95% of the remainder. Ideally, when
calculating your true collection ratio you would use the
last six weeks of collections divided by the previous six
weeks of production. There are actually eight areas, if
fully handled, that will put your collections ratio in a
whole new range.
3. You can lose money from having an untrained or poorly
trained staff.
Take your average weekly collections divided by the number
of Full Time Equivalents (FTE). Dont forget to include the
owners hours and if he or she works 60 hours that is a 1.5
FTE. Every staff member has value to the organization, but
some are clearly more valuable than others. When you have a
staff member that knows what to do, is very efficient in his
or her ability to get the job done and somehow motivates
others, you know they are worth their weight in gold. What
is sometimes difficult to understand is that getting
employees to actually do their job with a high degree of
productivity IS attainable. Every time you hire someone
within your organization you should have a certainty as to
how much income per week they should bring to the table
through their efforts. The average should be somewhere
around $3,500 a week for each FTE.
4. You can lose money from lack of effective marketing.
Effective marketing is a big area where businesses fail.
They usually plan their promotion like they plan their meals
one at a time. It pays to have a marketing plan and be able
to correctly determine the ROI (Return On Investment) from
marketing actions. Most businesses send out one promotion
piece and then tally the responses, not the amount of money
produced from those responses. This gives a false picture.
Then business owners think that their marketing isnt working
so they quit - just as quickly as they started. Likewise,
when they quit, they do so not realizing that repeat
mailings are the key to generating more responses and more
income. Executives commonly do not put themselves in their
prospects/customers shoes and look at their marketing from
the customers viewpoint. An example of this is taking a look
at how you actually respond to direct mail. Do you jump at
every mail piece that arrives in your mailbox? Or, more
realistically, do you start to really take notice of a
companys promotion once you have seen it repeatedly?
The marketing medium is something to consider as well. There
are inexpensive ways to get started with marketing that will
get you a good Return On your Investment and that will
enable you to generate enough income consistently before you
start branching out into other more expensive media. A
postcard is a particular medium that works well for a number
of reasons. I highly suggest finding a reputable direct mail
postcard company that gives free marketing advice as your
source for direct mail marketing. I would make sure that
postcards are all they do, get references from them to
investigate and call those references for data about that
company. And remember, the absolute cheapest price isnt
always the best you get what you pay for. There is a lot to
learn about marketing. It is a powerful tool to expanding
your business.
This four-point checklist that can help you discover where
your business is losing money. Each of these points can be
improved when you apply the correct tools. I base the
validity of those correct tools on whether they get results
not by my opinion but whether they actually work no matter
what industry you are in.
About the Author
Jeffrey F. Lee is CFO and Co-Founder of Measurable Solutions
Inc., a consulting firm engaged in all areas of business
management. He has found that all the basic principles of
how to expand a business apply to any business when
delivered in a very precise way. With his partner, he has
built the most rapidly expanding company of its kind in the
world. Visit his website at www.measurablesolutions.com
Written By: Jeffrey F. Lee
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