9 commandments on the basic habits of successful businesses.
Never allow any of your money to lie idle. Making the sale and collecting your bill is only half of the job of professional money management. Once you have collected your money, it’s important to manage it skillfully.
If you don’t already have one, open a money market account at your bank and link it to your business checking account for telephone or online transfers.
Deposit all of your daily receipts into the money market account, where they will immediately start drawing interest. Never deposit receipts directly into your checking account. Keep a minimum balance in the checking account and transfer cash by phone or online only as needed to cover checks written. The banks have made this technique so easy to use that there is no longer any reasonable excuse for not using it.
The worst money sin of all is allowing cash and checks to sit in a drawer until it’s convenient for you to visit the bank. Keeping all of your money working for you all of the time is an important part of professional business management.
Be aggressive collecting accounts receivable.
It’s important not to allow your accounts receivables to go untended. You’ve earned that money, you have a right to it and you need it.
Dunning late-paying clients may not be your favorite pastime, but setting up an accounts receivable file and following through on late payments is as important to your financial success as the quality of the services you offer.
If your customers learn that you are cavalier about money owed to you, then you can be certain they will stretch your patience (and your cash flow) to the limit.
Don’t be in a hurry to pay your bills.
But, there’s good reason why checks are slow to come in from people who owe you money.
It’s because hanging on to cash as long as possible keeps that money available to draw interest or put to work in the business.
That’s why it’s important for you to set up a system to pay your bills only when they come due. It’s easy to do and it moves you up on the ladder of professional cash management.
Don’t jeopardize your credit standing by paying bills late. Pay your bills just before they’re due – not before, not after.
It’s especially important to avoid late payment on credit card bills because of the oppressive penalties that most banks are now putting into place.
Adopt a marketing mentality.
If customer satisfaction is the mashed potatoes, marketing is the gravy.
But keep in mind: Marketing involves far more than an ad in the Yellow Pages or passing out your business cards. Marketing is a complex challenge, all the more so in a business operating in a specialized niche such as yours. If you are to achieve optimum success in marketing your landscaping business, you must be willing to spend time studying, reading and analyzing your market and your competition, whether your business is residential, commercial or both.
Keeping your business healthy and profitable requires an ongoing marketing program. There is no other way. Competitive prices alone won’t do it; dependability alone won’t do it.
Marketing embraces all facets of your operation. To be an effective marketer, you must nurture and promote your business image, sell yourself as well as your business and concentrate on making your services the best choice for discriminating clients.
Determine that you will never lose a client to a competitor.
Numerous studies over the years have shown that, on average, it costs five times as much for a business to find a new customer than to keep an old one. Focus on the significance of that statement; it is one of the most powerful concepts in the world of business.
With competitors standing ready and anxious to snatch away your clients and prospective clients, and your awareness of the cost of replacing a lost client with a new one, it should be easy for you to understand the importance of never giving even one client a reason to stray.
Once a client uses your services for the first time, you’ve done the hard part. Now, your job is to instill the notion that doing business with you will always be a satisfying experience.
You and your employees must never lose sight of the fact that developing a new customer is a costly and difficult job. Once a stranger becomes your customer, a major part of your overall marketing program must center on ways to make sure that he or she never has reason to leave you for a competitor.
Keep leasing in mind.
Most financial advisers agree that leasing products like trucks or vans for personal use is usually not financially advantageous. But business is a different animal entirely.
The nature of business accounting is such that leasing can be the most sensible approach to many types of capital investment. It usually makes sense to lease if you will be able to use the cash in your business or investments to earn a better return than the cost of leasing.
Talk to your own tax adviser about this the next time you’re considering a large capital purchase.
Go the extra mile.
Never forget that a complaint from a client can easily feel unreasonable. When that happens, think of the cost in time and money as an investment in your future.
Once you’ve sold yourself and your employees on why you are the best choice for clients who require the utmost in dependability and know-how, you must focus your marketing efforts on ways to promote this image to both clients and prospects.
Set your business apart.
America’s most successful entrepreneurs are those who have carefully developed an identity all their own. Your job is to evaluate your strengths and then combine them to form a unique identity.
Perhaps you’ve been in business longer than your nearest competitors; or maybe you have a reputation for especially skillful workmanship at competitive prices.
Whatever your marketable strengths, you should write them all down, study them and then determine how to separate yourself from your competitors – how to motivate potential clients to seek you out, and existing clients to feel fortunate to have discovered you.
Develop a personal relationship with your banker.
Handling money is a banker’s job, and most are very good at it. Even if your operation is relatively small, it’s a good idea to develop a personal relationship with the manager at your bank. Discuss your financial picture honestly with the manager of your local branch. You’ll get some good ideas and a favorable ear should you ever need a little financial help or advice.
To some landscape contractors, a tight economy means hibernating. To others, it’s a time to increase client loyalty, solidify market position and attract new clients. Following these nine commandments will help you turn tough times into good times.
The author is a freelance writer based in Abington, Pa.