How To Overcome The Rising Operational Costs In Business

When I launched The Entrepreneurs’ Journey podcast, I knew it was because I knew my clients needed more than just efficient credit card processing rates. I wanted to be able to help business owners with more than just credit card processing as I could see there were more pressing issues impacting the success of their business than merchant fees. This sent me on a journey to interview people smarter than me in other areas of business so I could be a better resource for my clients. Like most decisions, the confirmation of my intuition didn’t come until much later, like almost 2 years. Recently, I had a client reach out because they needed 100k in capital for some investments they needed to make in their business. In less than 2 days, they received a deposit for the capital they need to execute their 2023 strategic plan. Their execution of their strategic plan will allow them to not only grow their business but allow them to restructure debt and eliminate the opportunity costs they were facing by not having the capital on hand.

As we continue to move forward in an uncertain economy, right now is the best time to position your company to be as profitable and efficient as possible.

 

Streamline Costs

 

When companies hire us to evaluate their merchant services, there are times when the payment processor asks for bank statements. Within those bank statements, we can see everything a company spends money on. Many times, while the expenses at one point were correct, there are times we see companies paying for payment processors that they haven’t used in years. There are other times when a company is paying for levels of service that are completely unnecessary. For example, when I started PaySuite, I was paid to consult with a large local convenience store chain that was negotiating with payment processors so they could reduce their costs. In looking through their proposal for the processor they chose, I was able to help them save an additional 50k over the course of the contract they were going to sign because I knew they were already paying for the service the processor included in their proposal. This scenario happens with almost every service you pay for as a business owner from your phone service, internet, payment processing, marketing services, payroll, software, and other services that are essential to running your business. You may be wondering; shouldn’t my accountant or bookkeeper be on top of this? Well, yes and no, when you hire a bookkeeper or an accountant, they are experts in properly classifying the debits and credits that hit your bank account, not necessarily experts on whether your vendor unscrupulously passed an incremental fee increase to you without telling you about it. That is where having an advisor working with your accounting team is helpful as they can work together to make sure you have the best vendor at the appropriate price for your business model. This is important not only from the standpoint of costs, but as it relates to productivity in your business environment. If you could add technology to your business to increase your sales by 20% without increasing your labor costs, then for the right price, it’s probably an easy decision.

 

Improve Relationships

 

Every business has people, internally and externally, and within that lies the opportunity to improve relationships. Improving relationships with your staff, partners, and clients is likely one of the most impactful things you can do as a business owner for a number of reasons. First, studies show that engaged employees drive 43% more revenue than their non-engaged counterparts and this alone would dramatically change the numbers on your balance sheet. Why? Because not only would your employees be more productive by getting more work done, but the interactions they have with your customers would also change how your customers perceive your business. Customers that have a positive perception of your business are more likely to increase their spending with your company, refer others to your product, service, or experience and are more likely to leave positive reviews on your website and review websites.

 

Increase Revenue

 

When it comes to growing your revenue, you have an endless list of possibilities to choose from to achieve your goals. You could increase your prices, establish strategic partnerships, or even create new products or services that are relevant to your brand.

Here’s a few questions that I want you to ponder:

 

  • If you’re a restaurant, could you create a partnership with a local nonprofit to increase your impact and visibility? How is this a win-win? Well, nonprofits need help building relationships, demonstrating the work that they do, and need to be seen in the community as being more than an “ask”. The same goes for your restaurant. People are more likely to shop with local brands that are more than just good food. All things being equal, they will shop with brands that make an impact in the community.

 

  • As an online store, could you partner with local retailers to do product placement and fulfillment? How is this a win-win? Well, as an online retailer, potentially competing with Amazon and big box retailers, having local retailers that can display your products and perhaps deliver friendly service to your customers is valuable. Especially with Amazon closing many of its retail stores. Why is it valuable to a local, non-competitive retailer? Many retailers struggle with competing for visibility online, so supporting an established eCommerce brand may be a great partnership as your customers may choose to frequent their store for other items you don’t offer, making it a great co-marketing opportunity for them.

 

  • As a home services company, could you create a strategic partnership with the local bank to have your information shared with everyone that gets a mortgage? This is a great opportunity for the bank and the local roofer, electrician, landscaper, and HVAC company. The bank needs help with several things, but their primary goal is to grow their deposits so they can provide loans and other financial products. The more customers the bank has, the more opportunities they have to earn interest from the financial products they sell. As a home services company, you don’t sell financial products, but your customers may need a credit card, home equity line of credit, short term financing, or other options to consider as they decide whether to use you or your competitor. Having a financial institution that can help your clients evaluate the most cost-effective way to pay for your service is a great value to the customers you meet with and would differentiate you from other home service providers and help you pick up additional sales. You win because you become a resource to the client by helping them get what they want, and you help the bank because they gained a new customer. This is something that you could set up with a bank with minimal effort and could be automated on your end and at the bank so there are no additional steps or work needed from either party.

 

These are just a few simple ways to increase your visibility and potential relationships that will lead to increasing your revenue. We haven’t even talked about pricing strategies, bundling, adding new sales channels, or the subscription services you could offer. In a challenging economy, there are always new ways to reinvent how you do business to serve more people. It just takes taking the time to sit down with your key advisors to come up with a plan that will work for your business and goals.

If you’d like to discuss cutting costs and increasing your revenue, let’s talk!

One Thing Your Business Needs To Thrive In An Awful Economy

In 2006, I left college after finishing my sports career and entered the mortgage industry. I only lasted 6 months because I wasn’t mature enough to be self-employed, so I went to work in sales shortly thereafter. In 2008, the economy declined into a recession because of the mortgage crisis. By that time, I was working for AT&T which at the time had exclusive distribution rights to the iPhone. At a time when many industries were facing serious economic peril, AT&T was experiencing record profits and had people lined up around the block for months trying to purchase iPhones. Sales representatives were taking home record commission checks during what most people recall being the worst economic atmosphere since the Great Depression. Is this different than 2008? I think this economy is very different. In fact, I think things are more difficult for business owners in many ways, but they can also be better for you as a business owner.

 

 

This Economy Is Different

 

 

The reason things are different with our current economy versus the 2008 economic downturn is that 2008 started in the real estate sector and spread into other industries, but I don’t recall dealing with so many different challenges back then. The housing market, even though it was hot, hadn’t yet created the housing crisis we’ve faced in the NW market as it relates to affordability. Food prices were relatively stable, and there wasn’t a shortage of people wanting to work. Right now, with inflation rampant, the workforce not returning to work, and the cost of goods rising at the fastest pace in 50 years, we are experiencing a very different environment than what we saw in 2008. In addition to that, it seems that the political environment is impacting how people see work, and what they think of capitalism, and this is creating new demands on organizations that didn’t exist previously. Consumers now think about where they shop, where they eat, who they do business with, and where they work more than they did in 2008, which is a challenge that many entrepreneurs and organizations are unprepared for.

 

The opportunity entrepreneurs have in the current market has to do with the advancement of technology. The digital transformation we’ve gone through since 2008 has provided business owners with access to consumers in a way previously impossible, even for billion-dollar brands. Entrepreneurs can participate in eCommerce, with millions of consumers buying products and services from their Apple & Android devices, something that wasn’t the norm in 2008. Businesses can now generate revenue online while their entire staff is home with their families. Consumers are completely comfortable purchasing food, home essentials, courses, and everything else imaginable, and having someone else pick it up and drop it off for them. In fact, according to Zippia.com, the mobile commerce market comprises nearly 73% of total e-commerce as of 2021, a 39.1% increase from 2016. Not only can businesses generate one-time transactions, but with the rise of the subscription economy, where consumers pay for ongoing services like Netflix, Amazon Prime, and Audible.com, businesses can generate ongoing revenue that increases the value they drive to their customers while also improving their cash flow.

 

 

Positioning Your Business To Win

 

 

To thrive in the current economy with uncertainty, inflation, costs, and negativity running rampant, you need to immediately refresh your mindset and begin to think about ways you might be able to shift your business model to increase revenue, attract and retain the best employees, and cut costs. The time to do this is now. Regardless of how you vote, the economy is shifting and as an entrepreneur, you can’t afford to do business the way you did business before the pandemic. It’s time to create products and services that clearly differentiate your business from others in the marketplace and communicate a clear market-dominating position.

 

When I went to work for AT&T in 2008, they sent me to a two-week in-person training to educate me on how they differentiate their brand from Verizon, T-Mobile, and Sprint. It wasn’t just about the iPhone, which is why AT&T has continued to be a dominant player in the telecommunications market. The key differentiators that made them a dominant player in the market were things like:

 

  • Being able to send a text message and receive emails while being on a call.
  • Unlimited internet options without having your speeds throttled.
  • Rollover minutes, which allowed you to bank unused minutes on your phone plan.

 

These, combined with the fact that they had exclusive distribution rights to the Apple iPhone for 5 years created a market-dominating position, something that customers couldn’t get anywhere on the planet. Even when the exclusive on the iPhone expired, I never entertained going to Verizon or any other platform that got access to the iPhone. I want that for your business and it’s not only by finding a product that no one else can offer, although it really is. It might not be as easy as signing an exclusive joint venture with a technology partner or supplier for your business, but it also could be.

 

 

Incremental Advantage

 

 

Signing a major strategic partnership with a company like Apple would no doubt change your business overnight. That, obviously, isn’t on the table for every entrepreneur. So in lieu of thinking of massive changes that can dramatically change your business, I want you to consider what is possible by making incremental changes in your business that will dramatically increase your net profits and potentially double the selling price of your business when it’s time to exit.

 

During the past couple of months, through The Entrepreneur’s Ultimate Tax podcast and other conversations, I’ve been learning from experts about something I call “incremental advantages”. The experts I’ve been networking with across different industries specialize in helping entrepreneurs improve their business with their specific service, incrementally. For example, in my area of expertise, I saved a 2-million-dollar company 15k dollars on payment solutions and it took me 15 minutes to run an analysis to help them take advantage of my experience. I referred them to another expert I know in the telecommunications business, and they were able to help their business too. It’s realistic to expect this business to recapture up to 100k in waste and lost revenue just from the inefficiencies we are finding by helping our entrepreneur clients position their businesses to shift with the changes we are seeing in the economy. The interesting thing about it is that they will likely uncover 100k in revenue without investing a significant amount of time to find it. I am seeing businesses drive major profitability improvements like this in less than 30 days without spending a dime on new advertising or marketing. Finding incremental improvements in your business could help you:

 

  • Create signing-bonus programs to attract employees
  • Develop and fund programs that retain key employees
  • Fund market research to develop unique products & services
  • Invest in marketing programs and joint venture partnerships
  • Improve cash flow to restructure or eliminate debt

 

This is just the start of the different strategies and incentives you could create to completely supercharge your business growth.

 

 

Build Your Plan

 

 

The one thing you need to thrive in the economy we are facing is a market-dominating position. Creating one will help you attract and retain the best employees and customers while also driving incremental advantages in all aspects of your company that will help you reach new levels of profitability. A few things you can do to prepare your market-dominating position are:

 

  • Study your products/services and where they stand in the market
  • Uncover what threats exist in your market and how they could be overcome
  • Determine what strategic partnerships could enhance your offerings
  • Reevaluate pricing, loyalty programs, and ideal client profiles
  • Evaluate vendor contracts and pricing

 

There are lots of opportunities for you to grow your business in the current economy, even if it’s incremental growth. Take the time to sit down and build your plan or hire some help to help you build your plan. If you’d like help creating your market-dominating position, don’t hesitate to reach out and schedule a call.