Social Media Basics for Your Business

Social MediaIf you are of a certain age, just hearing the phrase “social media” can cause you stress.  “Social media for business” is even worse.  The phrase represents so much that seems hard to understand!  We remember the good old predictable days of yellow pages, flyers, direct mail: the simpler world.  But you don’t build a business by living in the past, but by adapting to the present.  And while you may not have grown up with social media, just like old media, it’s just one more way to get in front of new customers.  Once you get used to it, it can become an ally, not something to fear.

Stats Don’t Lie

There are currently 3.78B social media users worldwide.

Among US adults alone, 84% of those aged 18-29, 81% of those aged 30-49, 73% of those aged 60-64, and 45% of those over 65 are active social media users, spending an average of 2.5 hours per day on various platforms.

People use these social networks to keep up with friends, but they also use them to do research, shop, and do business.

The Conversation is Happening

Chances are the conversation about your business is already happening on the Internet, whether you are participating or not.  Reviews on Yelp or Google or Facebook don’t need your permission to be posted.  In fact, to respond to them as the business, you need to claim and create accounts.  Do you really want a conversation about your business happening without your being able to contribute to that conversation?

Step 0?  Claim your Google My Business, Yelp, and Facebook Business listings, if you haven’t already.  Fill out the profiles as completely as possible, with relevant keywords, photos, and services offered.

Start with a Plan

Once you’ve knocked out Step 0, think about what you want to achieve on social media.  Do you want to:

  • Be in touch with existing clients
  • Meet new clients
  • Do research for future products/services
  • Learn about trends in your industry
  • Network

Or maybe, all of the above?  It’s all possible.  You just need to make a plan.  That plan starts with picking where you will be interacting.

Pick your platforms

It’s silly to try to win on every platform.

  • LinkedIn is the world’s biggest B2B platform
  • Twitter features a lot of decision makers who enjoy interacting
  • Instagram and Pinterest are perfect for businesses that have products and services with curbside appeal
  • Facebook and Nextdoor offer global and local social networks with everything from cat videos to questions like “Does anyone know a fill-in-you-business-here?”  They also offer lucrative and wildly successful paid advertising opportunities

Pick one, maybe two platforms to start and learn their rhythms.  How and when do people post?  What are they posting about?  Add value yourself by adding to the conversation via insightful articles or conversation starters about topics in your industry.

Be consistent.  It’s better to interact once a week consistently than to interact five days in a row and then go dark for a week.

Learn

Depending on the platform you’re going to be spending your time on, you’re going to be running into people and brands that are part of every facet of your business.  Keep your eyes and ears open to see what customers are asking for, what your vendors are interested in, what your competition is bragging about.  It’s all free information…for those paying attention.

Iterate

If you haven’t interacted on social media as your business before there’s going to be a learning curve.  Be patient with yourself and be willing to ask questions.  You’ll find that there are an enormous number of people out there willing to assist if you ask for help in the right way.  

Go for quality over quantity in your postings and interactions.  See what’s working and keep that, dump what isn’t.  Keep tweaking to refine and improve.  

It’s not hard to continue to get business from the channels you are comfortable with and know well.  But when you start to get business from a channel you’re only beginning to understand, then you can see the potential for what happens when you’ve gotten just a bit better.  And that’s what interacting consistently will do for you: get you better, until you’re no longer stressed out by hearing “social media for business” but are excited about the possibilities.

Even better?  When it’s time to sell your business, you’re going to augment your valuation by the goodwill generated on the platforms you participate on via your consistent habits.  That’s not money you want to leave on the table, especially when the corresponding time investment is so small in comparison.

We aren’t social media gurus but we happen to know some great people who are.  If you need help getting your social media strategy up and running we’d be happy to connect you.  Give us a call!

7 Reasons Your Business Should Create a Podcast

PodcastIn 2020 more than 100M Americans listened to a podcast at least once a month.  While some of that might be attributed to staying at home more, that number was the culmination of a 54% growth in popularity of the medium over the preceding three years.  39% of small business owners listen to podcasts, and of them, 65% listen weekly.  Podcasting continues to grow in popularity, and like any platform, it can be used to benefit your business.

1. A podcast provides effective, persistent, low-cost marketing

There are all sorts of ways to get your business in front of potential customers.  They can vary in cost and most of them disappear after you have finished paying for them.  But podcasts (like blogs) are persistent.  They show up in relevant search results for your business and will be searchable for a long time to come.

While the low-hanging fruit of a podcast is interviewing current clients and vendors and other inspiring people in your orbit, a well-known technique is to invite a potential client onto a podcast.  By inviting such a person to share his/her expertise, you also give that person an opportunity to know you better and potentially do business with you in the future.

2. A podcast increases your authority and number of opportunities

While “podcast host” doesn’t quite have the cachet of “author” it does indicate you’re someone who is comfortable chatting with almost anyone and as a result, you’ll have a chance to meet and talk to people you might not otherwise have been introduced to.  Your friends and colleagues will start identifying potential good guests for you.

3. A podcast improves your brand associations

Hosting a podcast gives you the opportunity to demonstrate credibility to people who may have never heard of you before without giving away all the “secret sauce” your company has.  You can be helpful to people who would not have become clients but who can refer you to people who would be.  By being generous with your knowledge, you’ll often find generosity in return.

4. A podcast is straightforward to start and maintain

Many of us grew up in a “radio” era and so we take some of those associations (expensive equipment, professional studio) and overlay those onto our expectations for podcasts.  This is simply not the case.  If you have a computer, a decent microphone, a quiet place to record, and podcasting software, you’ve got everything you need to get started.  Of those, the only two you might need to obtain are a microphone (very good ones can be had for $100) and podcasting software (prices vary between $5-$25/month).  

If someone on your team can’t be tasked with editing the audio and typing up some show notes, there are plenty of freelancers who can do that for you at very reasonable rates.

5. A podcast can fit into your schedule

Whether you choose to do an interview or monologue style podcast, you simply need to set aside some time to jot down some notes on what you’re going to speak on and then the time to record.  If you don’t have any margin in your business life to do that, there are bigger problems looming than the ability to create a podcast.

6. A podcast accustoms you to public speaking

We don’t all have frequent opportunities to speak in public.  Podcasting, like Toastmasters, provides you with practice.  You’ll find yourself cutting out “ums” and “ahs” when you hear them played back to yourself, and you’ll find your listening and questioning skills improving as you interact with different guests.

7.  A podcast is a chance for you to have fun

All things considered, people prefer to do business with those they know, like, and trust.  A podcast gives you the chance to put a human face on your business, and, when appropriate, “let your hair down” a bit.  You’ll be surprised how much fun you can have (and how much value you can add to others) once you get started.

If you still need some encouragement getting started on a podcast, we can refer you to a few people we know who are doing well with it.  You might even get on their podcasts!  Give us a call.

Responding to Customer Reviews

Did you know that almost 80% of people say that they trust online reviews as much as personal recommendations from friends and family? Or that 94% of consumers say that good or bad reviews have been instrumental in helping them make decisions on whether to patronize a business?  While at first those statistics might sound astonishing, the reality is that online reviews are a major part of how both businesses and consumers make decisions these days.  That means it’s a vital part of building a business you plan to sell, and an important component of any business that a buyer might be interested in.

Good, Bad, or Ugly, Always Respond

Responding to Customer ReviewsYou can’t control what people say in reviews, but you can control how you respond.  In fact, a good response to a bad review might be precisely what encourages someone to do business with you.  But not responding at all means that the reviewer has had the last word.  Let’s examine some principles behind responding to good and bad reviews.

Bad Reviews

It’s never easy to see your business taken to the woodshed, much less in a public way via an online review.  But what we’ve seen all too often is an emotional response from owners.  This is, obviously, not the way to do things.  Of course business is emotional and you hate to see your business, and by implication, yourself, attacked.  But an emotional response will only fan the flames.  

Firstly, assess and evaluate the feedback internally with your team.  Find out “your side of the story” and see if you genuinely failed, if the customer is acting completely irrationally, or somewhere in between.  Once you have the facts, respond, as rapidly as you can, publicly.  

In that public response, make sure to show that you are interested in having a one-on-one conversation.  Aspects of your public response can include:

  • Asking questions
  • Acknowledging mistakes
  • Empathizing
  • Offering multiple solutions

Standards of service are so low these days that any sort of ownership and desire to “make it right” from companies are applauded by even angry reviewers, and we can tell you of multiple business owners who have discovered a brand ambassador that began his journey with the company as an angry reviewer.  

Once you’ve had a conversation with the reviewer and had a chance to make things right, ask them to update their review, or write a new one if the platform doesn’t allow for updates.  

Good Reviews

While everyone loves getting a pat on the back, too often we see business owners taking these for granted and not reacting with the same urgency as they would to a bad review.  Any reviewer has taken time out of his/her day to talk about your business.  Respect that.  

Just as you would with a negative review, check with your team to see if there’s any “inside knowledge” that would make your response more authentic.  When you do respond, lead with gratitude and further, ask if you can add further value, in a way that makes sense for your company and services.

Most importantly, be willing to ask for a referral.  Customer goodwill is on a high after a positive review: it’s the perfect time to ask if there is a friend or a family member of that customer you can serve as well.

The conversation about your business is happening on the Internet every hour of every day of every week of every year.  Don’t let it be a one-sided conversation.  Let potential customers see one more aspect of your business: the way that you respond to praise.  And criticism.

We’re pretty proud of our customer reviews.  If you’d like to be one of them, give us a call to see if we can help you with a buying or selling transaction.

Don’t Forget about Working Capital

Don't Forget about Working CapitalWith any purchase in life, if there’s a large item at the bottom of the bill that you don’t see coming that makes your grand total larger than you expect, you’re generally not pleased.  When you are talking about business transactions, working capital is precisely one of those “didn’t think about that” amounts that buyers don’t realize is a necessary part of running a business after a transaction is completed and should definitely be on their minds as they move towards closing on a sale.

Definition

In this particular case, the textbook definition of working capital isn’t helpful.  That’s because it’s defined as your current assets minus your current liabilities.  The other unhelpful definition, which is used by too many systems-less business owners, is “the business checking account balance.”  The proper way to think about working capital is the amount of money you need to keep the business going: paying for your overhead and your staff and a little extra.  

Factors

Working capital needs are going to vary based on the type of business.  Think, for example, about the seasonal fireworks stands or Christmas tree businesses.  They have a lot of their working capital essentially tied up in inventory that needs to sell over a period of a few weeks.  Their working capital needs are much higher than, for example, a training business that collects all of the payment upfront and then uses those funds over a period of weeks or months to pay for the resources needed to complete that training.  

When calculating your working capital needs, the four categories you need to explore are:

  • Receivables (when do you get paid)
  • Payables (when do you pay your vendors and staff)
  • Inventory (how much do you have in stock and how quickly does it turn over)
  • Time (how do the three previous categories interact)

How to Obtain It

On some larger deals working capital can be negotiated into the transactions, with the buyer taking on some of the payables in exchange for some of the receivables and cash.  On many Main Street transactions, however, like the ones we handle here at Apex, we simply counsel our buyers to make sure that they have the working capital in place, whether that’s by setting aside some additional capital or by getting a line of credit or a combination of the two.  

Communication with the seller is key here and when it comes to working capital, you’re never going to get penalized for having too much of it to start off…but too little, and you’ll have the worst kind of problems imaginable.

Growth

So far we have been talking about working capital as a means to sustain a business.  But what about if, like most buyers, you want to grow a business?  Well, you’re going to need more.  Where can you obtain that working capital?

  • From your retained earnings.  This is the easiest place to find the funds.
  • From a line of credit or crowdfunding.  This needs time to get set up (having a bank relationship or preparing the proper paperwork for an offering) so you’ll want to do it before you need it.
  • Alternative financing.  This is typically used if you can’t find other means of financing, but it should be considered against the profits you are hoping to gain in growth, as this is the most expensive form of financing out there.

This is also another conversation that can be had with the seller.  “If you had more money to grow the business, where would you deploy it?” and the natural follow-up, “How much do you think that would cost?”  The seller wants you to succeed: it’s part of the motivation behind the transaction.  However, to err on the side of safety, when it comes to working capital, always remember to add at least 20% onto any estimate they give.  If you have some extra, again, that’s better than not having enough.

Do you have questions about whether you have the right amount of working capital in your business or are you considering buying a business and want help calculating how much working capital you’ll need?  We’re here to help.

Should You Use a PEO?

For HireWe often discuss the challenges that entrepreneurs face that don’t have anything to do with why they got into business in the first place.  Important but not necessarily thrilling topics like deciding between cash and accrual accounting or which financial ratios are best to understand your business don’t often move the needle for most entrepreneurs.  If HR is another one of those non-desirables topics for you, it might be worth investigating if a Professional Employer Organization (PEO) makes sense for your business.

A Co-Employer

You might have seen HR software that helps with a lot of the necessary paperwork that comes with having employees.  A PEO takes that one step further, by essentially sharing liability with you as a co-employer.  PEOs are most frequently used by small to medium sized businesses with as few as ten employees to as many as 300.  A PEO can handle:

  • Onboarding
  • Benefits administration (health, investing, etc)
  • Payroll and employee tax compliance
  • Leaves of Absence/PTO
  • Standard employee paperwork, like
    • Workers’ compensation
    • Unemployment insurance claims
    • OSHA compliance
    • COBRA

PEOs have to constantly keep abreast of new state and federal regulations so that’s something else you won’t have to worry about.  By actually being the employer of record for your team they are able to use economies of scale to get good deals.

Some PEOs even help you with sourcing and hiring talent.  This frees you up to focus to just:

  • Create job descriptions and determine pay
  • Manage and develop your team

It is said that companies that use PEOs have 10-14% less employee turnover, though that stat does come from their national association, so take it for what you will.

Cost and Downsides

Less paperwork?  Sounds wonderful!  Where do I sign?  A few things to consider first.

Cost

There are hundreds of PEOs operating in the US at the moment and there’s no consistent pricing but some estimates offer:

  • 2% of salaried and 6% of hourly workers’ gross pay per month
  • $40-$160 per employee per month

Downsides

There’s not a lot of flexibility within PEOs for customization.  They choose the third parties they deal with (again, benefitting from their economies of scale) and if you don’t like the choices you have in health care or investing, you don’t have alternatives other than going to another PEO.

It’s also inconvenient to cancel working with a PEO during a calendar year as you will then trigger multiple W-2s and tax forms as you move away from them as the employer of record and start with another PEO (or revert to your company being the employer of record).

There’s also the cost of a PEO itself, but often people move to one precisely because it’s less expensive (and less concern) than having a full-time HR person.

What to Consider

There is obviously a lot to consider in essentially partnering with a company to handle HR functions, but there are four issues we think are most important:

  1. Ask for references, particularly in your industry.  You want to know what the experience of someone in your field has been like with this particular PEO.
  2. Find out if the PEO you are looking at has independently audited financial statements.  There’s a lot to keep track of when your business is managing employees in multiple businesses across multiple states.
  3. Speaking of states, make sure that the PEO meets all the requirements your state has in place for such organizations.
  4. If you want to get really fussy, there’s a self-identifying IRS certification that only a small percentage of PEOs attain.  People who voluntarily do more paperwork for the IRS?  These are not people afraid of paperwork!

Are you thinking of using a PEO as part of growing your business or getting it ready for a sale?  Want a second opinion as to whether it makes sense for you?  Give us a call!

Crowdfunding Basics

CrowdfundingWhile we have been speaking about SBA and PPP options to get businesses through the challenging period of Covid-19, there is an additional type of funding that might interest some business owners who are looking to grow in the months and years ahead: crowdfunding.

While most people have become familiar with the principle of donation crowdfunding via websites like Kickstarter and Indiegogo, and debt crowdfunding via Lending Club and Prosper, many are unaware that the 2012 Jobs Act signed by President Obama got the ball rolling for equity crowdfunding.

Equity Crowdfunding

Equity crowdfunding is exactly what it sounds like: giving up equity in your company to people from the general public who are interested in funding you.  While the legislation was passed in 2012, it wasn’t until 2015 when the SEC adopted final rules for equity crowdfunding that platforms eager to help business owners could really get going.  

By making sure that crowdfunding backers were actually purchasing securities, the SEC de-risked both sides of the equation: business owners couldn’t just put up any project to get funded, and potential investors were given full risk disclosures so they couldn’t complain later on that they didn’t know what they were getting into.

Pros

Using equity crowdfunding, business owners can obtain funds they need for no credit or collateral.  They will sometimes get enthusiastic ambassadors for their company in the persons of the investors.  Studies also show that equity crowdfunding tends to skew local and regional, so that also means there’s often a community connection with these backers.

Investors have the chance to invest in small and medium sized businesses without having to earn the title of “accredited investor.”  They get to be involved, even if it’s in a small way, with a small business, and they have many different industries they can choose from.

This doesn’t mean there aren’t downsides to raising money this way.

Cons

For investors, the wait for a return on their investment can be longer than they are used to, particularly if they have mostly spent time in the stock market, where ups and downs can be more easily tracked and, sometimes, understood.  The securities are also illiquid, as there isn’t (yet) a secondary market for these shares.  Finally, investors can still get quite diluted, especially if the business decides to go on for angel or venture funds after a successful crowdfunding raise.

There are downsides for business owners too.  Firstly, a crowdfunding campaign is precisely that: a campaign.  You’ll need to put together media, collateral, and a clear message as to why you need these funds and what kind of return can be expected.  That takes time and money.  Of course, too, there’s the reality that you are giving up parts of your business, which, even if you’ve only made it a small percentage, will still come with certain legal compliance costs.

Platforms

The equity crowdfunding market is still pretty new so there is no Google or Amazon in the space yet.  Websites like WeFunder and Localstake offer minimum investments in projects as low as $100 and $250, respectively.  Localstake even has some sophistication in their equity crowdfunding, offering revenue shares, convertible debt, or preferred equity as options.

Other sites, like Crowdfunder and Fundable, are simply advertising platforms and don’t serve as a medium for transactions.  Investors make nonbinding pledges and transactions happen offline.  Fundable even offers help (paid, of course) with your pitch construction and prospectus.

Choice 

While we’ve spent most of this article discussing equity crowdfunding, the reality is that businesses are still free to use donation crowdfunding instead.  Those businesses can gauge customer interest in a new product by creating a crowdfunding page for it and if existing or potential new customers “vote” enough for it by prepaying, you can have the confidence to move forward, as you’ve essentially created a fully funded purchase order.  

Crowdfunding isn’t for everyone, either on the investor or business owner side, but there have been some good success stories so far.  This book chronicles twenty case studies if you’re looking to learn more about the field in general.

Are you unhappy with your banking relationship or are you looking for some alternative funding optionsGive us a call: we’d love to connect you with the right people.

Are You Charging Enough for Your Goods and Services?

Competitive PricingOne of the themes we often discuss in these articles is the failure of most business owners to think appropriately about the selling price of their businesses.  Very rarely do we meet a business owner who is aligned with reality when it comes to what their business will fetch in the marketplace.  But that might be part of a larger problem: pricing in general.  In this article we’ll revisit what you should keep in mind as you price (or reprice) your products and services.

Cost-based Pricing

Many businesses use cost-based pricing.  They take the cost they pay for something and add a fixed number or percentage of the cost on top and voila, you’ve got the price.  There’s a lot to like about this:

  • It’s simple – no complicated formulas
  • It ensures profitability – you know that you aren’t losing money on any product
  • It helps with bidding on projects – when asked to put forward a proposal one part of your calculations will be straightforward

Value-based Pricing

There are companies that base their pricing not so much on their costs, but on what the customer is willing to pay.  An Hermes bag or an Aston Martin car are the most obvious examples, but it’s not just luxury firms that use value-based pricing.  There are two keys in value pricing:

  • A product or a service that is clearly differentiated from the competition – there must be at least one aspect that is difficult for competitors to emulate well
  • A focus on customers that allows improvements or features to be added based on their desires – this implies open communication and strong relationships with customers

A Hybrid Approach

McDonalds is one of the most successful businesses in the world, not just in its corporate profits but at the individual franchise level.  They use a combination of cost-based and value-based pricing.  For example, the margins on burgers are fairly low or sometimes, during promotions, non-existent, as the burgers may be loss leaders.  Where the margins are unbelievable are in beverages, specifically coffee and sodas, and in their famous fries.  

As the single largest buyer of potatoes in the United States, McDonalds can almost, in a way, engineer the final price of their fries.  Sitting together in an Extra Value meal you have products with wildly different margins.  McDonalds has used research to extract the maximum price out of each item, but you can see the philosophies of cost-based and value-based pricing operating in the background.  Many places offer burgers, so McDonalds has to offer those burgers at competitive prices, but they have poured so much marketing into their fries that McDonalds fries command a premium: people are willing to pay more for McDonalds fries than for another brand, even if they know that ultimately we’re just talking about fried potato sticks.

Are You Charging Enough?

If you have a business which uses cost-based pricing, are you looking in your blind spots?  Are you examining opportunities to curb costs not just with individual products but with the system in general?  Are you monitoring the marketplace and in particular, your competition, to see what you’re up against?  Complacency kills.

If you have a business which uses value-based pricing, you are dealing with a smaller customer base, hence, are you making sure you are reaching your entire total addressable market (TAM)?  Also, are you missing opportunities for cost savings simply because you have been doing things in the same way for a long time?  Are you continuing to innovate so that you aren’t just sitting on your laurels, thinking that no one will ever be able to replicate what you do?

We’ve said before that it’s the small tasks that add huge value to businesses, and there’s no need to leave a lot of money on the table for a future buyer to scoop up just because you weren’t willing to do the work to make sure you were charging enough for the hard work of you and your team.

Remember, pricing isn’t a decision you make once and leave alone.  It’s one of the key drivers of value in your business, and needs to be tended consistently.

Do you think you might be leaving money on the table by not charging enough for your products and services?  Would you like a second set of eyes to help you look at the numbers?  Give us a call.  We’d love to help!

6 Reasons You Should Consider Hiring a Business Coach

6 Reasons You Should Consider Hiring a Business CoachThe top performers in many fields, from the arts to sports to finance, use coaches.  They don’t just have coaches in order to be the best: they want to stay the best.  It’s no different for business owners.  If you want to be playing at the top of your game, you should consider hiring a coach to get you there (and keep you there).  Let’s talk about some of the reasons why.

1.  What Got You Here Won’t Get You There

While it would be nice to imagine the business building journey as mostly an upward trajectory from zero, there are many bumps along the way.  At some point you may find that your sales have stalled or your margins have eroded.  You’ve gone as far as you can go on your own and all the signs point to needing help.  A business owner has to have the humility to ask for help and the willingness to grow beyond his/her current capacity.  A coach can help you take a hard look at what is missing and offer solutions to fill that gap.

2.  Accountability

We’ve discussed how an advisory board can help you stay accountable and grow your business.  But they can’t meet with you every month.  A business coach can.  He/she can help keep you accountable to goals and tasks you set together.  We know it can be easy to break promises to yourself.  A coach doesn’t let you do that.

3.  Objective 3rd Party

While your spouse, business partner, or even a key employee may be able to help you with some of these issues, they aren’t objective parties, and adding this dimension to your relationships with them can cause unnecessary strain.  A coach isn’t emotionally or financially tied to your business, hence he/she can offer more objective advice.  They aren’t within your organization, so they aren’t influenced by forces and emotions that can sometimes make it difficult to see and diagnose issues.  Outside perspectives matter.

4.  You Have Specific Issues

There are many tasks that a business coach can help you with:

  • Exploring different directions for the company
  • Calibrating marketing and pricing
  • Hiring a new key employee
  • Examining company culture and retention
  • Giving a second set of eyes to your financial statements
  • Advising on exit strategies 

As each month and quarter ends, you’ll be able to deal with issues as they come up instead of resigning them to that mental pile of “I’ll deal with that later” (“later” here can often mean “never”).  A coach can help you work step-by-step through what seems to be large and complex issues: breaking down the elephant, one bite at a time.

5.  You Feel Stuck

Things could be going well for your business, but you just feel that you need to grow in areas that you aren’t world-class in.  This could be negotiation, management, or leadership, just to name a few areas.  Of course there are plenty of great books and courses out there these days to help, but a coach can give the sort of personalized and focused attention that they can’t.

6.  Steam Valve

Let’s be honest.  Sometimes as entrepreneurs we just want to blow off some steam.  Perhaps it’s a vendor who hasn’t been paying on time lately, or a business partner who hasn’t been communicating well, or a troublesome employee.  Whatever the challenge may be, we sometimes just need a way to let off some steam.  Coaches can help you do that.  But even better, once that steam has been vented, they can help you navigate to the root of the problem and try to solve it.

Need a business coach but don’t know any?  We happen to know a few, and some that we’ve used for our own businesses.  Give us a call and we can connect you.

The Value of an Advisory Board

Advisory BoardEvery day, small business owners face challenges that they need help solving.  Sometimes their teams can assist, but other times these challenges may be in areas in which everyone lacks expertise, or simply lacks experience.  At these moments objective and experienced voices can help small businesses to solve problems, grow, and thrive.  Those voices can and should be part of your business’s Advisory Board.

What is an Advisory Board?

Don’t be scared by the term “board.”  This is nothing like a board of directors, with formal legal and fiduciary responsibilities.  This is simply a group that meets on a regular basis to “advise” on matters that you need help with.  

What is it For?

An Advisory Board is a toolbox with many different tools inside.  Typical activities at an advisory board meeting could include:

  • Examination of current financial statements
  • Critique of a planned marketing initiative
  • Postgame of a new product/service launch
  • Discussion of a challenging team member

The advisory board allows business owners to speak their minds: there’s no employment relationship here so there’s no reason for any of the parties to hold back.  

How to Build One?

If you aren’t a hermit and are regularly circulating through your business community, you probably already have the contacts necessary to build a board.  You’ll want to keep it small, somewhere between three and five members altogether.  While it would be ideal to have at least one person with some background in your industry, don’t be afraid to have board members who have never had anything to do with your industry: outsider perspective is valuable.

You may also want to avoid tapping family or close friends: we all know the dynamics of interpersonal relationships can sometimes lead to people failing to say what they should in any given situation.  Business is no different.  

What’s the Plan?

Before you invite anybody to do anything, start with why.  Why are you putting this board together?  Perhaps you are frustrated with your growth rate and aren’t sure why things are stagnating.  Maybe a part of your business is really broken and you don’t know how to go about fixing it.  Maybe you’re completely happy with your business and you simply want to make sure you’re doing all the right things and covering every angle.  Again, keep it focused: don’t write down every single reason you want an Advisory Board: one to three will do.

Once you know your why, think about when.  How often would you like to meet?  Monthly is a bit too frequent, and annually is not really that helpful.  Quarterly or every six months is best.

Finally, think about how you’d like to compensate your board members.  Very often people will be honored to be asked to help you with your business and won’t expect or demand compensation.  That said, it’s important to honor someone’s time and the compensation can be as simple as food at the Advisory Board meetings and occasional gift cards or thoughtful presents throughout the year.  These people are giving you their valuable time and expertise: respect that.

How Does a Meeting Run?

Like most meetings, you might want to just have some time for people to arrive and relax, and of course at the very first meeting, people will need to introduce themselves and their connection with you.  After that social time, you can start the business part of the meeting.  Deal with the “must cover” topics first but also leave time for other less important topics. Be okay with disagreement, even passionate disagreement.  Let everyone know from the start that it’s not about winning arguments but about sharing ideas.

Ideally you, the business owner, should be taking notes.  This forces the meeting to slow down while you articulate in your own words what you are hearing and make sure that everyone agrees.  Those notes should be shared after the meeting and in between meetings you may want to offer a periodic short update on a particular matter.  The Board should not only be hearing from you when you summon them to a meeting.

Last Things

You’re going to be dealing with sensitive company information, so each of your board members should sign a basic NDA.  Also, don’t be disappointed if someone you ask to be part of your board declines: instead, ask if he/she might know someone who would be a good fit.  Finally, check your ego at the door before and after every meeting.  These people are here to help you, not attack your baby.  Don’t take things personally: strive constantly to see things from their perspectives and hear them out.  You just might learn something.

Want to build an advisory board but feel like your network is a little thin?  We know a LOT of people.  Give us a call and see if we can’t help you fill those seats.

KPIs Every Business Owner Should Track

KPIs Every Business Owner Should TrackWhile business owners can be tempted to keep their eyes on every aspect of their businesses, there are a few key performance indicators (KPIs) that are the most important to know. In this article, we’ve collected those key KPIs and the reasons they should matter to those who want their business not just to survive in 2021, but to thrive.

Financial Statements

Most business owners know the health of their business by gut feel. Ask them any time, any place, and they can often give you answers that are scarily close to the actual numbers. But great businesses aren’t built on gut feel. You need to know your numbers, and you need to know them regularly.

Now we aren’t just talking about financial ratios (though you should know them too), but you should be measuring and tweaking:

  • Inventory turnover
  • Customer lifetime value (LTV)
  • Revenue per service/product

If you know these KPIs, you can improve your effectiveness, productivity, and cost savings in each area. You’ll also be in a better position to make the decision to stop selling a product/service (or put more money into a product/service) since you’ve been closely monitoring its performance.

Marketing

There are so many ways to effectively track the ROI of your marketing efforts. Armed with this information, you can find out what your customer acquisition cost (CAC) is and if you’re happy with it. While we might always like lower CACs, sometimes the market dictates that we are paying “about right” to get new customers.  

Apart from knowing your CAC you should know key metrics from whatever analytics you have installed on your website, including:

  • Mobile (what percentage of your customers access your site on mobile vs desktop)
  • Channels (how are you getting your traffic)
  • Navigation (what path does the customer take on your website)
  • Site speed (how fast are your pages loading)

You don’t need to know the exact statistics here, but you need to know the trends and how to address challenges. For example, if your site speed is slow, you need to get with your tech team and address that. You know from your own experience, but statistics also affirm that if a website doesn’t load within three seconds, more than half of potential customers will hit the back button or move on. These same principles apply to whatever reports are available to you on social media platforms apart from the engagement that you can measure on the surface via likes, shares, retweets, etc.

Human Capital

We’ve seen a great migration kicked off by the dawn of widespread remote work. That migration is still ongoing and it’s changing the dynamics of workplaces everywhere. The KPIs of the past were “attendance” and “productivity” and while those have their places, they are really lagging indicators. Better KPIs would be:

  • Engagement – how tied are your team members to the mission of the business?
  • Happiness – do your team members feel valued?
  • Drive – do your team members seek to move forward or grow with the company?

A business owner should know the answers to these KPIs for at least all of his/her direct reports. Businesses run on people, and those people can’t be an afterthought.

Customer Satisfaction

There are a plethora of tools available today to find out how your customers feel about their experience with your brand. There are online reviews across various platforms, comments on social media, surveys via email, and feedback from phone calls, just to name a few. The information you learn from these KPIs can help you determine the health of your business and which way you need to steer it. They can also alert you to blind spots in your product manufacture or service delivery.

Characteristics of KPIs

You can drown yourself and your team in KPIs if you want to: we don’t think that’s a good plan. KPIs should be:

  • Actionable (now that we have this data, we can do something to improve our performance)
  • Evolving (changes in the marketplace or business situation can force us to change expectations)
  • Simple (don’t make someone jump through hoops to provide relevant data)
  • Limited in Number (focus on a few key things instead of all of the things)

Feeling unsure what to do about some of the KPIs you’re unhappy about in your business? Give us a call!  We happen to know some great people who can help.