Flowers are more exciting than accounting!

This week, we are going to tackle the big UGLY A word: Accounting.  Now, before you turn off your browser and hide in the corner in fetal position, let’s set some boundaries.  These are my HUGE RULES for teaching people accounting:

• You are not an accountant and that is OK.
• I don’t expect you to become an accountant.  (I went to school for 4 years, took a gazillion exams, wrote a trillion case studies, and worked in the field for 3 years to have a small expertise in accounting.)  You do not need another career.
• Accounting math is not difficult.  Accounting involves 4^th grade math: addition, subtraction, very little multiplication and maybe some division.  The math is not hard.  Open your mind.
• Accounting terminology can be challenging.  It is a new set of words, ideas, and language.  But who said you can’t learn a new language?  My goal is for you to have a “tourist fluency” in this language.
• If you can swing it, hire someone to do your accounting.  However, educate yourself enough to understand “the big picture” of your business finances.
• You MUST learn the NUMBERS to your business in order to truly understand what your business is doing.  Without knowing the numbers, you cannot truly gauge its success.  (Are you making money, honey?)

People often shut off from understanding “the numbers” of their business because of a traumatic school experience with math.  The truth is that math is a small part of accounting for your business.  It’s also not as exciting as the “pretty” things in the wedding industry: flowers, paper, love, music. But, keep this in mind: you have a business above all the “pretty” things.  So, I’m going to set you straight.  We are going to start off this lesson in accounting from the VERY beginning.  Today we are going to get you organized!

Knowing your Numbers Step #1: Get Organized

I haven’t done any hard research on this, but I’m going to guess that most small business owners who do not know their numbers don’t have this first step down.  You must get yourself organized.  Without this first step, none of the other steps will work.  Find a system that works for you.

Here are my tips for getting organized:

• Set up file folders to hold your receipts for the entire year: one month per folder.  (I organize mine by month, but you might have different needs.)  Keep it simple.  Label 12 folders: January 2010 through December 2010.
• Use a labeler to label your folders. (I love my Dymo labeler.)  This is SOOOO silly.  I read it in David Allen’s Getting Things Done book.  It’s something psychological about seeing them neatly labeled.  I don’t get it.  But it works!  Don’t use the computerized/printed labels because you won’t want to set it up every time you need another file folder labeled.  (Trust me – I’ve done it the other way – handwritten or computerized – and failed at this system.)
• Label a 13^th folder: Accounting Inbox.
• As soon as you get a receipt or an invoice, place it in the accounting inbox file.  (No need to file immediately.)  Just get it out of your way; get it out of your distraction.  You can do this for client invoice copies and bank deposit slips too.
• Use fun folders.  If this floats your boat, do it.  I tend to get tired of patterns quickly, so I stick with boring manila.  I also hate when a pattern is discontinued and then I have discombobulated/mismatched files.
• Keep these file folders out of view but accessible.  You must be able to file things away quickly and refer to them when needed.
• Pick a day in the last week of every month.  It can be the last Monday of the month if you like admin work on Mondays.  I like the last Friday of every month because I like the finality of it.  I like to “wrap things up” before starting a new month.  Now – write down “Accounting Day” on your calendar for the next 9-12 months out.  You will be using this day each month to process your “accounting inbox” file.  (More on that later this week.)
• Maintain. Your system is only as good as you use it.  Find a system that works for you and that you can maintain.

That’s it!  You are now organized!  You are one step closer to KNOWING the NUMBERS of your BUSINESS!  I love it.

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Last week and this week, we are addressing specific situations of small business owners.  Last week, we covered The Upstart, The Recessionista, the Mompreneur (or Papapreneur).  Today, we’ll be discussing “The Plateau”.  I like to describe businesses that are at a standstill as having reached a plateau.

What is a plateau?

A business that has stopped growing (no changes in profit) has reached a plateau.  This is a business that has “maxed out” its market and its ability, but profits continue to remain the same.  In my observation, a business in the wedding industry that is flat for 3 years has reached a plateau.

Some questions to ask yourself…

The following are some questions that can be helpful to determine whether you’ve really “maxed out” your business’ potential:

• What percentage of market share does your business currently capture?  Is it a large enough share that you feel you’ve truly captured the market?
• What have your patterns of profit been since the inception of your business?  Have their been ebbs and flows? Is this part of the cycle?
• Have you made changes to your business in the last 2-3 years?  Have those changes resulted in additional profits, or does your business remain flat?

“Maxing out”

The issue of “maxing out” is a big one for businesses that are established.  After a few years in business, you will start itching for new ways to grow.  You may start seeking another market to enter.  You may start thinking of ways to increase profits by doing more of the same, but with a new sea of customers.

Sean Low, Consultant to those in the Business of Being Creative, recently wrote a post on his blog discussing the phenomena of “Growth vs. Expansion“.  In this article, he discusses expanding your core business beyond your current offering.  He emphasizes that by finding new lines of business, you will be expanding your business to the customer base that already knows and loves you.  Sean describes a high-end wedding stationer who expands into other design specialities: “graphic design, papery beyond life events (and life events beyond weddings), interior design fabrics (wallpaper, textiles, linens, etc.), and flooring (dance floors, tile, carpets).”

Many small businesses may feel like they’ve hit a plateau because they have maximized their current offering, but they haven’t even begun to touch the surface when it comes to offering a whole array of products, conceivably becoming a lifestyle brand of sorts.

The mindset of Plateau

In my opinion, businesses don’t typically (and truly) plateau.  It’s the business owner’s mindset that may be at a plateau.  I am guilty of this myself.  We start to feel like we can’t do anything more to grow the business.  We are stuck in our ways.  We are stuck in a pattern of success and are scared of change.  So, we stay the same.  So, how to get around this?

Overcoming the Plateau

Derek of Prevential.com wrote recently about ways to overcome a plateau.  These are my favorites of his recommendations and some of my own:

• Seek Outside Consultation
  Consultants can give you a fresh perspective on your business.  They can see things you don’t.  They can give you insight into what works and what doesn’t.
• Get a Mentor
  If you don’t yet have a mentor, or an advisor, now is the time to get one!  A mentor or advisor can be like a fairy godmother in helping some of your greater goals happen.
• Take Some Risks
  Many business owners who reach a plateau, have stopped making changes and taking risks.  What’s holding you back?
• Find Growth/Expansion Opportunities
  Like we discussed earlier, how can you expand your lines of business?  How can you broaden your brand?
• Scale Business Down
  Instead of taking the offensive (growing income), how about taking the defensive (cutting expenses)?  Where can you cut the fat in your business?  If you can trim some of the inefficiencies and wasted costs, chances are you can maximize your profit to a whole new level.

And, if you find yourself in a plateau in 2009, it may be a case of economic slowdown.  Scaling your business down now may mean that you are more efficient when the economy picks up again.  In a few years, you’ll certainly start to see an upswing in your profits.

See you back here tomorrow for “The Shy One” for business owners whose own ambition scares them.

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Many many many businesses are finding themselves in a tough spot this year. I could sit down and write a bunch of money-saving tips for you, but you’ve probably heard them all!

I’m going to take it back to BASICS:

• Know your numbers!
  You are going to hear me say this a million times in our relationships as blogger and reader. You must know the numbers to your business. Learn how cash travels in and out of your business. Study the patterns. Write it all down. Small businesses fail time and time again because business owners do not know their numbers. You can hire an accountant to do the dirty work, but know what your business is doing in $ and #. You’ll make better business decisions if you do.
• Know what’s contributing to your income and how to maximize your promotions.
  During a down economy you must work harder to attract customers. This could mean ramping up your advertising, increasing your networking, or maximizing your level of service. You need to know what’s working for you by analyzing your promotional return on investment. Are you paying for ads that don’t lead to sales? Are you nurturing relationships that don’t cost anything but result in high income referrals? This is the time to maximize your money makers.
• Take a look at wasted money.
  If you know your numbers, you’ll be able to determine where you are spending money that you don’t need to be spending. I did a series of posts to give you ideas on where you can cut some corners. Make a budget and stick to it. And, make sure that you aren’t cutting out on some the most important segments of your business: branding, service, and quality.

And, some words of inspiration…

• You are not alone
  According to The Wedding Report the average cost of a wedding went down 30% from 2007 to 2008. I talk to small businesses every day that have had a drop in the number of customers this year and a drop in the dollar values per order.
• Talk about it!
  If I’m having a slow week, it helps to talk with other businesses about their challenges. It helps to hear how they are making due with the troubles of a bad economy. (psstt… would love to know what you are doing about this! Post a comment below.)
• And, if you really need inspiration…
  Hopefully, you are not facing bankruptcy (or anywhere close to it)… but if you need to feel pumped to learn that many successful geniuses have also faced failures, read this.
• Freshen up your Branding
  If you have even just a few hundred dollars do something to freshen up your branding and website. When business is booming everyone in the industry will get a piece of the pie. But, in a down economy customers can be more choosy. If your branding is dated and hasn’t been updated in 4-5 years (or more!) it’s time for a facelift. You might love the designs you chose a few years ago, but trends change. What is the customer looking for? What does the customer expect? What is happening in the wedding market right now? Leila Kahlil of Be Inspired PR recently wrote a great post on Branding. In this post she discusses the branding of your company and the branding of yourself.
• Be Creative
  Have fun with it! To me, this is an opportunity to do new things with my business. Find new ways to market yourself. Find new people to reach out to and network. Find new ways to promote your brand. Host an event. When life gives you lemons, make lemonade. Now more than ever is the time to be innovative. Here are few ways that you can spice things up.

And like everything… this too shall pass!

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There are three common mistakes that wedding professionals make in their businesses.  These are mistakes that if not corrected will continue to plague your ability to succeed.  We’ll be discussing these mistakes this week:

• Under-pricing your services
• Paying for advertising that gives little or no returns
• Not setting boundaries for balance between work and personal life

Let’s get into our first mistake…

The PRICING problem

Many entrepreneurs open their business with this thought:  “I’ll set my pricing low in order to compete in the industry and raise my pricing once I’m established.“  This can backfire in so many ways:

• Clientele will become accustomed to your pricing and will come to expect it
• People will begin to refer you as the “budget” vendor and you will be pigeon-holed
• Potential clientele may not want to do business with you because they may see you as providing a less-than-valuable service (often a more expensive item is perceived to be of higher value; a less expensive item can be perceived as cheap or of poor value)
• You won’t be able to turn a reasonable profit (eg: if your business expenses are greater than what you are charging, you will be operating at a loss)
• It devalues the services of all of those in your profession

In setting your pricing, you should ask yourself the following questions:

• How can I provide exclusivity of certain products or services?
  This goes hand-in-hand with finding a market niche.  Find something that you are unique at and build on marketing that as something special.  Your pricing should reflect the exclusivity of what you offer.
• How do I add value to my client?
  This is very important in understanding how you will service your client and add value to their wedding.  The value proposition gives your customer an understanding of the benefit you are exchanging for the price you have set on the product or service.
• What does my brand say about my product and my level of service?
  Branding is extremely important in marketing a product or service that is of high-value and worth.  A brand that is synonymous with service and value is a brand is associated with the higher cost.

A few more thoughts…

Sean Low, President of Preston Bailey Designs, Inc. recently wrote a great post on pricing and gave some very strong recommendations on pricing strategies for creative types.  I recommend reading the post here.

A small business seminar I once attended mentioned that most small business owners under-price their goods and services.  Their recommendation was this:

price what you think you should charge,
and then add 10-20% for what people would actually pay.

The thought behind this is that people are usually willing to pay more for your services than you give yourself credit.  Don’t undersell your skills, value, products, and services.  You are worth it!

Tomorrow… we’ll be talking about advertising… and how to make sure it’s working for you!

Yesterday, we discussed promotion and the ways that a solid marketing plan can drive your sales.  Today, we are going to break down easy and inexpensive things you can do to turn an inquiry or appointment into a sale.  These are small things you can do that will tip your client into the category of “gotta have it!”

Portuguese Oil Salesman

Here are a few creative things that help make the sale:

Give them VALUE
People aren’t as price resistant if they understand that they are getting A LOT of value for their money.  In addition to your proposal, include a punch card that details the value your business will add to their wedding experience.  The items on the punch card will give them enough information to choose you over a competitor.  Your punch card could include the following:

• We will respond to all email inquiries within 12 hours (typical turn around for email during work hours 9-5 is 30 minutes)
• Since 2005, our clients have rated us 4.9 out of a potential score of 5 for customer service
• There will be no “hidden costs” in your final invoice; what you see is what you get at the time of the proposal

Your WORD
A guarantee is an assurance that you will perform as agreed upon.  In the wedding industry, brides and grooms are terrified with horror stories of vendors not delivering.  Assuage this fear by letting them know exactly where you stand.  captureplanning.com lists some helpful ways to write a guarantee.

Everyone loves a CHECKLIST
Give your clients a “checklist” of the items they’ll need to purchase from you over the next several months.  For example, if you are a photographer, some of the items that your checklist might include:

• engagement portraits
• boudoir session
• rehearsal dinner session
• wedding ceremony and reception photography
• prints for bride and groom, families, and friends
• photo books

(An alternative would be to provide them with the list of “shots” they’ll want to capture the year of their engagement and their wedding day.)   The expectation is rarely for them to purchase all of the items (though there is certainly nothing wrong with that!)  The expectation is that they see one additional thing on that list that they can’t live without other than the day-of wedding photos.  Alternatively calling this something other than a “checklist” can have more marketing appeal: the planner, the budgeter, the dream sheet, the wish list, etc.

Make it PRETTY
Packaging can make or break a sale.  It says everything about the service your provide, the passion you have for your product, and the care you have for your customer.  This can be as simple as tying a ribbon around your checklist (above), presenting your business card in a petal enclosure or boxing your photos in vintage wrapping paper.

Packaging all three of these together would give you client a little “gift” to take home with them.  Can you see it now?

Envision: A pretty little blue box with fuchsia ribbon that holds the secrets of your business:

• a “punch card” that lists how the client will benefit from doing business with you
• a guarantee statement that ensures your client can count on you, no matter what
• a “planner” (the checklist) showing all the awesome services and products you provide
• a business card from YOU

Do you have any secrets of selling that you want to share with us? Shoot us an email at TheSmartWeddingBiz-at-gmail.com .  If you’d like to be credited, please include your name and the name of your business.

Originally uploaded by http://www.flickr.com/photos/charmandpoise/

Ahhhhh… marketing… fun, slick, glamorous, shiny… images of Mad Men come to my mind…

Marketing is defined as the process or technique of promoting, selling, and distributing a product or service.  Over the week, we’ll break this down with how it relates to your wedding related service or product.  First up: Promoting!

Promoting:  What is your Promotion Strategy and how successful is it in bringing returns?

Many wedding related businesses advertise across a wide range of print and web media.  Given the social nature of our industry, networking and public relations, are also key.  But, what are those marketing methods bringing in terms of business?

Here are some questions you can ask to determine the effectiveness:

• How do clients find you?
• What is your best method of promotion?  (The one that leads to the greatest amount of revenue.)
• Are you spending money on advertising that does not benefit your business?
• How many clients who contact you make an appointment?
• How many clients who contact you place an order?
  

Not so sure on some of these?  For the next month, try this:

1. Make a sheet (spreadsheets are awesome, but pen and paper work too) that lists 4 columns:
   • client inquiry
   • referral
   • appointment
   • order
2. Client Inquiry Column: Keep a list of every client that phones or emails you – note the date and their contact information
   
3. Referral Column: In your first conversation, ask them how they found you (ad, client, other vendor, etc)
   
4. Appointment: When they book their appointment – make an X under “appointment”
   
5. Order: When they place an order – make an X under “order”

Keep working this tracking sheet until you have a firm understanding of your return on promotional investment.  You may find your wasting money on promotional efforts that don’t lead to any rewards.  And, you may learn that you are not maximizing certain promotional tools. Rethinking your marketing and promotional plan can be a money maker and a money saver.