When it comes to accounting, few people have the credentials Stacy Kildal, founder of Kildal Services LLC, has. An internationally recognized QuickBooks Online expert, Stacy has been recognized as one of CPA Practice Advisor’s 40 Under 40 and Most Powerful Women in Accounting for the past three years.
In 2014, she added a couple of new notches to her belt by being named one of Accounting’s 100 Most Influential People; in addition, her peers voted her one of the Top 10 QuickBooks ProAdvisors.
All these accolades aren’t just for show. To date, Stacy has helped nearly 500 small businesses avoid wasting time and money. You can catch her every week on TheQBShow.com, but today, she’s back at the WORK[etc] blog with another insightful piece on how to keep a small business from hemorrhaging money. Read on!
When I was asked to write an article on the most common ways a small business wastes time and/or money (and let’s be honest here, those are the same things, right?), I thought this would be a cinch.
I was 100% wrong.
Businesses can bleed money in so many ways. Once I started asking people to weigh in, their responses blew my mind. When I thought of all the things I’ve seen over the last 11 years and looked at some of the things others contributed, I noticed a few ideas that kept popping up.
No sales pipeline or lead tracking
I’m absolutely guilty of this. I would estimate that in the first six to seven years I was in business, I probably left thousands — no, TENS of thousands of dollars — on the table because I did not have a way to track prospective customers and clients. You need to have SOMETHING, even if it’s as simple as a shared Google doc. Obviously, I think one great tool for this is WORK[etc] — it’s a CRM and a project management tool in one. Why not kill those two birds with one kickass stone?
Chasing money
This one blows my mind every time I hear a small business owner (generally consultants) say he or she doesn’t want to pay processing fees to accept credit card payments. I always point out the cost of only accepting checks: the wait to get paid, the time it takes to prepare the deposit, and the gas used driving to the bank to make the deposit.
Small businesses are also losing customers altogether by not accepting credit cards. The area around our old house had a carpenter ant problem, and everyone on our street had a “bug guy.” One of my neighbors recommended hers, but I couldn’t work with him — he didn’t accept credit cards, and we don’t use paper checks any more. If you make it easy for people to pay you, THEY WILL. And they’ll do it much more quickly!
Not getting rid of a bad hire soon enough
One of the people I talked to for this article mentioned a client he had; it was an engineering firm. If, for some reason, a hire didn’t work within the first team he or she was assigned to, he or she would be moved to another team and receive more training. This would continue until he or she eventually ran through pretty much every group in the company.
The company would often just keep that person, knowing that they … well … sort of sucked. If you hire a person for a specific position and they’re still not working out after 90 days? Let. Them. Go.
![WORK[etc] Small Business Survival Strategies](https://wetc2.wpenginepowered.com/wp-content/uploads/2015/04/hireslowfirefast.png)
This goes hand in hand with the sunk cost fallacy, which involves knowing when to walk away from a project. Arianna Huffington and Seth Godin wrote two great articles that explain this better than I ever could.
Unnecessary collateral or misdirected advertising
Don’t get me wrong — it’s great to have swag. I do TheQBShow.com every Tuesday, and we just ordered 100 shirts for a special promotion we’ll be doing at this year’s Scaling New Heights conference. We put our logo (which includes our website) on the front of the shirt, and we put all our sponsors’ logos and websites, the day/time of our show, and what the show is about on the back. Everything we put on the shirt is intended to drive people to visit any of the websites they see on that shirt. We only ordered enough for the promotion.
Another colleague told me about a client who recently spent thousands of dollars on shirts, hats, pens, tote bags—even SOCKS! This business put a slogan on the items that had no identifiable connection to their company; in fact, a Google search for that logo takes you to a Norwegian website. The company is located in the United States, near Minneapolis, Minnesota! The company had no plan, no budget, and no target audience for any of these items. Who’s going to see logos on socks?
We worked with designers to help with our shirt, and we worked with a consultant to help create the promotion. That promotion was targeted to a specific audience, for a specific desired outcome, with a specific budget and timeline.
The last thing I want to mention is that sometimes, it’s hard to look at your business from the outside in. This can make finding areas in which you’re losing money difficult. If your budget is so tight that you simply cannot afford to hire someone who knows your business (Matt Rissell, CEO of TSheets.com, said “Don’t hire consultants that aren’t familiar with your industry”), you can identify issues internally.
The one I like best is to list all of your company’s processes and its workflow. Hiring, sales, purchasing, marketing — all of it. Then list the pain points involved with each and who owns the process. This will give you a good starting point to identify where issues might be; then you can tackle them one at a time. Hint: if no one owns a process, that’s a good place to start.
COMMENTS
Thanks for the article. I can’t agree more with “Not getting rid of a bad hire soon enough” Sure Mr. Smith is a great person and everyone likes him but what does he do exactly? Business’s need to realize that employees are like any other investment which require a return in the same way you’d expect from a stock purchase. If a stock investment isn’t performing, you let it go, so why not an employee?
Because people don’t like confrontation. I remember a former bookkeeping client – I had only been working with her for a few weeks, asked me to come into her office while I was there doing payroll one day, which wasn’t unusual, her and I generally had a recap of what was happening when she had a few minutes in between patients.
It was a status meeting – it was me sitting in with her while she fired someone on her staff. I can’t even imagine what that person must have been thinking: “Why is the bookkeeper that only comes in 3 hours a week in here for this??”
Interesting article that raises some great points – thanks Stacy…
Funnily enough we recently experienced the pain of a bad hire (terrible attendance record) but as luck would have it they ended up leaving soon after starting!
I would add in my experiences of “Saying yes to a problem client when you should have said no”. I would say 60% of our time has been wasted in the past by taking on clients that we knew from our gut-instinct we should have said ‘no’ to.
The kind of clients that don’t know what they want until you build something for them and then they say “Oh that’s not what we wanted at all”
Learning to say no is just as important to keeping your business healthy (not to mention your sanity) and you will definitely benefit from dropping those clients that are a time-sink and a drain on your resources.
Speaking of working with bad clients… Here’s an article that prompted us to put at the top of our 2015 marketing plan: “DO NOT WORK WITH CLIENTS THAT SUCK”
http://bit.ly/1IQbgah
Thanks Stacy, The other thing that I find can be a ‘hidden drain is unneeded subscriptions or old service plans. Because it is easy to sign up for subscription services that only cost a small amount each month sometimes they can slip through the cracks however I found recently that when I reviewed all the things we were subscribed to that it added up to quite a bit and that by removing the ones we didn’t use we saved money without much effort.
The other thing is services where you are on a more expensive grandfathered plan, this is especially true with telecommunications and Internet etc where the prices keep going down. Often you can either save money or get more for your money just by reviewing what plans you are currently on.
I re-heard a quote recently that is fitting. “Some people are in Business to save money and some are in Business to make money.” I think this is why Stacy’s point above about Sales pipeline and Lead tracking etc is one of the most important.
Good one! The subscription issue pertains to both businesses and personal accounts… And I’ve been guilty on both counts before myself!
I’m happy to say that the company I work for does all these things right (well, I assume we do the only keeping good employees because I’m still here!).
But seriously, I think sometimes you have to realise that there isn’t always an obvious reason why a business doesn’t succeed. You can follow all the guidelines and still crash and burn.
If a business is doing all of these things right, and still failing, they may want to start talking to those lost prospects and find out exactly why. Sometimes the service or product itself, the timing or the location, the way it’s marketed or the pricing. Or there just isn’t really a need for it, like, say, this:
Fundamental to anyones success is the 10% rule, you must constantly cull 10% of your clients as this 10% sucks 90% of your resources. Hanging on to long to a needy client will quickly sink he ship
I encourage my clients to use a Client Scoring Matrix, customized to rank clients on criteria that are important to their firm. Clients with lower scores are either let go, or an action plan & time frame is put in motion to remedy any problem areas with the client.
Great article Stacy, with lots of food for thought. I loved your final tip on listing processes and workflows and identifying owners & pain points.
In our manufacturing consulting business, we normally begin an engagement by creating a “current state map” that outlines current processes and a “future state map” that outlines where we want to go. While implementing WORKetc, we discovered that it is so different and feature rich that we could not create a future state until we knew what was possible. We formed a “pioneers” team a year ago to explore the possibilities and are just now bringing the rest of our team along. As they come along, they are identifying even better ways to proceed. Just this morning, my team showed me 4 features of WORKetc I had missed during my “pioneering” days. I am thrilled that they are so engaged.
Thanks!
I love hearing stories like this – one of my coaching clients introduced her small business client to WorkETC and while it will require a major overhaul to their workflow, they’re really interested in it. Maybe you should write something about your experience to share with other users!
“Fire fast…” – You guys have obviously never worked in France!
For some inexplicable reason the wise politicians that make the rules are in complete denial that making it near impossible to fire anyone has any correlation to the ever climbing unemployment. But hey – what do I know- I just run a business here!
Otherwise… great article. A lot to be said about targeted advertising. Amazing how that sees to trip everyone up. I think we’ve all been there at some point: Looked back and said “Mmmm. Just who exactly where we aiming at there?”.
Here in the US, many states (including the one in which I live) are “at will” employment. This means that employers don’t necessarily need a reason to let someone go… and many companies have a 90 day “probation” period as well. Not that I’ve ever seen many employees NOT make it past that, as you can tell from the article 🙂
Thanks for the kind words!
‘Fire fast’ was definitely a practice that we needed to adhere to. Our company is small and training new people takes a lot of resources out of our normal production. Therefore every hiree is an ‘asset’ – one that is hard to lose even with mediocre performance. However, re-training over and over with no progression was ultimately hindering us and we had to let them go just as they passed 90-days. Definitely a lesson learned.
The collateral and advertising expenses have been a big discussion for us lately. We have multiple trade shows each year. Our give-away budget is set and then we figure out exactly what we can squeeze into it. But, the rule is the give-away can’t be just another dust gatherer for a desk. If it isn’t functional it doesn’t matter if it fits in the budget.
Sometimes we get nice ones that everyone at the show wants. We are able to use those nice ones for special deals or to get attention for the “limited quantity”. We also take the leftover cash from not getting the cheap useless stuff and have AmEx gift cards printed that say Congratulations from Kardon for drawings.
I don’t have real numbers on how much difference it makes but I do know I am able to spend within the budget set and then get a lot of attention from the target market at our expos.
Do you think there’s a way you can determine your ROI on these? Possibly capture booth visits with a google form to see whom you convert to customers? Trade a business card for swag?
I think hiring slow is just as important as firing fast, because it is important to fill roles and needs as they arise. I do agree that it in some respects it makes sense to cut ties with someone who isn’t a good fit for the organization, and from my experience you can usually figure that out in a couple of months.
Another piece I would add is to only hire for positions or roles that your organization actually has a need for. In other words don’t hire someone who is talented just because you think they are talented. Find the talented person that fills the void you currently have. It may take more time to find the right fit for a specific position, but it saves time & headaches in the future.
Thank you for the article & perspective. It’s always good to hear from other professionals!
This was a great article describing crucial things that can cost a lot in your business. All the points Stacy mentioned are spot on and makes sense. Chasing money was an issue to handle. At first it was all about good faith, and well it worked with a majority of clients. Then of course eventually you run into some issues. Next came, implementing better contract wording and fees. Finally, it was just apparent to go with retainers by accepting credit card and setting recurring billing.
I agree with hiring slow, fill a roll when it is really needed but also hire outside the box. Focus less on degrees and experience and more on creative thinkers who can come in with a new perspective. Obviously there needs to be some level of qualification but a smart thinker can beat experience any day of the week, speed up the training process, and save you money in areas of your business you may not have even thought of. With this it is important to make sure all employees have a voice across departments as a team effort without creating an element of fear that someone’s toes are going to get stepped on. For example someone in sales may have a genius marketing idea. If that idea is implemented it should be alongside the marketing team without someone thinking that salesperson is going to take a marketing job.
Great article. I am still trying to grow my business so the tips i gleamed from this will be invaluable.The tips for helping me grow like hiring slow and getting rid of the deadwood fast is really gonna save me time in the long run. I think ultimately by planning the growth effectively and listening to others and mentors will be the biggest safest bet for success.
The Sales Pipeline – oh the number of businesses not focusing on this is actually outrageous. How on earth will you drive any business growth if you have no strategy and a proper manner in which to deal with your leads? Thanks for the article Stacy, strategy #5 got me smiling here.
I agree with this article.
-Businesses often overlook basic business principles like your in business to make money. For example, employers often hold on to dead-weight employees because they have too much emotion wrapped up into the process. Evaluating an employee should be a business decision not an emotional one. Not only does this affect the bottom line but you tend to lose good employees in the process.
-Not having a sales strategy and a way to track is paramount in any business today. A business has to be competitive and organized in its sales process and must have some sort of CRM application to track its leads and projects.
-Cash flow is a key component to your business. You have to have money to make money as the saying goes. You need to make strategic decisions that will generate cash flow for your business faster. Accepting credit cards, billing a month ahead of time, giving discounts to customers who pay early, etc. These are all solutions to getting paid faster.
-We all love swag. Its great. But let’s be honest, most of us could care less who gave it to us and it usually ends up in our children’s hands anyway. Be mindful of how you market and who you market to by knowing your audience. Spending a little time investigating what will work best will pay off in the end. Sometimes simple is best. Don’t be afraid to spend money on marketing but make it count.
Brilliant article – those 4 are definitely key.
Our business changed as soon as we started accepting credit cards as payment. Proportionally around 40% of our customers prefer to pay by credit card and we don’t charge extra for paying that way – but we get access to the money the next day which is great.
We are about to integrate WorkETC with Xero (sorry Quickbooks) – and hopefully this will take our accounting and invoicing to the next level because of the integration.
All in all great reminders above – thank you for the article.