Debunking the Myth: “You need to spend money to make money”

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This is a guest post by Shabana Shiliwala, who owns The Financial Sort, a financial planning company based in Austin, Texas.

How many small businesses have gone under because they believed the myth “You need to spend money to make money” at face value? Following this phrase literally has led too many business owners on the wrong path, forgetting the first rule of business success–be profitable.

Remember this simple equation: Income – Expenses = Profit. If your profit isn’t where it needs to be, take a closer look at your expenses. You only have so much control over your income, but you’re fully in control of how much money you spend.

Debts
Many business owners automatically believe they need a loan to operate a business based on their estimated operating costs. Try reversing your thinking: can you lower your operating costs so you can borrow less or eliminate the need to borrow any money at all? The less money you owe, the less money you’ll spend each month on debt payments.

Tax deductions
You’re not the only business owner who has fallen into the spending trap of thinking, “It’s deductible.” Deductions only matter if your business is making enough profit to owe significant taxes in the first place. Even when your business has reached that point, you can have it both ways by making a contribution to a business retirement plan–you get the deduction without spending any money.

Employees
Employee expenses usually make up the bulk of most income statements–payroll, unemployment taxes, benefits, etc. Before deciding you need more employees or even any employees, consider lower-cost alternatives like hiring an independent contractor or temp as needed.

Rent
Besides being one of your largest monthly expenses, renting commercial space usually involves lengthy lease timeframes, reducing your flexibility to cut costs in this area. New business owners often dismiss the idea of starting out by working from home, but choosing this route could put you on the fast track to profitability by keeping your expenses low. When that’s not an option, start out with a lower rent at first by choosing a smaller space or less trendy area. You can always expand and upgrade once your business income can support a higher rent without affecting profitability.

Advertising
Social media has created low-cost advertising options that never existed before. If your target markets use social media, you can reach large numbers at a fraction of the cost of advertising in traditional media.

Stop following the crowd before you fall off the cliff. The reality is, “You need to spend less money to make money.”

The Best Food for Business Growth is CRM

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After five years in business SEO Works deployed Zoho to break out of its small business organizational chaos to become a medium-sized company managing 140 clients.

Business

Based in Australia and San Francisco, SEO Works is a medium-sized company providing search services. They work with clients that want to increase their visibility with search engines. Having started with just a couple of employees, SEO Works has 24 employees today and a thriving business with hundreds of ongoing projects.

The Challenge

Nine years ago when the company started, they had everything a new business would want – leads and referrals. Unfortunately that information was captured in a haphazard fashion. Leads were written down on slips of paper, or copied into spreadsheets. For a couple of people in the office, that was manageable. Once the company had four employees, they were seeing some problems, admitted Keith Paulin, Group General Manager and employee number one of SEO Works.

The poor management of contacts meant they were not able to handle new opportunities efficiently. “As you get bigger you need to make sure those opportunities, as they come up, don’t slip through the cracks,” said Paulin who realized that at 10 people it became critical for them to find a collaboration solution just so they could support their clients.

SEO Works faced the same troublesome issues most small companies faced. Their lack of organization, collaboration, and insight into how well the business was doing meant it simply couldn’t grow.

What CRM solution works for our growing business?

As they struggled to grow their business, SEO Works also struggled to find a CRM solution that would work with their unique needs while also not taxing them financially and with unnecessary development.

They tried a free CRM for a short time, but it was so unmemorable that Paulin honestly can’t remember its name. Then they gave Salesforce a go, and stuck with it for about a year and a half. While Paulin admitted that Salesforce is powerful, it was somewhat inflexible and didn’t connect with everything they wanted it to connect with right out of the box.

They wanted a solution that would map their entire business from end to end, in their point of view (e.g., from phone call, to request, to project). While that was possible with Salesforce it would have required a ton of learning, an external consultant, and very detailed development work. They simply didn’t have the time nor money to deal with that.

SEO Works admittedly had a love-hate relationship with Salesforce. And once they got to ten users then the licensing costs became an issue, said Paulin.

How discovered Zoho

When I asked Paulin how they discovered Zoho he simply responded, “We’re a search engine optimization company.”

Through just natural search SEO Works stumbled upon Zoho. Four years ago they were dazzled by the fact that requests could come in via websites and then fed directly into Zoho. That’s nothing by today’s standards, but back then to SEO Works it was a big deal.

Not only was the simple usability attractive, but so was the flexibility of the licensing. It was extremely easy to add users. Paulin didn’t have to worry about signing long term contracts with a CRM vendor. As a growing company, it was very important for them to easily add new licenses and not be encumbered by a long term contract.

Using Zoho to map the entire business flow

“One of the great things about Zoho is you can hit the ground running quite quickly,” said Paulin. “We were literally an out of the box user.”

SEO Works quickly put their entire business flow into Zoho CRM and Zoho Projects. They bring in leads. Leads become accounts. An account then creates a case. They create products, prepare quotes for clients, and then convert those to sales orders which are moved into a different cloud-based accounting solution, explained Paulin who also liked adding business rules to leads which automatically routed them and triggered further actions.

That flow continues when Paulin is outside of his office. He uses Zoho on his mobile and loves the feature that allows him to enter information about a call right after the call completes.

Visibility into all operations

“We no longer have that level of small- to medium-sized business discomfort that says, ‘How’s my business doing,’” said Paulin. “I can see very quickly, literally in two screens, how we’re traveling, where that business is coming from, how that’s moving through the system. Our business revolves around Zoho.”

Unlike SEO Works’ early days, they now have very measurable benchmarks thanks to Zoho. They know the number of leads that come in and how many of them are hot.

“Those kinds of benchmarks for a growing company are very important to us,” said Paulin. “We would never have been able to grow to the size that we are and to deal with the clients that we deal with [such as IBM and Telstra].”

“We wouldn’t be able to manage those projects and we wouldn’t be able to make sure we manage them effectively, deliver a good product, and deliver it profitably. So to be absolutely honest, without Zoho we wouldn’t have gotten to the stage that we’re at,” admitted Paulin. “I wouldn’t know end-to-end about 400 projects and duties going on. I couldn’t have that at my fingertips without Zoho.”

What are you going to do when you do get the business?

Many of SEO Works’ clients are young companies looking to grow themselves. While Paulin’s business can drive traffic and generate leads, they’re not designed to reinvent their clients’ businesses.

Before they deploy a SEO solution that will deliver results, SEO Works asks their clients, “When we generate this business, then what?”

The response is often met with silence to which Paulin will often respond, “We think you need a CRM solution in place to begin to deal with this stuff.”

The client may hem and haw, but it’s necessary not just for the client, but also for SEO Works.

“It’s selfish for us because we want them to see measurable results coming into their business,” said Paulin.

Delegating Tasks and Managing the Flow

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This is a guest post by Sandra Faleris of SmBizWinningTips. 

How does your business get from A to Z on projects, expansion efforts, and on-going tasks? After they are complete, what’s your method for tracking, reporting and reviewing? Managing tasks and work flow helps your employees, and the business, achieve goals and accomplish projects in a gratifying and efficient manner. There are positive side effects to becoming and staying organized.

It is one thing to delegate and quite another to ensure project responsibility and accountability.

Effective task management includes all aspects of a task that are important to track, such as its daily or weekly status, time spent, steps required to finish the task (internally or externally) and more.

5 primary groups of activities that can be tracked in nearly any business:

  1. Functional: These activities include everything that pertains to sales, employees, quality control, and customer delivery and satisfaction. Anything that moves the product or service from inception to completion would fall under the category of “functional”.
  2. Creative:  Brainstorming, marketing, displays, business development, diversification.
  3. Service:  Quality control, returns/refunds, special customers, unhappy customers, Mystery Shopping Programs, surveys, customer rewards programs.
  4. Project:  Special projects outside of day-to-day operations would be in this category. Planning, cost-accounting, research, testing.
  5. Performance: Performance of your staff, products and services.

Using the help of online applications or software options can offer easy management solutions for moving tasks and projects through the pipeline quickly and effectively.

Do you need a project-tracking tool?

Go through this checklist to get a better idea if a project/task management online application would help you and your business. After all, in a small business, the more automated you are, the more time your employees have to effectively work on the projects and tasks. Ask yourself these questions:

  1. Do you visually track projects and tasks? Or are you still using the verbal follow-up method?
  2. How often do projects get completed on time?
  3. Does everyone in the company understand their role in all projects and tasks?
  4. Are incremental steps given to help projects move forward more easily?
  5. Does overall blame happen when something isn’t accomplished because no one was originally assigned to the project?
  6. Do you feel on top of forward movement in every department, every day?
  7. Is your growth managed and broken down into projects and tasks that can be tracked?
  8. Are employees rewarded for accomplishing tasks on-time and on-budget?
  9. Do you consider everyone and everything an extension of you? For example, if you are the CPA, Attorney or other service professional and you have a support staff, do you give short and long term projects and goals? Or is everyone ready and waiting each day for instructions?
  10. Do you have a vision that is on paper, or just in your head?

If you answered “No” to more than two questions, an online project management tool is highly recommended.

Task management tools and software are available in many different formats and pricing options. Depending on your industry and business-use, it’s recommended to select the application best suited to your needs.

After implementing a new system, it will surprise everyone how quickly projects get successfully completed. It is gratifying to experience project completion, particularly when it helps propel the company forward. 

Using Zoho to Teach Students Project Management

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“Ahem, class, are you paying attention? Your first assignment is to find a project management tool that’s easy to use, friendly, and can work well with a CRM application.”

Believe it or not, that was the first assignment Robert Braathe of Braathe Enterprises gave to his students. Braathe runs a virtual internship program that gives college students real experience. And teaching project management is critical for operating in the real world, said Braathe.

“If you don’t have a project management tool in place, you’ll just throw a lot of spaghetti on the wall,” Braathe said. “With a project management tool you can keep things on track and do more things at once.”

At the Small Business Expo in New York, I spoke with Braathe about why he and his students chose Zoho. He said that Zoho met their comfort level. It was user friendly and most similar to Google Apps. But they also liked Zoho because they were looking for a CRM tool as well. In their search they discovered other CRM applications, but they were either very clunky or really expensive. With Zoho, Braathe and his students liked the interactivity with other applications, the ability of multiple people to sign on, and the ability to just scale it up as they need it.

An update on Zoho Sites

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We have made enhancements in three different areas on Zoho Sites. These minor updates have been made for better functionality before we bring out some really major changes that we’ve been working on.

  • Thumbnails in File Manager
  • One-click protection of all pages
  • Generation of sitemap

File Manager gets a Facelift

The collection of images you uploaded will be listed on the file manager, as thumbnails. This makes it easy to pick the one you want to include on a page. Other files will be grouped based on file type.

Password Protection

Password Protection has had a change of philosophy. You already could protect all pages on your site using one password. Now, you can do it in one click.

SEO gets better with Sitemap

Another area of change is SEO. We’ve added sitemap generation. Sitemaps are to inform search engine bots about the hierarchy of your website and how each page is connected to the others. Bots crawl webpages based on priority and the frequency of updates. By this, bots know which pages on your website should be crawled frequently in order to present the latest information to searchers.

As for the big ones, we are eager to announce a couple of integrations with Zoho Sites and usability enhancements, coming up soon. Stay tuned.

The Critical Need to Integrate All Customer Information

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The more knowledge a salesperson has about a particular customer or group, the better decisions they can make and insight they can gain, said Paul Greenberg, Principal of The 56 Group and Chairman of the CRM Evolution 2012 conference in New York City where I spoke to him about the importance of integration.

Companies are gathering information about their customers from a variety of sources such as the social web, traditional communications, and the commerce transactions captured in their CRM.

“You’re much better off knowing all of that, than just a part of that,” said Greenberg stressing the importance of integration. Yet Greenberg knows that companies aren’t necessarily going to dump their investments in their web, financial, and CRM systems just for the sake of integration. Rather, they’ll look for ways to tie existing systems together.

Technically, integration can happen through the use of middleware or via application programming interfaces (APIs), which are pieces of codes that allow disparate systems with data to talk to each other, said Greenberg.

A Tax Break Ending Soon – Internet Sales

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One of the most compelling tax breaks is coming to an end in the near future. Internet sales are booming and the incredible tax savings that comes from buying supplies or equipment off the internet might soon be over.

Before legislation speeds up this process, it is important to take advantage of this huge loophole and the overall savings that can be realized.

Products purchased from the Internet often cost less.

Buying just about anything from the Internet offers not only a break in paying sales tax, but often a cost savings over local retailers with hefty leases and greater operating costs. So it’s often a double savings from buying local.

Think about purchasing higher quantities to take advantage of large volume discounts and be prepared to be surprised at the savings.

Internet shopping often saves on shipping.

Many Internet retailers can even offer free shipping, while simply absorbing the cost and still bring in a higher profit margin than a retailer that runs out of a brick-and-mortar storefront establishment.

Shipping has also come a long way. Products arrive unscathed right to the door with the same guarantees, even saving a bad back or the headache of getting it from one location to another. Competition in shipping has also lowered the cost and expedited shipping is readily available.

Time saved by comparative Internet shopping saves too.

When business owners or employees are sent out to purchase products, the money spent doing so is often overlooked. Ordering products from the Internet can be accomplished from the office with a few simple strokes of the keyboard and click of a mouse. Most websites take less time to complete a sale than the time that can be spent waiting in a checkout line. Repeat orders take even half the time.

Your savings on sales tax and Internet shopping can quickly add up.

If a business needs a couple of new computers, new software, office furniture or even ink for the printers, the savings on sales tax can easily add up. Some states without sales tax often experience extra sales in cities that border states with high sales tax and the internet has been no different. Internet commerce has been booming as individuals and businesses alike have taken advantage of this massive loophole.

To remain competitive, all small businesses have to take advantage of these immense savings before they are a thing of the past. Add the other reasons to shop online and now is the time to capitalize on a good thing.

Internet sales tax legislation is expected to be demanded and in effect by 2016 at the latest. This will level the playing field, however, the competitive edge that these businesses have will remain in effect. As smaller businesses struggle to cut costs, purchasing from the internet today will set up more savings in the future. Much like “free shipping”, we might even see these same retailers absorbing sales tax in the same manner.