| u start out in small business pretty much every small | | | | such you can not make money. |
| business owner has the perception that everybody is | | | | The one thing I have learnt from small business is |
| their customer. In fact taking on this strategy can be | | | | that I like customers who pay cash upfront before |
| the death knell of your business before you really | | | | the service or product is taken out of your store. I |
| get started. The key secret to small business is to | | | | also prefer customers who have a reasonable |
| carefully choose who you want to be a customer. Do | | | | expectation on service. |
| not get trapped into believing that you have to have | | | | You would think a car cleaning business would be a |
| everyone as your customer. | | | | relatively simple business to run with very few |
| There are many reasons why you want to choose | | | | complaints. I kid you not; this is a nightmare industry |
| your customers, rather than they choosing you. One | | | | where some people have some unreal expectations |
| of the key reasons is money. Having too many | | | | so when we are on a recruitment drive for new |
| companies that do not pay you within an acceptable | | | | customers we choose customers who have four |
| period of time can in fact put such a financial burden | | | | facets - |
| on your business that they can bankrupt your | | | | 1. Want Regular Cleans |
| business. Let me explain
| | | | 2. Have kept their cars relatively well cared for |
| I had a number of government clients a few years | | | | 3. The cars are no older than 6 years old |
| ago which had a policy of choosing when and if they | | | | 4. They pay cash upfront |
| were going to pay. These government clients used | | | | In fact, when it comes to our car cleaning business, |
| purchase orders to buy training from our company, | | | | or all of our businesses we actually interview our |
| but just because they could, they decided that they | | | | customers before we enroll them as our clients. |
| did not want to pay because the whole purchase | | | | Here is the reason why we have chosen those |
| order had not been completed. So even though one | | | | customers above for our car cleaning business. Any |
| person out of 15 had not completed their training and | | | | business where you get repeat business is always a |
| had been sent overseas, they chose that they were | | | | boon, because the long term customer value is |
| not going to pay the $14,000 bill. | | | | always more than somebody who just wants it |
| Fourteen thousand dollars to any small business is a | | | | cleaned once. One thing we have learned about our |
| massive amount, add onto the fact that we had to | | | | customers is that those who want to get a regular |
| outlay money for these courses including wages, | | | | clean have more realistic expectations than those |
| catering and manuals. The consequence of this | | | | who only get their cars done once or every now and |
| organization deciding not to pay put a huge financial | | | | again. |
| burden on my business. I should note that this client | | | | Customers who keep their cars relatively well cared |
| was not dissatisfied with our training, which was far | | | | for means the amount of work to maintain it is much |
| from the truth, the person in charge simply decided | | | | less than those who do not and it means less work |
| that they were not going to pay. Some government | | | | on our behalf and better profit. The third facet, we |
| bureaucrats and large corporation managers do this | | | | like cars that are no older than 6 years old. Cars that |
| just to show that they have power. | | | | are older than this usually have a poorer paint quality, |
| Anyway, after 9 months we did finally get paid, | | | | simply because the paint has faded and most people |
| however, that training actually cost us more than | | | | when they get a car detail think their car is going to |
| $14,000 by the time we accrued things like penalty | | | | look brand new and if your paint work is terrible well |
| payments on products we purchased and interest | | | | there realistically is not much we can do cause car |
| plus legal fees in recovering the money. In the end I | | | | detailers do not respray cars or do that sort of paint |
| learnt a very important lesson that you need to be | | | | work. We can only work with what we have. The |
| very careful as to whom your customers are | | | | fourth facet is they pay cash upfront. |
| because they can do a huge amount of damage to | | | | In small business, cashflow is everything. Without |
| your cash flow and can put you into huge debt just | | | | cash you cannot pay your bills. If you have a good |
| to survive. | | | | solid cashflow then you will be making a profit. A |
| Let me give you another example of a family | | | | small business without cash will be placed into |
| member who recently experienced the same | | | | receivership very quickly. |
| situation
| | | | Look the bottom line is that small business is really |
| Certain members of my family decided they wanted | | | | hard and to make it easier you need to choose |
| to try their hand at the trucking industry. They | | | | customers that have the following facets: |
| purchased a truck and got into a contract with a | | | | 1. Pay Cash Upfront or By the Due Date |
| large freight distribution company. Essentially, they ran | | | | 2. Have Realistic Expectations of your products and |
| into trouble within the first few months of starting | | | | services |
| their business, simply because they chose to have | | | | 3. Want to Buy From You Regularly |
| just one client and the contract they entered into | | | | If you have customers that have these facets then |
| with this client allowed the freight company to | | | | you have a good chance of surviving small business. |
| withhold payments for upto 3 months before they | | | | The mix of customers you have is something that |
| got paid. This has cause this family a lot of problems | | | | you have to manage and review on a regular basis |
| because without cash, you can not run your trucks | | | | to ensure that you do not build a customer base |
| cause you need to fill up on Diesel. Not being paid for | | | | with to many customers without all of these facets. |
| over 90 days means you can not buy fuel and as | | | | |