There are three things that you must accomplish to succeed in business.
Stay focused on these and don't get distracted by less important concerns.
Invest your time, energy and money on these three things and you'll achieve success sooner.
- Find an ongoing flow of customers
- Create enough profit
- Be profitable before running out of investment money.
#1: Find an ongoing flow of customers
I assume that you have already discovered that it's harder to get customers than you originally thought.
When I started in business, I thought the hard part would be finding good equipment and learning how to clean carpet. I had no idea that was the easy part.
You can have state-of-the-art equipment and be the most skilled technician, but if you don't have customers willing to pay for your services, your career as a carpet cleaner will be short.
Success demands a continuous flow of customers. You need a system that keeps your schedule book full of work.
Without a system, it's hard to create enough work and you waste your precious resources trying to get the next job.
If you don't figure out how to keep the work coming in automatically, you will constantly struggle.
Successful companies have more work than they need; they've met this challenge.
These companies aren't busy just because they are good carpet cleaners. They're busy because they have a system that keeps a steady flow of customers calling.
As long as this concept remains a mystery to you, your success will be in doubt. You need a system that provides enough work.
There are two approaches to building this system.
The best way for a small business is to establish a group of loyal customers that will use your service repeatedly for years.
You may have heard about companies that don't use any paid advertising, but instead stay busy servicing repeat and referral customers. These companies have designed their services to appeal to the type of consumers that regularly use cleaning services. These consumers are usually obtained through networking and referrals.
Once you build this base of repeating customers, it doesn't take very much work to maintain it.
A less effective system uses advertising.
For instance, you might use a combination of coupon mailers, Yellow Page advertising, pay-per-click online ads and newspaper ads.
Even this system requires you find ways to advertise that will provide a consistent return.
For example, you could create an advertising system where $1,000 invested in advertising generates $4,000 in work. If you need more or less work, you simply adjust the amount you invest in advertising.
Unfortunately, the customers obtained through advertising tend to seek lower prices and don't repeat. This results in a dependence on advertising.
Create a system that provides a steady flow of customers instead of just worrying about how to get work one day at a time.
#2: Create enough profit
Having a continuous flow of customers doesn't guarantee that you will make money.
Many companies have more work than they can handle, but are not profitable.
It is possible for a company to generate $100,000 in sales but have expenses of $110,000. They're working at a loss!
Increasing your income within a limited time is achieved by increasing how much you earn per hour and by eliminating non-productive time.
A good way to increase your income per hour is to provide higher levels of service and professionalism.
Making improvements to your image and providing "little extras" can make a big difference in what consumers will pay.
For example, a restaurant can charge more for a hamburger if they provide a server to take your order and bring you the food versus you going to the counter to order and service yourself.
You can decrease your non-productive time by increasing your average job size.
If you can produce the same amount of income in three jobs instead of four, you will decrease travel and setup time. Restricting how far you travel for jobs also saves time and money.
Necessary expenses are part of any successful business.
You are the one who pays for any unnecessary expenses.
Every expense should help you reach your goals. Getting the newest equipment, renting an office or having a full-time secretary may not be the best use of your money.
Advertising expenses cripple many small businesses.
Making the shift from expensive advertising to building a clientele will increase your profit.
Create as much profit as you can.
#3: Be profitable before running out of investment money
No one goes into business with unlimited resources. You need to be profitable before you run out of money.
The goal of any start-up business is to reach the breakeven point as soon as possible.
The breakeven point is reached when you consistently create enough income to pay both your business and personal expenses.
Until you reach that point, you must pay those business and personal expenses with either your savings or borrowed money.
Every month you fail to reach that breakeven point, your net worth gets smaller.
Every owner has a different breakeven point and a different amount of money to invest in his or her business. It is critical you have a clear understanding of these two amounts.
If you exhaust your investment money before you reach the breakeven point, the game is over.
For example, you may have $30,000 to invest and you spend $15,000 for equipment and other expenses to start the business.
If every month you make $3,000 less than what you need to live on, you have only five months to reach your breakeven point.
Knowing these amounts allows you to make wiser spending decisions.
Instead, if you invest $5,000 less for equipment and cut your personal expenses by $1,000 per month, you will double the time you have to reach the breakeven point.
Understand that you are in a race against time. You must reach your breakeven point before you run out of money.
Stay focused on finding an ongoing flow of customers and creating enough profit, and doing it before you run out of investment money.
Steve Marsh is the creator of the Be Competition Free Marketing Program. He is a 30-year veteran of the carpet cleaning industry, an IICRC-approved instructor, and a Senior Carpet Inspector. Marsh is a marketing and business consultant who provides a turn-key program for attracting better customers. For more information, log on to www.BeCompetitionFree.com.
