bizthreads.net: Business Information for Entrepreneurs by an Entrepreneur

How to Calculate Your Profit Margin for Maximum Impact

For your small business to succeed, it is essential not only to have good sales, but also decent profit margins. Your profit margin not only contributes to the present, but will also to help you fill your nest for the future.

Given below are some ways to calculate your profit margins to ensure a healthy future for your business.

Check Out Your Competition

You should know the rates that your competition is selling their products, especially if they are in the same market as you. You will then get a base for your pricing.

Your base price should be above your purchasing costs and over other expenses associated with purchasing, like storing and shipping products to your customers.

Know Your Direct and Indirect Expenses

You will have many other costs associated with your purchasing costs. These may be direct expenses such as taxes and freight. They may also be indirect expenses such as advertising, rent and staff salaries.

Indirect expenses are usually fixed expenses - and some expenses, such as staff salaries, will increase every year. You will need to calculate the percentage that these costs constitute over your basic product costs and add them to your basic costs.

You can now calculate your profit margin from this figure.

Be Flexible In Calculating Profit Margins

If you are offering services in addition to products, then these will also add on to your profit margin. Sometimes, in order to get an order, you might have to lower your product profit margin and recover it from earnings from your services.

At the end of the day or year, it is the average profit that you have earned over the entire range of your products and services that will determine whether you have made or lost money in your business.

Calculate your profit margins after factoring in all your direct and indirect expenses - and ensure that you not only earn money now, but also manage to save for the future.

It is very important to keep the flame alive when you are running your business. Sometimes, due to additional stress or lack of time, you might find that you are losing the zeal to carry on. Here are some helpful tips to ensure that your passion remains as strong as ever.

Remember the Good Times

Remember the reason why you started your small business in the first place. Think about how much fun you had dreaming up ideas and setting up your business.

These moments should give you a reason to continue and the motivation to expand.

Step Back and Keep an Eye on the Big Picture

Do not lose sight of the big picture. Visualize where you want to be after a particular number of years. That will motivate you to keep working hard. Take a mental step backwards and analyze as to what you have achieved up to this point - and what needs to be done to take the business further.

Think of Work as Fun

Do not think of your work as being boring or burdensome. Enjoy doing your work and stay interested in learning more about your field.

Maintain your Physical and Mental Health

Take care of yourself - mentally and physically. Don't put too much pressure on yourself. You are earning money for both you and your family - so take small vacations with them and come back refreshed, recharged and ready to continue with your work.

Treat Your Customers as Friends

Treat your customers with respect and treat them as your friends. This will result in a little bit of laughter along with your work - and will make your workplace into a pleasant meeting point.

Making of some of these tips will ensure that your passion for your small business never dies out and remains as just as strong as the first day you started.

If you are a woman and are thinking of starting a small business, there are a wide variety of businesses that you can start where you can focus on attracting female clients.

Start A Beauty Salon. In addition to the routine haircuts and other face and body care options, you can also offer various new treatments such as body sculpting and massage treatments in your salon.

Just remember to take out the appropriate license and insurance policy before you start out.

Start A Lounge For Women Only. There are probably lots of women who want to have a quiet drink after work without being harassed by over-zealous men.

You could open an only women's lounge and club, where women could enjoy drinking and talking to each other without the distractions common to regular bars.

Start Teaching Music To Women. You could start your own school to teach singing or music to women. You could even encourage your students to start their own women’s band.

Start A Gym For Women Only. Start a gym with women instructors who can teach women to get healthy and fit. This is a great idea that is growing in popularity; some women don't want to or don't feel comfortable exercising in front of men.

You can also include pre-natal and post-natal exercises for pregnant women, and open a juice and salad bar on the premises.

Woman-focused businesses can be very popular and lucrative. Conduct a survey as to what type of business is in demand in your neighborhood - and get working on it!

How to Handle Your Small Business Partners

If you have one or more partners in your small business, then you need to ensure that your partnership sails smoothly. Any internal or external problems that arise need to be handled deftly and tactfully, before they get out of hand.

Keep It Professional

Even if you have your spouse or family members as business partners, keep all the aspects of running your company as professional as possible. Do not let emotions get in the way of making tough decisions.

A professional setup with contracts that everyone has signed will ensure that you earn the maximum amount of money - and that your customers and suppliers will be comfortable in dealing with your business.

Create the Proper Business Entity

Ensure that you create a Limited Liability Company or a Corporation, so that none of the partners are held financially responsible for another's mistake.

Ask your accountant which configuration that best suits your small business and adopt that entity.

Know Your Partners Commitment and Passion

When you're running a small business, your partners' commitment level and passion for the business will largely determine its success or failure.

Your partners should be as fired up as you are for the business to succeed - and should also have fun while striving to reach common goals.

Keep Transparency in the Partnership

Make sure all terms are clear before signing any documents. Explain your role and your partners' roles in the business. When it comes to money and investments, you should also keep each of the partners' interests separate and clear.

Clarity, professionalism and tact are definitely required if your small business partnership is to survive and thrive in this competitive market. Remember that your partners are part of your business family - so always treat them with respect.

Sell Your Products on Your Credit Terms

Depending on the type of small business that you run, you might have to extend credit to some of your customers. This may be due to the size of the order or the relationship that you share with certain customers - or maybe just because the rest of the market is extending them credit.

Here are a few tips that will help you increase your sales without ending up cash-strapped.

Check Out Your Potential Credit Customers

Do a check on the reputation and credit worthiness of your customers before agreeing to sell them products on credit. Never agree to sell goods to new customers unless you are sure of their ability to pay.

Establish Some Ground Rules - and Stick By Them

Make it clear to your customers that you are quite strict with your credit terms. Ensure that your customers pay you by the end of the credit period without exception.

If you ignore payment delays, then in the future it may be very difficult for you to recover the money. If some customers have pending payments, then do not stop selling to them, but rather cut down on the value of the products that you supply to them so that slowly their credit limit and amount paid are equal.

Provide Incentives for Prompt Payments

If your customers want to pay you before the due date, then you can offer them up to a 2% discount, so that both of you are happy.

Use the above tips to ensure that you sell your goods on your credit terms and that your customers do not take advantage of you.

Business Gifts for Women

If you have women on your list of clients, then it is better to think carefully on gift-giving occasions. Before deciding on one, you need to narrow down your choices to gifts that will appeal especially to them.

Ask Some Women

It will be better if you could ask some of your women friends as to what they would like to receive as a business gift.

That way, you will have some idea about what your female clients might prefer.

Decide On Some Common Ideas

There are some items such as low-fat chocolates or other edible treats, which most women like. You could decide on giving them these as standard items if you are unable to make up your mind.

Personalized office items from high-end stores, such as Tiffany's, always go over well.

Use Your Imagination

If you are planning on giving expensive gift items, then you can use your imagination and give away vouchers to a spa. You could also a gift certificate to a famous department store.

That way, they can purchase items of their choice.

Make a Package

If you are undecided on any one single gift, then make a package consisting of beauty products and/or personalized office products.

Try out the above ideas, so that your female customers appreciate your gifts - or at least appreciate the effort that you have put in to gift them the perfect gift.

Stay-At-Home Moms —Turning a Profit and Loving It!

Stay-at-home moms used to have no other choice than to fill their days with caring for their children. While many mothers loved doing this, still others craved the professional atmosphere.

Modern times have opened up a lot of avenues for moms to work from home.

Online Marketing: You can start your own online business. One easy way to do this is to register with sites such as Ebay and start buying and selling products online. It may take a little time to get familiar with the process, so start off with small items.

You can either keep your products in your home, or you can use the services of a drop shipping company.

Insurance: This is one field that works especially well for stay-at-home moms. You can sell and renew insurance policies from your home. You will need a telephone line in addition to a high-speed Internet connection.

Mothers often have well-developed powers of persuasion; and you can use them to get a lot of personal, auto and property insurance policies into your kitty.

Consultancy Work: If you were an expert in a particular line of work before becoming a full-time mom, then you can turn into a consultant and give your knowledge to others for a fee.

Data Entry or Data Management Work: Again, armed with a computer and a phone, you can do data entry or database management work. You may require a little bit of training but once you get the hang of it, you can easily do the job.

You can also decide on the number of hours you want to put in.

If you are a stay-at-home mom and long to return to the workforce, the businesses above offer you the best of both worlds. Go for it!

Increase Your Profits — Pick out the Bad Apples

Once you your small business gets off the ground, you will realize that you are getting all sorts of customers. The key to increasing your profits is to filter out the bad clients and rope in the good ones.

Here are some types of bad clients - and how to make the best of the situation.

Clients Who Haggle Too Much

These are clients who haggle too much, decreasing your profit margins and eating away a lot of your precious time. If they happen to pay on time and you want to retain these types of clients, try quoting a higher price initially, then bring the price down to keep them happy.

If you have clients like this and find that your strategy isn't working, then stick to your guns, making clear that you value their business but will not reduce your prices any further.

The key is to not waste a lot of time in dealing with them. Time is money.

Clients Who Pay Late

If you have a business and extend credit to your customers, then you might find that there are some clients who do not pay on time. You could either reduce the amount of products that you sell to them gradually, or you could warn them that you need to be paid on time before revoking their credit altogether

Either way, take firm action or you could lose both your money and your clients in the long run.

Clients Who Continually Return Products

At one time or another, any small business that sells physical products has run into a client like this. The way to handle them is to have a specific period that returns must be made. If they continue to abuse the system, you have no other choice than to refuse their business.

Beware of the above types of clients who, instead of increasing your business, only manage to slow it down. Use the above steps to keep them in check.

Reach Into Prospects’ Pockets with Promotional Keyrings

Promotional keyrings are a very economical and effective way of promoting your small business. And this mode of advertising also ensures that your business details are always present in customers' pockets at any given time.

Given below are some aspects that you should consider when ordering making and distributing your keyrings.

Decide On the Type of KeyRing

You can have your keyrings made in leather, plastic or metal, and you can even have the keyring shaped according to the type of products that you sell.

For example, if you have a car dealership, you can make your key ring in metal and give it the shape of a car. That will visually link your key ring to your business.

If you sell leather products, then you can have a leather keyring shaped like a miniature bag or shoe.

Keep Your Printing Large and Clear

You should print your business name, contact number and your website address on your keyrings. Keep the font large and clear and match the color with your keyring - but ensure that it stands out clearly.

Keyring Add-Ons

In addition to your key ring, you can also add on a small LED flashlight or other practical item in the loop. This feature will be useful to your customers.

Distribute Them Generously

During trade fairs, conferences or workshops, give out your keyrings to everyone. If you like, you can also get two keyring designs; one exclusive design for your top customers and prospects, and one regular design for all your other customers.

How to Ensure Happy, Productive Employees

For your small business to succeed, you will need a motivated and happy band of employees to ensure that they help convert your dreams into success.

Here are some ways that you can increase the productivity of your employees - without increasing their stress levels.

Communicate With Them

Observe your employees closely and watch their body language. Keep all communication channels open so that they will feel comfortable telling you if they are not comfortable with any aspect of their work.

If you notice that they are getting stressed, then nip the problem in the bud instead of letting the matter come to a boiling point.

Appreciate Their Good Performance

Devise an incentive or reward program for your outstanding employees. You can give them cash rewards or you can make special plaques for them.

This will keep them motivated and in a happy mood - and doing this regularly will encourage others to work harder.

You should also be sure to hold performance reviews and increase their salaries on a regular basis.

Arrange an Exercise Program

If you have a big office, then have an area with a massage chair, if possible, so they can relax and get a small break from their work routine. This will really help in decreasing their stress levels.

You can also arrange for your employees to go to a local gym; lots of exercise facilities offer discounts for group and corporate memberships.

Treat Them with Respect

To earn the respect of your employees, you should also give them the respect that they deserve. Hear their views before making decisions, especially in matters concerning them. This will make them feel important to your organization.

Your business will increase rapidly if your employees remain stress free and happy - and using the above steps will ensure that are constantly motivated.