How To Optimize Your Small Business For Success

Figuring out how to become an efficiently run small business is the one thing most people target by focusing attention on increasing their profits; trying to accomplish this can, at first, seem overwhelming. However, if you know where to focus most of your attention, you will be one step ahead of the competition. Your labor force is the one thing you have direct control of. Implementing various strategies and philosophies will greatly affect your bottom line and have immediate effects on the success of your small business. Communication is also another key factor in slimming down a company’s wasted revenue.

There are many tools to help optimize your labor in an effort to slim down your workforce, ultimately generating a more efficiently run team. Labor banding is a tool that helps to categorize a multi-departmentalized company and helps to allocate a certain percentage of the company’s wage. Implementing overall salary expense ranges to a specified department budget can help to prevent labor dollars from being squandered. The general idea of labor banding is to give you an idea how much labor it takes to produce a certain amount of revenue. Set limits to salary expenses and aim to work within the specified targets.

Another tool to help leverage your labor in a similar fashion relates to your sales per labor hour (SPLH). This particular tool allows you to analyze how much sales your labor generates per hour worked. Markets that generate sales on a weekly basis benefit greatly from this because it enables them to study on a weekly basis about whether or not their increase in sales per labor hour for what they spent capital on. Look for an increase in SPLH as a great indicator to labor efficiency. If a business is geared more towards a seasonal generated income then using seasonal workers helps to maximize your production output during your busiest times of the year. Meanwhile, during the slower intervals of the year your staff should be slim and functioning on a core structure of workers.

Every small business owner wants to increase their bottom line, turning over every stone possible in their pursuit of efficiency. No matter how large or small their company is, the most important key to its success is communication. Communication is the oil that helps everything run smoothly. Whether your business is email driven or based on conference calls it is important for every professional to communicate in a clear, open, and honest fashion. Miscommunication leads to innumerable lost labor hours and lost sales. Use these three things when you communicate to help establish an honest environment, enabling coworkers to work together as a team.

Part of the communication piece is to always set expectations with your workers. This enables workers to understand exactly what is expected of them in their role within your company. Sit down with your employees and have an in depth conversation to make sure that what you expect of them in their role is completely understood.

Once expectations are set and workers understand what is expected, go ahead and establish a presence of authority. This gives workers a set of parameters to work within. It enables them to present questions and problems to someone immediately instead of running around trying to figure out who can help solve a problem. One of the biggest efficiency killers that a company faces is the run around workers experience when responsibility is dispersed randomly throughout a department.

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Listing a Business For Sale

Listing your business for sale is an experience that most business owners are unprepared for. Too many small business owners liken the experience of selling a business to that of selling a piece of property. Any experienced business broker can tell you differently though. This article will touch on some of the key factors that suggest a prudent move is to properly plan before you list your business for sale.

Business Performance Needs to Show Improvement
If your business has been stagnating and the profitability declining then a buyer may not be very interested in purchasing it. Spend the months (or years) it takes to show a prosperous and growing company. If sales are on the decline determine why. Perhaps you must refocus your sales efforts or add new products to your mix. If your margins are retreating then examine all of your expenses to determine if there are any savings that can be realized.

Get Your Financial Information in Order
Spend the time and money it takes to have accountant prepared financial statements. Do not look at this exercise as an added expense but, rather, an investment. When it comes time to sell your business then you will have better luck with the buyers and they will have greater traction with the bank when they go for the acquisition financing.

Documenting Processes Takes Time
A business where the success is dependent largely on one person has what is referred to as key person risk. These are businesses where the enterprise will suffer if the key person walks away from the company. These types of organizations sell at a discount since a buyer may have challenges to transferring the company goodwill to themselves after the sale. Try to eliminate this situation if it applies to your company. Document procedures and train your customers that there are other people and resources in the business that they can turn to.

Get Machinery Up to Date
Keep track of all of your equipment maintenance. Repair or replace broken or obsolete equipment. If you would not be interested in buying it ask yourself if a prospective purchaser would?

Clean Out Unsalable Inventory
Go through your inventory and so a thorough count to get an accurate amount. If you have obsolete or inventory that is damaged or unsalable then dispose of it.

Tax and Legal Planning
Talk to your professionals to get proper tax guidance before you list. The way you structure your business for sale may have a large impact on your net tax payable after the sale. Also work with your attorney. If you have any legal issues pending such as lawsuits or employee disputes then try to have them resolved before you list.

These are but a few factors to consider before you actually start the process of selling your company. There are certainly more, as every business is unique. Work with a business broker and other professionals to talk about the things you can do immediately that will help pave the way to a successful sale.

What is the Difference Between a Small Business For Sale and a Franchise?

Franchises exist in all realms of business and are certainly not limited to food chains and carpet cleaning services. Literally thousands of businesses are franchises throughout the country and all over the world. Whatever kind of business you are hoping to purchase, you can certainly find a franchise option. Before deciding this is the best choice for you, it is essential to understand the difference between a small business that is for sale and a franchise chain.

The purchase of a small business is fairly simple. The seller and you come to a decision on a reasonable selling price and papers are signed. A final date is set and you move in to take control of all the business assets and operations. Most of the time, your relationship with the seller ends after the purchase of the business, but sometimes, like in the case of network marketing businesses, the previous owner will continue to earn residual income as you successfully run the business. In almost every other case, though, you are on your own after the sale takes place.

With the purchase of a branch of a franchise, the relationship between you and seller stays in place after the purchase. You become the franchisee and the seller is the franchiser. They collect a fee from you up front that pays for brand name recognition, a business model to follow, training for yourself and that of future employees as well as continuing support. You also continue to give the franchiser a percentage of your revenue to pay for these ongoing benefits. As the owner of a franchise, you must follow specific guidelines for running the business to keep it consistent with the other branches of the company. You may have noticed that every McDonald’s, JCPenney and Wal-Mart looks and operates the same. This is because every franchisee follows the procedures set up by the franchiser.

Some people prefer the comparative simplicity of purchasing an individual small business while others are intrigued with the idea of owning part of a franchise. No matter which one you choose, there are countless niches you can choose from to find the best business for you to own. Remember, buying a small business franchise is much less capital-intensive than building one from the ground up, especially a franchise guru like McDonald’s. You can have the benefits of name brand recognition without the huge expenses of starting a business from scratch by finding the right franchise to purchase.