Monthly Archives: April 2011

 We accountants have a lot of numbers up our respective sleeves. For the sake of avoiding glazed eyes, I don’t pull them out often. But here is a stat I think you’ll be interested in – the Pareto Principal:

“80% of your sales come from 20% of your clients.”

 Where you see that phrase, this one is not far behind:

“80% of your aggravation also comes from 20% of your clients”. 

 Keep in mind the second 20% is usually different from the first. A big problem for small businesses is finding enough good clients to be able to afford getting rid of the bad ones. 

 Who are those bad apples? Anyone who runs a business gets it- we’ve all come across these wormy, mushy guys. They’re the ones that don’t value what you do, who don’t pay you on time, who complain about the size of your bill no matter what services you provided and, of course, they invariably require the most attention.   To make matters worse, you spend so much time and energy trying to service what are often unreasonable demands from these bottom-of-the-barrel-20-per-centers that you don’t have enough time to develop, improve and nurture relationships with your top 20%.

It’s not always easy, but a key strategy to ongoing business success is to fire clients who are drains on your company and devote more time to the relationships that can grow and add profit to your business.  You can’t do that comfortably without generating enough of the shiny, crunchy, pick of the harvest clients.

So how do you find the “good” clients?

Let’s start with this concept: you don’t sell goods and services. You sell solutions to problems. You need to be absolutely clear about what problems your customers are trying to solve to ensure you deliver the most value. 

Let’s look at some examples.

The brilliant Old Spice – The Man Your Man Could Smell Like ad. http://www.youtube.com/user/OldSpice#p/c/440B5AD92C9B3BD3/0/owGykVbfgUE

The makers of Old Spice are clearly not selling you a product. They’re selling you an image. If your man uses this product, he could somehow morph into this shockingly handsome Prince Charming (maybe even on a horse).

Or, this Tim Horton’s ad that often brings out a tear in even the most cynical of ad watchers:

http://www.youtube.com/watch?v=BzmHwF2G4Vk

You’re not buying a beverage. In that one minute, you are buying into hope, adventure, trust and patriotism, of course.

It can be even simpler, too. The makers of Tylenol and Advil don’t sell pills, they sell pain relief. The producers of computer backup and anti-virus systems sell piece of mind.

Now it’s your turn. What do you really sell? Is it pain relief? Piece of mind? Status? Whatever it is, it needs to solve your customers’ problems to satisfy them.

Next, you can narrow your target market to a sufficiently small area to be able to effectively reach them.  Narrowing can mean a certain geographic region, a specific age group, type of consumer or a particular business in a specific industry.  The point is to commit your business to serve a well defined market niche and exclude all those that don’t fit into your narrow ideal market description.  This allows you to develop unique, tailored expertise and innovative products and services. The narrower your boundaries, the easier it is to find customers to fit within – and the easier it is to say goodbye to the bad apples.

Hi, I’m Hui Ling.

I’m a student at the University of Waterloo studying Accounting and Financial Management. Currently, I’m on my first co-op work term at Silver & Goren Chartered Accountants.

You might be wondering, what’s it like working at an accounting firm?

It’s certainly an eye-opening experience. At Silver & Goren, I work on bookkeeping files, personal tax returns, and helping out with the T4s and T5s. More senior co-op students also gain experience in review engagements. I am also learning a variety of accounting software.

What about the stereotype that accountants are introverted and boring? Not true! One of the best things about working at Silver & Goren is really the company – the people I work with. Everyone has been friendly. They made me feel welcomed and supported, which has made it easy to ask questions, enhancing the learning experience even more. To me, the best part, by far, is when we are working towards a deadline. It’s a unifying time, where we are all, in that moment, working towards a common goal. Whether it be completing T4s and T5s, or completing tax returns before the April 30^th deadline, it’s that camaraderie of being in it together that I found I really enjoy. 

There are some big adjustments from student life.  If you expect everything you learned in school to be used at work and vice versa, you may be sorely mistaken. You must be a strong independent learner—expect to pick up knowledge here and there. Eventually, it all ties in. The once blurry picture becomes sharper and the pieces of that puzzle called “accounting” come together. Adapting to these changes has made me grow as a person, because it has taught me different ways of learning.

I’ve also been struck by the importance of adaptability. Silver & Goren recently implemented a few changes – a new website, a portal that will allow clients to access their personal income tax returns online securely, and is in the process of going paperless. Even after being in business for 30 years, improvements in processes are still being made, demonstrating the adaptability of humans and businesses alike.

In the coming days, things will get busier, things might get crazier (we are in the midst of tax season), and there might be change ahead. But to me, that’s what makes every day exciting.

If you come by and say hello, I’ll be happy to show you how things work at an accounting office.

Hui Ling

Do Not Pass Go (and you know how that ends…)

 If we were able to sell you on the importance of having a business plan, you’re ready to move on to No. 2 in my list of Very Important Things. (If we didn’t sell you yet, go back and read the last post one more time.)

 In some ways, having an overall vision for your end product, result or look is the easy part. Let’s compare planning your business to a giant game of Monopoly. You want to build a dynasty on those tricky dark blue squares. You know, put up a strip of hotels that rival Vegas. Once you can see the bright lights sparkling, it’s time to go back and make friends with the banker. Hopefully for you, it’s that uncle who always slips you twenties when no one else is looking.

Many businesses start without having sufficient capital to develop their opportunity in an effective way.

Usually there are two simple explanations for this. Sometimes, the entrepreneur just doesn’t have enough capitol to start with – so he buys into the white-collar Connecticut when he should maybe stick to ‘slumlording’ with Baltic. Or, he buys, buys, buys without planning for the future – and then has no money to develop properties down the line. Both scenarios results in the same problems: under capitalization, cash flow problems and difficulties in succeeding.

At Silver + Goren we recommend a financial plan be developed before you start, to make sure enough capital is available throughout the growth period of the business, and to assist in obtaining the necessary financing. In other words, don’t pass GO without a plan for what, how, and when you will use that $200 around the board.

Through meeting with our firm, if we determine there isn’t capital available, we recommend the entrepreneur postpone starting their own business until more capital can be raised.  It’s our belief (and experience) that it may be better to delay starting, than starting too soon and failing because you don’t have enough money. We’re trying to help you land Boardwalk and Park Place…with a comfortable pile left over to build your little plastic empire.

As for what goes into that financial plan, yep, it’s a little dry – even Monopoly can’t jazz this one up. You need to take everything you poured into the business plan, and quantify the pieces so they can be reflected in numeric terms. This means streamlining the capital budget, the marketing plan and the manufacturing plan into a central document.  Last, a projected cash flow is developed that reflects the potential sales trajectories and product profitability. We know that sentence may sound like financial alphabet soup, but each step is critical so the business owner will have a clear idea of how much capital he needs to raise for future success. And don’t worry – we can help you decode it.   

Once you have a clear picture as to how much money you need, next time we will talk about where this money can come from. Because in real life, unfortunately, it’s about more than having your Uncle Steve as the banker.

Can’t See McDonald’s for the Burgers (or the Forest for the Trees)