Last updated 11 days ago
In order to accurately assess your company’s profits, you need to understand how much money you are spending on attracting sales. An effective way of gauging this expense is calculating the customer acquisition cost which accounts for any discounts, incentives, or closing costs associated with attracting a new customer. Once you determine your customer acquisition cost, you can assess how much value a new customer is bringing to your business.
The best way to measure your customer acquisition cost is by calculating your business’s entire cost of sales and marketing in a given time period and dividing that figure by the total number of customers you gained. If it costs you significantly more to attract new customers than you profit from them, then you need to find ways to reduce your acquisition costs. Aside from identifying how much value a new customer adds to your business, calculating the customer acquisition cost can also help you determine whether or not a particular marketing campaign is effective at gaining new customers.
At Family Business Institute Consulting, our consults help family businesses assess financial, interpersonal, and management issues. To learn how we can help your business succeed, call (888) 438-1948.
Last updated 18 days ago
When you look at big, powerhouse companies like Nike, Starbucks, and Apple, they all have something in common—an easily recognizable brand presence. In fact, the reason these companies can successfully add additional product lines or services is because their logos convey value to customers. These logos don’t just explain what products the companies offer; they show how they will improve a customer’s day-to-day life.
This video illustrates how small business owners can build brand equity in the same way as successful Fortune 500 companies. There are three ways to connect with customers through a brand—visually, verbally, and experientially. While the visual and verbal aspects can be expressed through logos, experience is communicated through the company’s history, client referrals, and expertise.
To learn more about building brand equity, call The Family Business Institute at (888) 438-1948. Since 1995, we have provided professional consulting to family and closely held businesses.
Last updated 26 days ago
Whether you’re working to generate sales, build customer relationships, or develop a great product, the ultimate goal is to help make your business successful. Success can be defined in different ways, and financial success is one of the most important and acknowledged metrics for determining how well your business performs. Here’s a look at some key business metrics to look for.
Pre-tax net profit margin
Your pre-tax net profit margin shows how much profit you are making for every dollar in sales, so it is one of the most important metrics for determining financial success. If your family business runs as a private company, this measurement will be expressed as net profit before taxes for a certain financial period divided by sales. This number also shows how well you allocate your expenses, indicating whether or not you can decrease expenses in certain areas. Having a higher profit margin means that your company is more efficient.
Also called a fundamental liquidity ratio, the current ratio indicates how easily you can meet your current financial obligations. You can find your current ratio by dividing your current assets by your current liabilities. This calculation essentially shows how easily you can convert your assets to cash to pay off your obligations. If your ratio is less than one, this indicates a need to generate additional cash.
Accounts payable days
You can calculate accounts payable days by dividing accounts payable by the cost of goods sold and multiplying by 365 days. This calculation shows how long it would take for you to pay your trade creditors. Though a positive ratio varies by industry, typically having a higher ratio is better.
At The Family Business Institute, we help family and closely held businesses address their financial, interpersonal, and management issues. Founded by a father and son-in-law team in 1995, we offer a unique perspective for helping family businesses succeed. To schedule a meeting with one of our consultants, call (888) 438-1948.
Last updated 1 month ago
Though your family business might have started out small, with growing success you may discover the need to bring on more managers, salespeople, or other talented people. One way to alleviate the stress of bringing in new people is by developing a strategic plan for avoiding some of the most common business hiring mistakes.
Rushing the interview process
If you suddenly need more help around your business, you may find it tempting to fill the positions quickly. This is especially true because the time spent interviewing job candidates is time taken away from running your business. Unfortunately, rushing the interview process opens your business up to many risks, including hiring someone without the proper skill set, work ethic, or personality type to integrate with your closely held business culture.
Waiting for the perfect candidate
Even though you shouldn’t rush the interview process, you still need to have realistic timeline expectations for hiring a new employee. Ideally your job candidate would have endless motivation, amazing customer services skills, and willingness to accept whatever salary you offer. Sadly, your idea of a perfect candidate probably doesn’t exist and the more time you spend waiting for someone who fits with your idea of a perfect employee, the more likely you will miss out on hiring a suitable, well qualified candidate.
Trusting your gut feeling
While trusting your intuition may have been successful in other areas of business management, it isn’t the best approach for hiring a new employee. Instead, you need to develop a strategic interview approach, defining the job, searching for candidates in an organized way, and conducting phone interviews first. Furthermore, you need to utilize psychometric assessment tools and practical, job related assessments.
Founded in 1995 by a father and son-in-law team, the Family Business Institute has extensive experience helping family businesses address their financial and management issues. Call (888) 438-1948 to learn how we could help your business operation more successful. We specialize in interpersonal and management issues, including succession planning.
Last updated 1 month ago
In order for a family business to succeed, there must be a balance between interpersonal, operational, and financial issues. Family business consultants help closely held businesses achieve this balance by both analyzing family and business issues and delivering plans to deal with changing structural circumstances. Here’s a look at how working with a family business consultant can help your family business prepare for the future.
You want to transfer ownership and management
Planning for ownership succession is one of the toughest and most critical challenges for a family business. At the same time, planning for management succession can help family businesses establish a multi-generational organization that continues to carry the founding mission and values. Family business consults help businesses plan the future transfer of both ownership and management by addressing issues in administration and finance, operations, sales, and marketing.
You notice interpersonal conflicts
For many family businesses, conflict is part of daily business life. Disagreements often arise in terms of perceptions, beliefs, and expectations for how the business should run. Each member of a family-run business is highly invested in helping the business succeed, so each person will be highly passionate that his or her organizational expectations and beliefs are correct. Conflict resolution works by surfacing deeply held belief differences in order to facilitate win-win outcomes that resolve internal conflict.
You lack visibility into your future finances
Family business consults help businesses manage their interpersonal issues as well as budgetary concerns. Specifically, the business consult may conduct an expense reduction audit that identifies every possible way a family business could save money. From this audit, consultants are able to create a list of recommendations and suggestions to improve financial efficiency. From there, management can choose their desired course of action for the business’s financial future.
Since 1995, The Family Business Institute has helped small business with financial, interpersonal, and management issues. We are dedicated to educating our clients in how to succeed in a changing business climate. Call (877) 326-2493 to schedule a consultation or to learn more about our consulting services.