Sometimes you ask yourself, ‘Is it all worth it?’ Or if you don’t ask this question, perhaps you should. It’s an important one for your business.

Ask yourself, ‘Is it worth making this product?’ or ‘Is it worth providing this service?’ If the answer is no, you might want to think about changing your product line or refocusing your business.

One of the tools that can help you get an answer is a breakeven analysis. Breakeven analysis tells you how much you need to sell to at least cover your costs. It’s pretty crucial to know the breakeven point for what you offer and even for your business as a whole. If you fall below it, you’re making a loss and you may be on the top of a slippery slope.

If you want to calculate a breakeven point for a product, you need to consider its sale price and its variable and fixed costs. The variable costs are the ones that increase in direct proportion to sales volume. Say you sell soap, for example. You currently sell it at $1.50 a pack.

Your variable costs might include:

• the price of packaging that you buy from your suppliers;

• the raw materials you use to produce each pack;

• transport costs; and

• sales commissions.

Say your variable costs amount to 50 cents per pack. That leaves you with a margin of $1 on each pack you sell.

To find your breakeven point, you then calculate how many packs you need to sell to cover your fixed costs—which are the costs that remain constant regardless of your sales volume.

Your fixed costs could include:

• the rental you pay for your factory;

• insurance costs;

• loan repayments;

• salaries for your core team members; and

• plant costs (provided that you don’t make major purchases).

Say your fixed costs are $50,000 a quarter. Remember that your margin after paying variable costs was $1 per pack. So you’ll have to sell 50,000 packs a quarter just to cover your fixed costs.

If you fall below that point, alarm bells should start to ring. In fact, they should start to ring well before you reach the breakeven point, because you’ll be eating into your overall profit margin.  

Breakeven analysis is also an important part of business planning. Say you’re looking at launching a new product. You’re not sure how to price it so you do some research. You carry out some calculations to estimate how price sensitive it is.

For example, will demand drop off suddenly if there are small price increases? (This commonly happens if you are selling discount goods and you are competing mainly on price.) Or can you price at a range of levels with only a moderate decline in demand and sales? You can estimate a kind of price/demand curve that will tell you how a product might sell at a range of prices. Then you can carry out breakeven analyses for a range of points on this curve. This will help you make decisions about pricing, production volumes and profit.

If this sounds like it might be getting a little complex, perhaps you’re right. But your RAN ONE accountant is only a phone call away and has a proprietary software program (Targeting Business Results Plus) that can help carry out and track these important business calculations. When you call your accountant, ask about the Effective Financial Management seminar, which covers breakeven analysis and a host of other useful financial management concepts.

Suppose you run an operation with twenty or thirty team members. You manufacture food for goldfish. You operate out of a small town in Southern California.

But when you go out to dinner parties do you like to say, just loud enough so that everyone else can hear you, ‘Well, actually, I’m the global CEO’?

It can be a gratifying line to trot out from time to time. And it might even make business sense to think of yourself in this way, particularly if your business has an Internet arm to it. There’s really no contradiction in being both small and global.

This is clear for some businesses. Suppose you run a boutique hotel in Miami, Florida. A website could be a great global marketing tool. It probably wouldn’t make sense to post out brochures to travel agents in all parts of the world. But you can be sure that, when people plan their holiday, they’ll go searching on the Web. And suppose they stumble upon your site, which features photographs of glorious sunsets, beautiful beaches and elegant hotel rooms. Of course, it would help if your business had a name that crops up readily on a Miami Web search, or if you have web links to some major tourism sites.

Now, you don’t have to be in the hotel business to benefit from global reach. Marketing guru Philip Kotler points this out in his book Marketing Management. He notes that many of Germany’s small and medium-sized companies have managed to grab a large global market share. They are niche operations. However, while their niche market within Germany might be small, they’ve managed to expand and dominate their niche either in Europe or globally. Collectively, they’re earning $1 billion a year.

As examples, Kotler mentions:

• Tetra Food, which sells 80 percent of tropical fish food;

• Hohner, which has cornered 85 percent of global harmonica sales;

• Becher, which manufactures over half of the world’s umbrellas; and

• Steiner Optical, which manufactures 80 percent of the world’s military field glasses.

There are certain things that these businesses have in common. They have very high service standards, are very responsive to customers, and are reliable and punctual in their deliveries. They’re flexible and innovative. Their managers are accessible to customers and keep a finger on the pulse of the market.

Clearly, if you’re a niche operator such as this, the Internet offers you a lot of scope to expand. It offers you a marketing tool that has global reach at low cost. It also provides you with the perfect means for keeping in touch with your customers.

You can not only attract customers with a good-looking site, you can also draw them into doing immediate business with you, ordering and paying over the Internet. Of course, you’ll need to have convincing Internet protocols, which are methods of reassuring customers that when they pay for something, they’ll get it. And you’ll need to run a tight operation to make sure that you can distribute goods or deliver services reliably.

However, these are operational problems that can be solved. If you’re a niche operator and you think you might want to use the Web to expand, give your RAN ONE accountant a call and talk through the issues. Ask about the myBiz·online Web Solution offered exclusively through RAN ONE.  It’s a low-cost, low maintenance, yet powerful option for getting your business up and running on the Web.  And if you’re looking for a terrific training program to get your team even more focused on those customer service issues mentioned above, ask your accountant about the Towards Awesome Service training program.

You can choose your friends, but you can’t choose your family, as the saying goes. Funny enough, some people like their family so much that they choose them to do business with.

A family business can be a very emotionally intense operation. It can work brilliantly or it can open up opportunities for a unique set of business disasters. It may also mean working in a rich emotional environment, full of close personal relationships, good humor and intimate understanding.  It can be like a year-long lunch with the Simpsons. It just depends.

It depends partly on whether the focus is on working with the family and merely making a bit of money, or whether it’s on running a successful business and bringing some of the family along for the ride. The two approaches entail different management priorities, though the priorities tend to get tangled up in practice.

That’s because family businesses are personal and carry a lot of emotional weight. Loyalty and commitment are often high in a family business. People will put in long hours. And they’ll be fiercely defensive about the image of the firm.

Strong commitment is fine. But sometimes it helps to be a little less personal. You don’t want everyone taking a personal stake in every business outcome. For example, you don’t necessarily want to seek broad consensus on every marketing strategy.

A family business can get into trouble when it hires people because they are family, rather than because of any specific set of skills. And if they do hire non-family members, they tend to hire people because they fit in somehow.

You can end up with a company where everyone is employed because they are either well connected or likeable. Clearly, this can lead to organizational skill gaps. It means the business may not have a healthy diversity of experience and opinion to draw on.

A family business can also get into trouble for the opposite reason. Suppose ‘outsiders’ are hired to plug skill gaps. This may get family noses out of joint. You might get the indignant response, “You promoted that ‘outsider’ over my head, merely because he’s better qualified!”

Or suppose a family member is not performing. You decide you need to get tough. Except that you can’t figure out how to discipline or even fire your uncle. Or worse, what if you need to fire your own wife? Or your husband? Is there an instruction manual for doing that? At least one that does not involve dissolving both the marriage and the business?

Family businesses often have other areas of special complexity. For example, succession planning often raises thorny issues. Succession is commonly a much more complex issue in a family business than in any other business. A family business needs to be carved up for a whole extra layer of priorities. And succession generally doesn’t go well. A minority of family businesses actually make it through to the next generation and very, very few make it to a third.

So a little perspective can be a valuable thing for a family business. It can be useful to seek advice from an outsider—that is, someone who has no idea of the relative golf handicaps of all the company directors.

Such a person will be able to look at your operation from a purely business perspective. They will run an objective eye over your business and operational structure and make sure that money is flowing in a way that makes good commercial sense. Many of your RAN ONE accountant’s clients are family businesses going through the same issues you are. Ask about the Business Diagnostic and Performance Improvement Service, which is specifically aimed at family businesses. It involves working with you to analyze the strengths and weaknesses of your business, as well as the opportunities and threats, and you’ll leave with an Action Plan that is tailored specifically for your business and prioritized for your immediate needs.

Many small businesses are like weekend fishermen when it comes to winning new accounts. They’ll row out when they’ve got some spare time, cast in a line and hope that something happens. More often than not they’ll come home with nothing more than a tall story about ‘the one that got away’.

Of course, weekend fishermen can afford to be haphazard in their approach. They’re not relying on the fish for their next meal. At worst, they’ll go home and pull some fish sticks from the freezer.

But businesses can’t afford to be so cavalier. Nearly every business is dependent on a constant flow of new accounts. It’s easy to ignore this, because most businesses earn most of their revenue from old, established customers. The problem is that a certain percentage of old customers will drift away or change their focus every year. They’ll change their buying habits, often for reasons that you can’t influence.

So you need to continually market to recruit new customers, establish them, and start promoting them up your customer ladder, so that one day they’ll be part of your staple business. It’s easy to forget to do this - you’re so busy making money that you have no time to market. But then one day you wake up and find that several of your major customers have defected and you’re left with a gaping hole in your revenue and you have no easy means to fill it.

So you need to be systematic. Think like a commercial fisherman. You go out every day, invest and organize. Commercial fishermen never tell tall tales about the ones that got away. They don’t have to.  Their livelihood depends on keeping every bit of their catch, and therefore the focus is always on retention.

Step one in this systematic approach is to identify the sort of customer you’re looking for. You can use a range of criteria, including:

• geography (how close they are to you)

• their capacity to make repeat purchases

• their capacity to grow and extend their purchases

• their preference for quality over price

• the likelihood that they will value your business

• their payment habits (prompt payers being obviously preferred)

• their industry sector

This way you make up a profile of the sort of customer that is likely to be of value to you in the long term. Then you go out and prospect for them. This doesn’t have to cost you a lot of money. You can do a lot of research merely by leafing through the Yellow Pages, selecting likely candidates and doing some Internet or other research on them. You can also get information from the directories of trade associations, clubs, chambers of commerce and trade magazines.

Once you’ve got a list of likely candidates, go into more depth. You might want to check out their credit records. Use your industry contacts to see what the ‘buzz’ is about them. Once you’ve done that, you start to make your pitch, whether that involves cold calling, sending out brochures or networking. The main thing is that, at the beginning of your sales process, you’re focused on your final goal, which is to develop a long-term relationship with a valuable customer.

Of course, you’ve still only cast your hooks into the water at this stage. There are other stages to the process. If you want more information, see your RAN ONE accountant and discuss how you they can help you segment your customer base, apply the 4 Ps to each and design a new customer acquisition marketing program with you.

You must have heard the joke about the paperless office by now. Why is it a joke? Well … look around you! Unless you’re one of a rare few, can you honestly say that you use less printer paper, fax paper, envelopes and ‘post-it’ notes than you did five, or even ten years ago?

While the concept of a ‘fully-electronic’ or ‘technology-based’ office has been doing the rounds for the last two decades, the truth is that paper usage in most businesses has actually grown in that time.

Rob Heymink, managing director of Access Office Systems offers these tips for promoting simple improvements in everyday business practices –

"If you cannot get rid of the family skeleton, you may as well make it dance."

– George Bernard Shaw