By Al Bagocius
Starting a new business, especially from your home, creates many challenges and needs for behavioral control. Going
from a job situation to a self-employed endeavor, you find unlimited freedom but at the cost of not receiving a paycheck two weeks.
Working out of your home to start a new business has so many distractions that you could fail in a very short period of time.
When I started my own business, I adopted the following fail-safe system. If you incorporate it as one of your planning tools, you’ll find it will help you keep afloat and successful. The system is based on accomplishing a quota of activities that ensures success in as short a time period as possible. The quota is defined as a weekly point goal; I suggest you aim to “earn” 1,000 points each week.
Point values
To tally 1,000 points, you earn points for various types of activities:
• Phone calls, 1 point. However, you only earn that point for each call that results in talking directly to a prospect or customer.
• E-mail, 1 point. These must be directed to the prospect or customer.
• Mailing marketing information to a customer, 1 point. Because mailing is a black hole that too often gets little or no response, its point value is low.
• Account visitation, 10 points. Meeting the customer face-to-face in most businesses is so important that has a value 10 times that of other activities.
• Order entry, 33% of the dollar value of the profit. The calculation for points for order entry should only be made on profit above cost. For example, if the profit on your $1,500 order is $500, the calculation would be: 33% x $500 = $166 (that is, 166 points).
• Invoice to customer, 33% of dollar value of the profit. (Calculated the same way as for order entry.)
• Checks received from Customers, 33% of dollar value of profit. (Same as above.)
The order cycle develops in three stages: order entry, invoicing the customer, and finally cashing the check that is received from the customer. A sales mentor of mine many years ago only defined an order as one in which the customer’s check clears. How right he was.
Too often, new business owners snooker themselves with a false sense of security, counting the money made at order entry and spending accordingly. If you use the point system, however, you will track all of the components of the order cycle each week, and you will have a clear picture of how well you are doing, how well you did in the immediate past, and what you need to do in the near future.
One more thing: Along with maintaining a high activity level to earn points and ensure success, you should also find a way to give back to the community. You don’t earn points for this activity, but it will pay you pay tenfold in the long run. Consider donating products, service, or time to local organizations.
Al Bagocius is owner of A & I Consulting Group: Creative Marketing Solutions, www.aicreativepackaging.com. He can be reached at 904-367-9322 or al@aicreativepackaging.com
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I agree that face to face interaction with a prospective client/customer is so much more effective than a phone call/email. Order entry, invoicing, and depositing/waiting for the check to clear are also administrative tasks that are crucial to business growth.
Giving back to the community is another great way to remind yourself of why we’re here on this earth and cut down on distractions.
Al,
This is a great-simple method that I agree all small business owners should utilize. I can also see how this can be applied as a management tool in a sales department for example to ensure that efforts are properly focused on achieving results (I’ve used a Stage/Gate system in a similar fashion in the past for this). However, I noticed that no mention of the value social-networking, and or online marketing was mentioned. I see this as a hole in the system. Consider how much traction one can gain from a simple post on a business networking site, a blog or forum… after all I discovered this article via our connection on Linkedin and have already forwarded the link to a handful of my colleagues – while its difficult to properly quantify the value of such activities I think we both agree that they have a place in any small businesss’ quiver of business success tools.
Cheers and thanks for the great post!
Andrew Bloo
http://www.linkedin.com/in/abloo
To: Mr. Al Bagocius — A & I Consulting Group
From: Ben Plymale — Automotive Dealership Consultant
bplymale@aol.com http://www.AutoAuditHelp.com
Very good comment & suggestions regarding ‘Starting A Home Business’ or ‘Going Into Business’ — I have been there, done that, still doing it!!
Thanks Al, I have just started on my business and this information really helps.
Al,
Great point system, especially for new businesses who do overspend and end up bankrupt. It is a good system for putting companies back on track.
We could debate the point value of 33% versus 25% because few companies establish any reserves for future growth or lean times. But, the concept is the same.
Great post, Al. And really cool tool! I’ve been in business for many years, but am still going to try it…maybe I’ll make more appointments : ) (Or figure out I’m not cashing enough checks!)
How many points for PROSPECTING face-to-face? Speed networking (of course), chamber and other trade organization meeting networking, networking groups and expos/trade shows are far better than a phone call or mailing, but not exactly an account visit.
Good work Al. Thanks for the info.
I will be in contact as soon as I bury my father and life smooths out a bit.
JL Mealer
Mealer Companies LLC
Great ideas Al. I can see how it would be quite easy to adapt such a point system for different types of businesses. Since I just went out on my own last February, I’ve really been evolving my methods for scheduling and prioritizing my work. I’ve been trying to do things like only check e-mail a few times per day to reduce distractions, add to-do items to my calendar (so I get email reminders), etc. but it’s also been critical to find the balance between actually doing the work for clients and doing my own marketing.
The client always comes first, but if we make sure our marketing and related endeavors are also given priority (and use something like your point system to help us focus on the most productive tasks) we can ensure that these tasks don’t fall by the wayside.
Thanks so much for make this available to us, Al. As I am just starting out, it will help me establish good habits right from the go-get. I will share this with my Entrepreneur networking group.
Many thanks,
Michelle Romanica
Simple, sustainable solution that is pragmatic and does not scare folks away. I think this is great, thank you for sharing, best of luck. I am considering work from home to have a flexible schedule upon retiring from the Air Force. Problem is military has not paid a lot, don’t have capital to start up and have very low risk tolerance. Any suggestions?
Thank You
Ron
Al,
First, thank you for posting in Linkedin and pointing to this article. In my regular job I have “telecommuted” for years. Working from home requires dedication and focus. I never thought about a point system as you described in your article, but it makes perfect sense.
My husband and I have recently started our own home business; helping people save money on their home utilities (electricity and/or gas). We also show motivated individuals how they can earn a residual income just helping people save money.
Thanks for sharing.
Excellent Al,
Great Article.
John
Hi AL,
It’s a good formula to measure every act we do and give importance to only productive activities which will take us near to the ultimate goal of a business ie Profit.
Cheers
kabilan
Hi Al, interesting system.
I like the thirds order-invoice-checks in.
These system seems concise. I’ll pass it on to the SME’s and entrepreneurs I work with and see what they make of it.
Regards
Roisin