Leslie Hoffman, Director of Lending & Client Service, ACCION New Mexico

One certainty in the life of a small business is change. Today, business people are riding the wave of economic change, looking for ways to maximize the profitability of their business amid lower consumer spending and higher prices from suppliers.

Every small business has powerful information at its fingertips that can assist them in adjusting to change. The key is costs. Entrepreneurs who understand how the costs of their business respond to changes can make more informed decisions, allowing them to better utilize limited resources.

The first step is to explore the two basic types of costs in a business – fixed and variable. Continue reading →

Mary Schmidt, Marketing Advisor, The Loan Fund

Marketing means more than coming up with clever, eye-catching ads. If you don’t also ensure that your target market sees and remembers your ads and if you don’t deliver on what those ads promise, you’ll find yourself investing large amounts of money trying — and failing — to attract and retain customers.

Because marketing encompasses everything you do as an entrepreneur, a marketing plan — and a budget to support it — is essential to your success. This is especially true when economic times are tough for you and your customers: The less money your customers have to spend, the more they insist on value, not pretty words. But where and how does such a plan begin?

Marketing is defining business goals. Before you start getting quotes for “branding,” marketing campaigns, Web sites and brochures, clear your mind and desk and write down the three most important goals you need to accomplish in the next 30, 60, 90 and 365 days. Keep the list simple but specific. “Get more customers” is too broad: What kind of customers? Where will you find them? For what products or services? How will you keep them? How will you know if you’ve reached your goals? Once you’ve determined your goals and how to measure whether you’ve reached them — X number of new customers for X product in X location by X date — you can think about how to budget for all that marketing stuff.
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Kim T. Blueher, Director of Lending, WESST Corp.

During economically fragile times – when consumers and businesses are holding their collective breath – survival can sometimes be found by fine-tuning key expense areas.  In my household we are eating out less, driving our economy car instead of the more comfortable but gas-hogging SUV, and turning out the lights when we leave a room.

Businesses can also benefit from examining expenses in key areas and cutting costs where possible. They might also respond to a slow market by lowering the selling price of their products or services to spur increased sales. But before a business owner adjusts pricing, he or she needs to be able to answer these questions – how do I know I am operating at a profit, and what are the lowest sales I can have and still break even?

At WESST Corp., we work with many small businesses whose owners have never taken the time to truly account for all the underlying costs of getting their product or service to market. They haven’t identified their breakeven point.

One of my first clients when I started working at WESST in 1990 was a well-known and highly respected artist who made ceramic dishes. She came to WESST for help because even though she was selling well at art and craft fairs, she was having trouble paying her living expenses – things like rent, car payments and even groceries. Once I guided her through a pricing evaluation, she discovered she was only charging about $2.00 on top of the cost of her product. More importantly, she realized she had neglected to add the time of her own labor to her costs.
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