Updated January 26 at 10:26am

Resolution: Get lean in 2012

For small-business owners, there’s a “new normal” out there, and it doesn’t look a whole lot like the old normal. If your business seems to be on a treadmill of too much debt, too many operating expenses and too little growth, it may be time to take “lean and mean” to a new level. More

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ADVICE

Resolution: Get lean in 2012

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For small-business owners, there’s a “new normal” out there, and it doesn’t look a whole lot like the old normal. If your business seems to be on a treadmill of too much debt, too many operating expenses and too little growth, it may be time to take “lean and mean” to a new level.

Everything you do should be subject to scrutiny and revision, including your mission statement, business and marketing plans, budget, sales and expense expectations and more, says business makeover specialist Patricia Sigmon, president of LPS Consulting.

“If you’ve held on to that large office waiting for things to pick up, kept an extra car, maintained a larger-than-needed staff, have too many cellphones, or whatever, it’s time to start a ‘new business,’ scrap what you can, and feel the relief,” said Sigmon, author of “Six Steps to Creating Profit: A Guide for Small and Mid-sized Service-Based Businesses.”

Make 2012 about major regrouping, major renovation and creating a brighter, less stressful view of the road ahead – your new normal. Here are five of Sigmon’s suggestions for giving your business a profit makeover:

• “Fire” unprofitable customers. Sometimes, the highest-maintenance, most time-consuming customers you have are the ones who pay you the least. Analyze the profit margin or lack of profit margin that each customer or perhaps customer-segment produces. Stop pursuing customers who are not helping you be profitable – period.

• Reward your best customers. Look at which customers are giving you the most profit, and coddle them, woo them, don’t lose them! Offer them frequent-buyer rewards. Send them a small gift at their one-year anniversary.

• Start relationships. This coming year, it’s time to overhaul your sales behavior. Turn all one-time sales efforts into relationship sales. Start monthly maintenance plans, suggest auxiliary services, sell complementary products, or offer retainer plans covering 50-100 labor hours, for example.

• Erase those expense lines. Reduce your operating-expense budget to the lowest possible number. If that means selling your car or closing an office, so be it. You can’t build a new profit base when you are still using yesterday’s expense model. Go through your expenses line by line and get rid of everything you can live without.

• Outsource, outsource, outsource. Whatever type of skill or service you need, think hard before hiring a new employee or keeping an old employee. Look at each department or each person when you are trying to manage costs. •


Daniel Kehrer can be reached at

editor@bizbest.com.

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