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Entrepreneurship Newsletter 10/11/2024: Surfing the Market Waves: How to Spot the Next Big Surge

by Adam Litster | Oct 18, 2024 | VPS, Entrepreneurship Newsletter, Profit First

Hello all! In this edition:

• What is a market surge, and why is it important for business growth?

• How to identify emerging trends in your industry.

• The power of niching down to capitalize on growing demand.

• A preview of future editions, where we’ll explore how to apply these principles to our own businesses.

As business owners, we have often heard that it is extremely important to stay ahead of the curve. So why does it feel like most of the time that we are barely keeping up with the curve, if that? Lately, I’ve been diving into Surge by Mike Michalowicz, a book that teaches entrepreneurs how to spot and ride market trends for explosive growth. I’m still studying and applying the concepts myself, but the ideas resonate deeply with what we all strive for-momentum and growth that are sustainable and profitable. Today, I want to share some of the key takeaways that have made me think differently about how we approach opportunity.

What Is a Surge?

A surge is a wave of demand or opportunity in the market that, if timed correctly, can be the difference between slow growth and fast-tracking your business to the next level. The key is recognizing the signs of an emerging trend before it becomes saturated, so you can position your business to ride the wave, not just catch the tail end of it.

How Do You Identify a Surge?

It starts with paying close attention to the market. What new problems are your customers facing? What innovations are they excited about? The companies that can solve these problems first are often the ones that capitalize on a surge. It’s about narrowing your focus and diving deep into a niche that’s experiencing this wave of momentum.

By answering these questions, we will move closer to finding “buy-ready” clients, those who are already in the market and actively searching for a solution. If you can identify where demand is growing, you can meet these customers right where they are. This is a powerful way to position yourself at the forefront of a trend. I will dive deeper into how to find buy-ready clients in future editions!

Why Niching Down Matters

Also key in finding and riding the market wave is niching down. Niching makes you more competitive during a surge. By focusing on a smaller, specialized market that’s gaining traction, you stand out. Instead of trying to appeal to everyone, you target the customers who are already feeling the pressure of the problem your product or service solves. This allows you to carve out a space where you can lead, even as more competitors jump on the wave later.

What’s Next?

In future editions, I’ll dig deeper into how we can use these principles in our businesses. From finding our own niche surge to targeting buy-ready clients, the potential to capitalize on market waves is there, it’s just a matter of positioning ourselves effectively.

For now, I encourage you to start paying closer attention to shifts in your industry. What new challenges are emerging? What customer demands seem to be on the rise? These are the early signals of a surge, and spotting them early can put you in a prime position to catch the wave. If you are interested in digging into these topics with me, I’d also recommend checking out the book on Amazon!

Until next time, keep an eye on the horizon!

Thanks for reading and have a great weekend!

Adam Litster

Certified Profit First Professional and Pumpkin Plan Strategist

(816) 500-5779

Click here for my calendar to schedule a call or meeting

Entrepreneurship Newsletter 10/4/2024: Profit First: Your Best Defense Against Price Increases

by Adam Litster | Oct 4, 2024 | Profit First, VPS, Entrepreneurship Newsletter

Hey there, entrepreneurs!

If you’ve been paying attention to the headlines this week, you probably heard about the dockworkers’ strike that nearly brought our supply chain to its knees. While it was resolved fairly quickly, the scare is enough to keep many business owners up at night. I personally had several conversations with my wife about what we would do if all the prices went up, how our budget would be impacted, etc. It doesn’t take much—a single disruption like this—and suddenly you’re facing price increases that ripple across your entire operation and potentially put your personal finances in jeopardy also. It’s more important than ever to put your business in the most healthy position possible so you can weather any unexpected storms.

Before we dive in, here’s what you can expect from this article:

How Profit First creates a financial cushion to absorb unexpected price hikes.
Why sudden price increases or supply shortages don’t have to derail your business or personal life.
Strategies for handling rising costs without immediately passing them on to your customers.
A real-world example of how a business owner successfully navigated rising costs using Profit First.
Actionable steps to ensure your business is ready for the next disruption.

Now let’s dig into how you can stay profitable, even when the world around you seems unpredictable.

Profit First: Building a Buffer for Your Business

If you’re already using Profit First, you know that this system is about prioritizing profitability from day one. It’s not just a tool to track your money—it’s a strategic approach and mindset that allows you to prepare for the unexpected and build a buffer against rising costs, like the ones we’ve seen threatened by this week’s strike.

Instead of reacting to price increases after they’ve hit, you’re already ahead of the game. You’ve allocated a percentage of every dollar earned to profit, so when supply chain costs rise or inflation sneaks in, you’re not scrambling to cover your margins. You’ve built in a cushion—peace of mind that lets you focus on growth, not survival.

Handling Price Increases with Confidence

We know that, in the economic environment we live in, price increases are inevitable. Even disregarding the recent increases in strikes and natural disasters, we are facing increased regulations, political turmoil, and military conflicts around the world. But with Profit First, you’re not caught off guard. You’re not forced to pass on the costs to your customers right away or slash your own income just to keep things running.

With a well-thought-out Profit First strategy in place, you can evaluate the situation calmly. Can you absorb the extra costs? Can you tweak your allocations slightly for a month or two without putting your business in jeopardy? Maybe you can negotiate better terms with your suppliers because you’ve built a stronger financial foundation. These are all questions that are only possible because you’ve made profitability a priority. Further, because you are prioritizing profitability, your business is providing you with the compensation you need to provide for yourself and your family AND still have some left over for profit/emergencies! You are in a position where you have the ability to act rather than react to outside stimuli or pressure, without worrying that you will have to sacrifice your own personal income to keep your business afloat.

Profit First in Action

Take the real world example of a pizza restaurant which successfully weathered the COVID-19 pandemic because they used Profit First. I read about this business in an article, which explained that despite the pandemic causing numerous challenges for the restaurant industry, the Profit First methodology allowed the owner to continue to make allocations and pay his bills throughout the pandemic, despite the fact that his doors were closed for months. By maintaining financial discipline, he could keep the restaurant operating while others around him were closing. This method gave him the ability to weather the financial storm by focusing on profitability from the start rather than waiting until year-end to assess his financial health.

This is the kind of financial flexibility Profit First gives you. It’s not just about profitability; it’s about control and confidence in the health of your business. And as we’ve seen with this week’s strike, having that control is priceless.

What You Can Do Right Now

If you haven’t read and implemented Profit First yet, now is the time. Here’s a link to get it on Amazon (I believe there is going to be a promotion on Amazon later this month!). The dockworkers’ strike is just a reminder that there will always be external factors beyond your control. But we can control how we manage our money. Profit First gives you the tools to handle the unpredictable with confidence.

And if you’re already using Profit First, take a moment to revisit your allocations. Are they set up to help you weather the next supply chain disruption or cost increase? If not, it might be time to adjust.

Bill Litster and I are experts in cash flow management. In 2022, our firm was recognized as the Profit First Professional Firm of the Year. All this is to say that if you need help or would like someone to guide you through improving your business health, we’ve got your back. Click here to schedule a call with us!

We would like to provide as much value as possible through these weekly posts. If you have any feedback or recommendations on how we can do better, or are struggling with something in your business that is keeping you up at night, let us know!

Thanks for reading and have a great weekend!

Adam Litster

Certified Profit First Professional and Pumpkin Plan Strategist

(816) 500-5779

Click here for my calendar to schedule a call or meeting

Entrepreneurship Newsletter 9/27/2024: Scaling without losing your sanity

by Adam Litster | Sep 27, 2024 | Profit First, VPS, Entrepreneurship Newsletter

Welcome to our weekly entrepreneur newsletter! Is there anything in your business that is keeping you up at night? Let us know! We’d love to help and provide our advice/experience in future newsletters.

Main takeaways for today:

Systematization drives growth without the added stress.
Document processes so the business runs smoothly without you.
Delegate and automate to streamline routine tasks.
Focus systems on your most profitable clients and services.
Refine systems regularly to keep pace with business growth.

Scaling a business should bring freedom, not more work. But if you’re like most business owners, it can feel like growth just means longer hours and more stress. Being transparent, we are dealing with the exact same issue at our firm. We want to grow, but being in a service industry often means we “trade hours for dollars”. What we have learned (and are working to apply ourselves also!) is that we don’t have to do it all ourselves. When we build the right systems, we can scale without sacrificing our time or sanity.

Here’s how to make that happen:

1. Document repetitive processes

If you’re handling repetitive tasks yourself, you may be working harder than you need to. Every process that happens regularly—like billing, scheduling, or client onboarding should be written down. This way, any member of your team can handle it, giving you room to focus on growth, not the day-to-day grind.

Example: Our firm does bookkeeping for a handful of clients. We found recently that every time we bring on a new bookkeeping staff, we spend a large amount of time walking them through each client and training them on all the many steps involved in managing their books. We are now going through the process of documenting these processes in Standard Operating Procedures (SOP’s) for each client so that any new staff can easily reference the document and skip the hours of training. This will free us up to focus on serving our other clients and growing the business!

2. Automate and Delegate

You don’t need to be involved in every little thing. Once you’ve documented a process, take a step back and ask, “Does this need a human touch?” Many tasks can be automated—like sending reminders or tracking expenses. Those that can’t be automated, consider if you can delegate them to your team.

Example: Sales can take up a lot of time for business owners. We know this is a crucial part of growing the business, but we often spend a lot of our time vetting and emailing incoming leads, setting up calls, etc. And as our business grows, this would only take up more of our time. Recently, we invested in a CRM and set up automated sequences so that when new leads come in, the system automatically sends out a tailored email to them with links to set up a call. When they set up the call, the system sends scheduled reminders and follow-ups. The process that previously took several hours each month is done automatically and has had an amazing impact on our business!

3. Build Systems Around Your Best Clients

Not all clients are equal. If you’re spending time and resources on low-value customers, your systems are helping the wrong part of your business. Focus on creating systems that help serve your best clients, the ones who bring in the most revenue and truly align with your vision. You will find that your ability to provide value to these clients increases, they are happier with you, and you become much more attractive to potential clients (not to mention you are now much more profitable by spending less time providing more value!)

4. Continuously Refine Your Systems

Your systems should grow alongside your business. As you expand, make it a priority to regularly assess and refine your processes. Whether it’s streamlining something further or automating new steps, evolving your systems helps you stay efficient and maximize profitability as you scale.

The key to scaling without losing control or becoming burnt out is having the right systems in place. Systematizing doesn’t just reduce stress, it gives you the freedom to step back, work on your business rather than in it, and pursue the growth you want. You will be actively leading the business in the direction you envisioned when you first opened the doors!

We can help you build the processes that drive growth without sacrificing your time or quality of life. If you’re ready to systematize your business and prepare your business to scale effectively, reach out to us! We’d love to hear your ideas and provide our expertise! Click here to schedule a call with us!

Thanks for reading and have a great weekend!

Adam Litster

Certified Profit First Professional and Pumpkin Plan Strategist

(816) 500-5779

Click here for my calendar to schedule a call or meeting

Entrepreneurship Newsletter 9/20/2024: Are You in a Cash Flow Crisis?

by Adam Litster | Sep 20, 2024 | Profit First, VPS, Entrepreneurship Newsletter

Welcome to our weekly entrepreneur newsletter! If you are new and would like to check out any prior editions, click here! I had the amazing opportunity to attend the ProfitCon conference this week, where we gained valuable insights into the unique challenges entrepreneurs face today and what can be done to face those challenges successfully. It was such a fantastic experience, so I would like to share some of those insights here for all of you.

In this article, we are hoping to help you better understand:

The common cash flow challenges that small businesses face
Why overconfidence in cash flow management can lead to financial issues
The top drivers of cash flow problems, including labor costs, seasonality, and late payments
A few helpful tips to better manage your cash flow:

As small business owners, we often find ourselves facing solving problems on the fly — whether it’s handling a sudden staff shortage or delay in an inventory shipment. But one challenge that quietly lingers and can easily sink a business if ignored is cash flow. 91% of small business owners face cash flow challenges, and yet, many believe they have a handle on it until they find themselves in a cash flow crisis.

The Overconfidence Trap
The majority of small business owners check their bank balance daily to make financial decisions, but relying on a single bank balance doesn’t provide the full picture. In a prior newsletter, we discussed the importance of having visibility into the finances of our business. This comes from understanding and interpreting financial statements, and just as important, managing the cash flow of our business. During the conference, I learned that small business owners are on average 42% overconfident in how well they manage their cash flow, and this overconfidence often leads to missed payments, increases in debt, or, arguably the worst of all, not being able to cover payroll. It’s not just about having cash today — it’s about knowing where that cash is supposed to go tomorrow or next month – having an understanding of the cash flow needs of your business, ensuring you are prepared for whatever crisis may be around the corner.

What’s Really Causing the Problem?
We’ve seen that there are four factors that most often drive cash flow crises: rising labor costs, seasonal fluctuations, late payments from clients, and sporadic/excessive spending. These factors can lead to the “feast or famine” cycles we’re all too familiar with—making it difficult to budget or plan for growth.

But here’s the good news: Cash flow is one area where simple changes can lead to significant positive results.

4 Tips to Get a Grip on Cash Flow

1. Use Multiple Accounts

Many of us toss all our cash into a single account, which can make it look like we have more to spend than we actually do, and limit our ability to prepare for large or rare expenses that may come in the future (i.e. annual fees or taxes). By opening multiple accounts—for profit, owner’s compensation, taxes, and operating expenses, you create clear boundaries around where your money should go. I read something an expert said, “You wouldn’t throw all your clothes into the same drawer, so why throw all your money into one account?” Keeping your finances organized this way is one of the simplest ways to avoid overspending and financial panic.

2. Practice Profit First

When it comes to managing cash flow, too many businesses focus on revenue and expenses first and profit last. It is often an afterthought. We have a profit if there’s money left over after all the bills are paid. By adopting a “Profit First” methodology, you set aside a portion of your income for profit before you account for expenses. This forces your business to operate within its means while ensuring profitability. Your profit should drive your business decisions, not the other way around.

3. Integrate Your Banking and Bookkeeping

We often meet business owners who manage their business finances in excel, or even with a paper and pencil. I’ve seen this work for maybe one or two businesses, but more often than not, this is an ineffective way to manage business finances and does not provide real time or helpful information for making smart business decisions. There is great value in integrating your banking with accounting software like QuickBooks and using this software to manage business finances. This not only saves time but also ensures you have real-time data when making financial decisions. The more accurate your view of incoming and outgoing cash, the more effectively you can plan ahead. If you are struggling to track your business finances or would like help getting set up, we’re here to help! Click here to set up a meeting with us.

4. Leverage Credit Wisely

Many businesses use credit as a lifeline in a cash flow crunch, but it needs to be used with caution. When managed properly, credit products can provide various benefits such as cash back or travel rewards. However, we encourage business owners to only use credit cards in a controlled system (i.e. reserving funds each time credit cards are used, so the card can be fully paid down each month and avoid interest. Many entrepreneurs poorly manage or abuse credit products to make purchases or pay bills that they do not have the cash to pay back. Most business owners assume they’ll make back the money that they borrowed, plus the interest. But they haven’t run the calculations. In other words, they’re going off of AOI instead of ROI, meaning assumption of investments and not return on investments. Getting hit with massive interest charges on credit cards and loans can severly limit your ability to stay profitable and run a healthy business. Before using credit, always consider “What is the likely return and what is the probability of that return?” Remember, using credit wisely is a strategy — abusing it can be a downfall.

Cash Flow and Your Peace of Mind
What’s at stake isn’t just your business’s ability to pay bills. It’s also your personal well-being. Cash flow stress impacts 71% of business owners, leading to anxiety, burnout, and sleepless nights. But by taking control of your cash flow now, you not only secure your business’s future, you also reclaim your peace of mind.

Managing cash flow might seem like a daunting task, but the right systems and a proactive approach can turn this challenge into a manageable part of your business.

At Better Biz Info, we are cash flow experts and have coached many businesses through cash flow crises. There’s always a path to better business health and personal peace. If you have questions or would like help managing the cash flow in your business, click here to schedule a call with us!

Thanks for reading and have a great weekend!

Adam Litster

Certified Profit First Professional and Pumpkin Plan Strategist

(816) 500-5779