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How to Hire New Employees

How to Hire New Employees

Hiring new employees is one of the most challenging tasks business owners face. You can take the fear and anxiety out of the process – and ensure you get the best prospect for the job – by developing an incremental, systematic approach and staying focused on the process. There are four simple steps that cover how to hire new employees.

Remember this: if you don’t change the system or process of hiring that you’ve been using thus far, then you’ll simply get more of what you’ve already got. Here’s a proven four step recruiting system that if followed carefully will ensure you hire the best candidate for the job every time.

Define What You Are Looking For

Define what you’re looking for carefully. Before you even begin looking or telling people you have a position you’re looking to fill – assess your present situation and define your ideal organization chart. Is your current staff in the best positions? And then, for this new / open position – have you fully defined the job and documented its responsibilities and requirements in a job description? What will the ideal candidate look like? Draw this picture before you even begin looking.

Attract a Large Pool of Applicants

Attract the largest pool of applicants your time and budget will allow. Be prepared ahead of the need arising with an up to date database of all your contacts. Research a wide variety of job posting resources that make sense for your business – develop a list and keep it updated. These would range from newspapers and industry newsletters, community organizations and churches, to temp agencies to web sites. Spread the word and share the job description with all your current employees, customers, vendors and other personal contacts.

Compare Applicanta

Compare each of the applicants who contact you two ways: compare each to your requirements, and then compare the qualified applicants to each other and rank them from most to least suitable. Implement multiple levels of screening and you’ll waste less time in lengthy interviews with under-qualified candidates. After you have developed a short list of applicants – invite them in for a structured test situation where they perform the essentials of the position in real time while you observe the results. Also assess your short list with one or more of the variety of assessment tools available to make sure you’re making an appropriate selection.

Sell Your Ideal Candidate

Sell your ideal candidate on the job. Remember the hiring process is a two way street. You’re interviewing them – and they’re assessing you. The stronger more desirable candidates will always have more opportunities. Do you have a strong vision and mission for your business that you can effectively communicate with enthusiasm and sincerity? You need to enroll and inspire in your vision to get a strong team member to join you. Another common mistake in hiring is ‘selling’ too soon. Be sure you haven’t skipped any of the previous steps so you don’t wind up selling the wrong candidate.

The hiring process is critical to the growth of a strong healthy business. Turning it into a systematic, incremental process can take the fear and anxiety out of the process. Having a system in place for making hiring a routine process will ensure you are not trapped with retaining poor performing staff because you fear having to hire replacements.

In order to determine which candidates are the right fit for your company, download and access your free white paper, 5 Guiding Principles For Recruiting a Star-Quality Team.

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how to hire new employees

See Also:

How to Run an Effective Meeting
How To Train People For Success
Future of the Accounting Workforce
Recruiting a Winning Team
How to form an Advisory Board
How to Hire a CFO Controller

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Five Reasons To Pay Attention To CRM Software

See Also:
How Do You Know When It Is Time to Buy New Software?
How to Choose New Software
Technology Assessment Criteria
How to Choose a Software Dealer
Technology Strategy for Small to Medium Sized Companies

Five Reasons To Pay Attention To CRM Software (Customer Relationship Management)

Customer Relationship Management or CRM software is not usually one of the top concerns of CFOs and probably with good reason given the poor rate of successful CRM Software implementations. However, what you may not know is that if CRM is implemented correctly, then it can provide a wealth of very relevant and useful information for a CFO. A good CRM implementation will yield all sorts of useful data regarding everything from ROI on sales and marketing expenses to projected operations resources requirements. If those figures sound peak your interest, then read to learn about the five reasons to pay attention to CRM software.

1. CRM Software Packages Can Help Determine ROI on Marketing Campaigns

Do you ever look at your marketing budget and wonder how much you are really getting in return for those dollars? On the flip side, are you afraid to spend money on marketing because you are not sure about ROI? CRM Software can help because it can allow your sales team to capture where sales leads are coming from and track those leads all the way through to closed sales. I’ve often seen clients who thought they had a good feel for where their sales were coming from until we actually started tracking them – the results are almost always surprising. The screen print below illustrates what a good Win Report can tell you (i.e. what percentage of your business is coming from which referral sources).

  Company                  Opportunity                         Revenue  % Revenue
Client Referrals
  Agricultural Focus       25 tons premium product B             55000
  Greek Vineyards          5 tons product A, 10 tons product B   37000
                           Subtotal                              92000   25%

Industry Trade Magazine
  Ciro's Co.               50 tons product A                     75000
                           Subtotal                              75000   21%

Trade Show ABC
  Flowery Inc.             50 tons product A                     75000
  Amberly Watkins          25 tons product A                     40000
  Forestry Inc.            30 tons product B                     70000
                           Subtotal                             185000   51%

Trade Show XYZ
  Wings Express Delivery   5 tons product C                      10000
                           Subtotal                              10000   3%

                           Total                                362000

After reviewing the Win Report above, you may want to skip Trade Show XYZ for the next year. It cost you more than $10,000 for booth space, promotions, travel, and lost time out of the office. Trade Show ABC on the other hand, looks pretty good.


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2. CRM Software Can Help Determine ROI on Future Expenditures

Just as important as tracking where your sales are coming from, tracking why you are losing business is one of the important reasons to pay attention to CRM software. A good Loss Report like the example below will tell you which investments in additional resources will most likely pay for themselves.

                                                      Projected  % Lost
    Company                 Opportunity                Revenue    Sales
alternate vendor - Company X
   Test Demolition          25 tons product A            40000
   DEF Company              50 tons product B           110000
   Good Prospect Limited    10 tons product A            17000
                            Subtotal                    167000     30%

alternate vendor - Company Y
   Brandise Consulting      20 tons product A            35000
                            Subtotal                     35000     10%

untimely credit process
   My Favorite Prospect     50 tons product A            75000
   Jaconbs & Co             100 tons product A          150000
   Just Another Company     25 tons product B            55000
   Not Abad Prospect        30 tons product A            45000
                            Subtotal                    325000     50%

Budget issues
   What A Client Co         25 tons product B            55000
   Hot Prospect             20 tons product A            35000
   Sports Equipment         10 tons product B            22500
                            Subtotal                    112500     20%

                            Total                       639500

If you could spend $55,000 to fix your credit process, then wouldn’t you feel more comfortable doing it with the information above?

3. CRM Software Can Help You Predict Future Resource Requirements

Wouldn’t it be great if you could predict more accurately how much new business to expect next quarter? You could feel more confident in hiring additional employees or waiting for a better candidate based on the predicted need. The problem is that very few sales organizations provide accurate sales forecasts if any. A good CRM software will tell you not only what sales are projected to close, but what the likelihood of their closing is. Forecasts that take historical data regarding closed sales into consideration are much more likely to give you an accurate picture of impending resource needs.

4. Properly Implemented CRM Software Makes Sales People More Efficient & Effective

The average CRM database often ends up being little more than a method for your sales people to mark their territory at best or an expensive address book at worst. However, a well implemented CRM software will help your sales people implement strategy to meet your company revenue goals. In addition, they will work smarter and incorporate their sales training. Sales training is another expense that often doesn’t see the return on investment it deserves. More efficient salespeople add more revenues to your bottom line with less payroll expense.

5. CRM Software Implementations Can Be Expensive!

While a well implemented CRM can provide invaluable data, a poorly implemented may end up being worthless. When implementing CRM software, you want to make sure that you spend enough. You want to make sure that you are not just purchasing the software but also providing relevant customization, training, installation and integration with existing systems.

Mistakes Implementing CRM Software

One of the most common mistakes made in implementing CRM software is forgetting about the really important investment in training users. This is especially true if the system is not particularly user friendly. If training is not well executed, then the success of the entire implementation is in jeopardy. If users don’t embrace your new CRM, then the quality of the data they input will be poor. As a result, it will yield poor quality reports that no one will trust or use. Now you’ve just wasted a huge chunk of cash, time, and energy on a useless system.

So the next time your eyes start to glaze over at the mention of CRM software, perk up – you may have more to gain or lose than you previously thought. Choosing the right software is so important. Check out our free Internal Analysis whitepaper to discover what you need strengthened and/or resolved. Then choose a CRM software that will help you accomplish those goals.

Reasons To Pay Attention to CRM Software
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Feasibility Study

See Also:
Current Ratio Analysis
Comparison Analysis
Customer Analysis
Mixed Economy
Variance Analysis

Feasibility Study Definition

The feasibility study definition is the study of the feasibility of creating benefit from a given project. It is one of the first steps in evaluating a business idea. Basically, a feasibility study proposal is the analysis which establishes whether a business or project is a worthwhile investment of time.


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Feasibility Study Explanation

A feasibility study, explained as the smart first step to starting any business, must be done. In regards to starting a business, a feasibility study outline is done by asking the following questions. It all starts by asking if it is possible.

Are the business operations even possible? If so, how would the company make money? Are there customers that are willing to buy the product? Once this is established, marketing feasibility must then be studied.

How many customers are there? And how much of a similar product do they buy? What amount will we sell? How would the company let customers know that it exists? How does the company persuade customers to use their product? What does the marketing and sales process cost? Will the business make enough money to support this? How much will the company charge for products? Operational questions come next when creating a feasibility study report.

How much would the operations, which create products, cost? How many units of products will the company have to sell, with the above amount of profit from each unit, to cover marketing and operational costs? Finally, you must ask financial questions.

How much will the company make in a year? How much will the entire startup costs, with employees, equipment, and marketing expenses, be?

Conclusion

In conclusion, a feasibility study follows this method. It establishes, first, if the project is even possible. Then it follows the method listed above to finally establish if there will be any benefit to owning the company after you put all of the effort forth. Do the feasibility study analysis this way, before opening operations, to prevent an expensive mistake.

The above feasibility study example provides the main questions to ask when considering starting a project or business. You will need to answer additional questions based on situational needs. Though no single process decides the answer, you can assume an indication of the results before the company is created.

A feasibility study checklist is available in books or online. Find a few books and reports you like. By following the methods in each of these books, you will be able to answer all of the unique questions and prove the company concept over time.

Guide your CEO by conducting the feasibility study to vet their ideas. Click here to learn how you can be the best wingman with our free How to be a Wingman guide!

feasibility study, Feasibility Study Explanation, Feasibility Study Definition

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Customer Relationship Management (CRM)

See Also:
Customer Analysis
Profitability Index Method
Segmenting Customers for Profit
Five Reasons To Pay Attention To CRM Software
Market Segmentation

Customer Relationship Management (CRM)

Customer relationship management, or CRM for short, is the process by which a company identifies customers based on profitability or sales, and markets to them specifically. By identifying the best customer, the company has the ability to provide a unique offering to that customer or customers. This means repeat visits by that customer and a relationship that should be sustainable even through bad economic turns.

Customer Relationship Management (CRM) Meaning

Customer Relationship Management means that a company possesses the knowledge and capability to not only identify a target market or segment, but it is also able to provide a unique offering to maximize benefits for both companies involved. There are several steps involved when evaluating the customer relationship and providing the offering as follows:

Define the Ideal Customer

Most companies do not take the time to evaluate who their best customers really are or what they might look like. Instead, they go by something like a percentage of revenue calculation. But they don’t take into account the amount of resources or time a large high maintenance customer may be using up and therefore digging into their profits.

Target Marketing & Sales to Your Ideal Customer

Once you have identified your ideal customer, your sales and marketing activities should be targeting those particular customers. For example, if you identify entrepreneurs as your ideal customers, you should target your marketing and sales activities toward places that attract entrepreneurs.


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Once this is done there are two options that a company can pursue in order to gain profitable sales as follows:

Option A: Tailor Your Products to Better Serve Your Ideal Customer

Many companies develop new products or services. Then they ask their sales and marketing teams to go sell them without evaluating market needs. Your existing customers are the easiest to sell to. So make sure that your core business and any new products you add are aligned to serve your ideal customer profile.

Option B: Define Your Unique Value for Your Ideal Customer

In a down economy, the companies that survive are the ones that can show their unique offering or value and in a recovering economy those are the companies that thrive. Figure out what unique assets your company can bring to your ideal customer. Then help your sales and marketing team communicate them to prospects. Companies that stand out are those that can build customer relationships. In addition, they provide a meaningful service and value to their ideal customers.

Download your free Internal Analysis worksheet to start developing and enhancing your strengths as well as start reducing and resolving your weaknesses.

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Customer Analysis

See Also:
Customer Relationship Management (CRM)
Segmenting Customers for Profit
Disaster Planning for Information Technology Systems
How to compensate sales staff
How To Train People For Success
Scrap Value

Customer Analysis Definition

The customer analysis definition is the process of analyzing customers and their habits. Customer analysis is one of the most important areas of study in a business. Perform these decision processes in the following 3 stages, assessing:

  • Before the purchase
  • During the purchase
  • After the purchase

Customer Analysis Explanation

Customer analysis, explained as the route to knowing your customers, is one of the most important functions of marketing. Through understanding the customer one can begin to offer services to their needs. Customer analysis, marketing tools included, is a study centered around the buyer.

Before a customer has begun to purchase, marketers analyze several factors. Total market size would form one of the most crucial measurements. From here marketers place high importance on market location, preferences, socioeconomic status, price elasticity towards the product, and more. The focus of this is to understand the existing culture of these people in order to understand the motivating factors of why they are interested in purchasing.

During the purchase, marketers analyze how customers perform in order to focus their attention on the most profitable products of the business. A customer analysis sample in this stage includes buying behavior, total purchase value, influencing factors which motivated the purchase, satisfaction levels during the purchase, and more.

Once the product has been purchased, then the customer analysis matrix takes a different role. Areas of importance at this stage include customer satisfaction, word-of-mouth from the customer, likelihood of additional purchases, and more. The focus here is to measure the effectiveness of the product in order to motivate customers to make repeat purchases, generally.


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Customer Analysis Example

For example, Shay is a marketing analyst with a major marketing firm. She enjoys going to work because she can use both the creative and analytical sides of her personality. She does well at this job.

Recently, she was tasked with customer analysis for one of the firms clients. Shay is to take the research and make strategic assessments from the information. She is excited to begin this project.

Review the Market Factors

She first starts by reviewing the market factors: total market size, location, interest in the product, and more. Through a series of focus groups, surveys, and similar studies, Shay begins to understand how to coerce the customer to interact with the company.

Analyze Customer Habits

Next, she analyzes the habits which the customer displays during the purchase. Shay notes, from the research, that customers are introduced to the company through cheaper products. Eventually, they earn trust to purchase more expensive products. She notes this as she moves forward.

She finally looks at the way a customer acts after buying. The key factor she notices here is word-of-mouth: customers always tell their friends about the good experiences they had from the product. She recognizes the importance of this and plans for maximization of it’s benefit.

Assemble the Report

Shay finally assembles the report. She makes key discoveries in this document. Shay walks away from it knowing what is important: that the market is nationwide, it is relatively unbothered by price increases, is familiar with technology, is more interested in purchasing quality than saving money, and much more. She begins to strategize from this base.

Shay believes that by changing gears the company could further maximize profits. In her report she recommends several things: creation of an online store to offer another channel for sales, adding an additional product line which uses premium pricing, and creating a customer rewards program where previous purchasers who cause friends to buy can reap the benefits of their actions.

She prepares for the meeting to present her new customer analysis business plan. She knows she will have to overcome some resistance but looks forward to the meeting. Shay can bring value through her actions for the company.

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Cost of Goods Sold (COGS)

See Also:
Manufacturing Cost
Direct Materials
Direct Labor
Overhead
Direct Cost vs. Indirect Cost

Cost of Goods Sold (COGS) Definition

Cost of Goods Sold (COGS), defined as the inventory expense that is sold to customers and is known as the largest expense to a company. It is also referred to as the Cost of Sales, and the two are used interchangeably.

Cost of Goods Sold Explained

Cost of Goods Sold, explained as being an expense, has a direct correlation with the inventory which is considered an asset. Derive the COGS equation from the inventory which will be shown later. In addition, the Cost of Sales falls right underneath the Revenue or Sales on the Income Statement. In fact, the Gross Margin is the result of Revenue minus the COGS. Also, divide the Cost of Goods Sold by Sales to find Gross Profit Margin percentage. The Gross Profit Margin percentage gives a company insight into what they need to charge for a certain product. Or they may find a component of the Cost of Goods Sold expense to reduce.

Cost of Goods Sold Formula

The formula or Cost of Goods sold equation is as follows:

Cost of Goods Sold Beginning Inventory
+ Net Purchase (raw materials, labor, and overhead)
= Cost of Goods available for sale
–  Cost of Goods Sold ending inventory
= COGS

Example

Printer Inc. sells printers and other computer components to the the general public. Peggy an accountant is in charge of the inventory and Cost of Sales as it posts to the income statement. She finds the following numbers:

Beginning Inventory = $20,000
Manufacturing or Purchase Costs = $120,000
Ending Inventory = $30,000

Then calculate the Cost of Goods Sold as follows using the formula above:

$20,000 + $120,000 = $140,000 or the Cost of Goods available for sale

$140,000 – $30,000 = $110,000 or the Cost of Goods Sold

When you know how to calculate COGS, you will better manage your company’s financials or economics. If you want to learn how you can add more value to your organization, then click here to download the Know Your Economics Worksheet.

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Completed Production Method

See Also:
Accounting Principles
Accounting Concepts
Point of Sale (POS) Method
Installment Sales Method
Percentage Completion (POC) Method

Completed Production Method Definition

Completed production method accounting includes recognizing revenue as the products roll off the assembly line or are available for transportation and sale. This means that the production process is considered to be the final revenue generating activity. This occurs normally if a company convinces its customers to assume the transportation of the goods.

Completed Production Method Meaning

The use of the completed production method usually requires a contract with a customer to assume the responsibility of transportation of goods. The contract also needs to specify that the customer intends to buy the goods for a specified period of time. One normally uses production accounting services in raw material providers. Production accounting oil and gas is the largest industry that commonly uses the method. Other industries that use complete production services include lumber, coal, and steel.

Completed Production Method Example

For example, Tim is an accountant for an oil and gas production company called Texon Energy Inc. The company is responsible for several wells onshore. In addition, the company recently entered into a 5 year contract with Sea Shell Inc. Sea Shell will pay $65/barrel to Texon for 100,000 barrels each year. As a result, Tim uses the completed production method of accounting for all Texon transactions because it gives a more meaningful revenue count than the point of sale method.

Suppose that the company produced 120,000 barrels. If the company had used a Point of Sale (POS) Method, then the company would only be allowed to recognize $6.5 million. However, this is not reflective of the total output and would actually yield a higher Cost of Goods Sold (COGS). Under the completed production method, revenue would be recognized in the amount of $7.8 million. Notice: this is more meaningful to the company because it gauges output of the company. Unless the customer is leaning towards bankruptcy, the pay is guaranteed per the contract.

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