J. Roy Miller, State Director, NMSBDC Network

As recently as a few years ago, when a customer had a bad experience and moved his business elsewhere, he shared his story with neighbors or business associates. These days, online social networks provide forums that can spread both facts and rumors to many more people at cyber speeds.

Bad customer service today can cost a business not just one customer but potentially hundreds or thousands more who decide not to try a product or service based on one customer’s negative experience. That’s why it’s more important now than ever to retain existing customers and keep those customers happy so negative comments never have the opportunity to spread.

Make customer service a priority.  Set the example for employees, who learn by seeing and doing what you do. Make suggestions and invite workers to come up with their own suggestions for how customers could be better served. Good customer service starts with the boss.

Stand behind your product or service. Guarantees, whether written or oral, provide trust, and customers come back to businesses they can trust. Many customers are willing to pay more just knowing they have recourse if the product or workmanship should fail.

Act on complaints. For every customer who complains, another 26 have similar problems they haven’t resolved, according to the U.S. Office of Consumer Affairs. Think of complaints as market research you didn’t have to pay for, and then respond by fixing the problem.
 
Reward loyalty.  Every customer wants to know that his or her business is appreciated. Customers often go elsewhere simply because they feel ignored. Let your customers know you appreciate their business by saying thanks through words, letters and small rewards.
  
Provide incentives. Promotional campaigns that provide an incentive to existing customers for doing business with your company in the future can generate additional business you would otherwise have missed out on. A discount, gift or chance to win additional services will often cost you little at wholesale but can spur much more in revenue and loyalty.
   
Make things simple. Make it easier to buy from you than from your competitor by offering convenience and simplicity. Something as simple as including a self-addressed envelope when documents must be returned tells your customers you care about making their lives less complicated.
  
Listen. Be aware of the needs of your customers even if they aren’t expressed. Take time to watch their habits as well as listen to their concerns. This type of research often uncovers hidden opportunities that allow you to meet more of your customers’ needs. Actively look for opportunities to provide more value to your customers, whether it’s in the form of a more pleasant experience, greater cleanliness or friendlier service.
 
The New Mexico Small Business Development Centers offer workshops that can help your business survive and thrive during a slow economy.

Find the NMSBDC nearest you.

Article 132

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James Hernandez, Vice President at First Community Bank in Santa Fe

When the economy sours, many businesses cut back on services they consider nonessential. The most shortsighted companies lump customer service into the “expendable” category.

What these businesses don’t understand is that consumers tend to remember the people and businesses that help them through tough times.  It might be a business that provides a vital, one-time service or it might be a store the customer visits often, such as a grocery or hardware store.

The store that employs enough people to prevent backups in the checkout lines and to answer customers’ questions is the store most likely to survive a recession because it’s demonstrating a respect for its customers’ time and energy at a time when many stores are trying to limp along with skeleton crews.

In an economy struggling to right itself, just about any service business can distinguish itself from the competition by ramping up the customer service.

What constitutes service

In a global marketplace where local merchants are competing with Internet-based businesses around the world, outdoing the competition means offering customers good value for their limited dollars. That value includes the service and support the customer gets before, during and after the sale.

Customer service boils down to communication. Any business that deals with the public is usually only as successful as the first impression it makes on customers who visit the business or contact it by telephone or e-mail. Employees should be trained and empowered to help customers with all of their shopping needs, and managers should be close by to back up front-line workers as soon as the customer’s needs exceed their authority or expertise.

Businesses that rely on technology for sales or customer service need to be sure that online services and web sites are easy to understand and navigate. The best of these businesses distinguish themselves among competitors by providing telephone and online support — and it’s better still when the service people are based in local communities rather than in a country halfway around the world.

A world hungry for conflict resolution

Customers usually don’t care what went wrong or why it went wrong when a product or service doesn’t meet their expectations. They just want the problem fixed.

Businesses should make sure every employee is trained in conflict resolution skills and familiar with the business’s return policies.  Employees should understand that empathy goes a long way toward disarming an angry customer and that making excuses or trying to find fault only escalates conflict.

Dealing with unhappy customers is the least favorite part of the customer service job, but a business that can quickly solve problems or mistakes in a business transaction can defuse customer anger and often win a loyal, long-term customer.

Article 119

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David Valdez, Vice President Small Business Lending, Century Bank

Despite signs that the recession is easing in some quarters, many small businesses continue to struggle to pay off business-related debt. America’s Recovery Capital Loan Program — better known as the ARC loan program — can provide up to $35,000 in short-term relief to help qualified small businesses return to profitability.

The program was authorized by the American Recovery and Reinvestment Act, which became law in February. ARC loans are being offered by various Small Business Administration lenders until September 30, 2010, or as long as the money lasts.

How to qualify

To qualify for an ARC loan, the business must have been in operation for at least two years and have financial statements or tax returns showing profitability or a positive cash flow in at least one of the past two years. The business must be able to project sufficient cash flow to meet its business-related debts in the future.

ARC loans aim to help small-business people pay down or refinance existing business loans so they can redirect cash flow from making loan payments to investing in their businesses. The borrower must not be more than 60 days past due on any loan being paid with ARC funds. The business owner also must prove immediate financial hardship in the form of declining sales, frozen credit or difficulty meeting payroll or payments on rent or loans.

ARC loan proceeds can be used to make up to six months of principal and interest payments on mortgages, secured and unsecured loans, lines of credit and credit cards if the debt was incurred for business purposes. The loans are interest-free to the borrower and have no SBA fees attached to them. No payments are required for the first 12 months.

Where to go

Century Bank is among the SBA lenders in New Mexico now offering ARC loans to small businesses within its trade area: Santa Fe, Española and Albuquerque. Other banks that have made ARC loans in New Mexico are Bank of the Southwest, First New Mexico Bank Las Cruces, Valley National Bank and Western Bank.

Century Bank participates in the SBA’s many loan programs, including the Express Program, which funds up to $350,000, and Patriot Express Program, which can finance up to $500,000 for veterans, spouses of veterans and people transitioning out of active duty with the military into a small-business venture. The 7a program is intended for financing larger amounts — up to $2 million — or loans that otherwise might not qualify under the Express or Patriot Express programs. The SBA 504 Program is specifically designed for businesses wanting to purchase real estate and equipment. For more information about SBA loans, visit http://www.sba.gov/.

Article 115
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Leslie Hoffman, Vice President of Lending and Client Service, ACCION New Mexico

Those who spend their careers watching the economy contract and expand agree on at least one thing: a person’s credit score is important in any economic cycle.  Before extending credit to an individual or business, bankers want to review the borrower’s credit report and know their credit score.

Financial institutions verify credit through reports that reflects how an individual has handled his debts.  Three national companies – Equifax, Experian and Transunion – track credit and produce reports.  All include similar information.

Report elements include personal information such as Social Security number and employment record, borrowing history, a record of creditors who have reviewed the credit history, and other public information such as foreclosures or bankruptcies.

Credit scores generally range from 350 to 850 points, with most people scoring in the 600 to 700 range. A high score indicates good credit. Lenders review credit scores to determine loan amounts and interest rates that will be charged, and a higher score usually yields more favorable loan terms.

Individuals can increase their credit score by making payments on time, paying off credit card balances and avoiding purchases that go over the account maximum.  Limiting the number of new credit account applications and avoiding the transfer of balances to another card will also help.

Those who do not have a credit history and want to build one can apply for a small, manageable loan at their local bank or credit union.  Owners of small businesses can apply at an organization such as ACCION New Mexico, which works to help people establish business credit.  Creating a good credit record may take a few years since the ability to make payments must be demonstrated over time.

Everyone has the right to get a free copy of their credit report once a year from each of the national consumer credit reporting companies. Requests can be made at www.annualcreditreport.com or directly through each of the credit reporting companies: www.equifax.com, www.experian.com, and www.transunion.com.

If credit history errors are found, they can be disputed.

If debt has become overwhelming, there are people who can help.  Consumer Credit Counseling Services, a non-profit agency, provides confidential low-cost counseling, educational programs, debt management assistance and counseling in New Mexico.  Services can be obtained at www.cccsintl.org or over the phone at 1-800-873-2227.

Learn more about ACCION New Mexico.

Article 113

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Nina Anthony, SEO Consultant for WESST

As companies search for the most efficient ways to spend limited marketing resources in a weak economy, more and more are spending those dollars online. According to the Interactive Advertising Bureau, the third quarter of 2008 showed the second-highest growth period for Internet marketing revenues in the bureau’s history. IAB predicts total online ad spending of nearly $26 billion this year, and ZenithOptimedia likewise predicts that global Internet ad spending will surge by 28 percent in 2009.

Smart companies are turning to inbound marketing strategies: the kind where customers find the companies that are visible where they orbit, in cyberspace.

Why Internet marketing?

The Internet trumps traditional advertising in several ways. It’s cheaper, more measurable, more flexible and better targets potential customers, especially those between the ages of 18 and 34.

The Internet lets businesses promote their brands and products without spending a fortune. It goes where those who are actively seeking goods or services can find detailed descriptions about a company and its offerings and can contact the seller when they’re ready to buy.

Online advertising automatically measures “hits” (visits) and records what customers do at a site. Thus a company can calculate its advertising strategy and return on investment. And the Internet’s fluidity means a business can quickly tweak its marketing strategy to improve performance.

Marketing mix for small business Web sites

Most companies use search engine optimization (SEO) and pay-per-click (PPC) to advertise on the Internet. With PPC advertising, a business usually pays the site that hosts its ad only when someone clicks on the ad. But bigger companies with more money can place their ads on more sites or on sites that accept ads from the highest bidder. Many businesses waste between 10 percent and 40 percent of their PPC budgets on nonproductive ads by not carefully monitoring and frequently auditing PPC spending and return on investment.

With SEO, you don’t have to pay a host for every visit to your site because you’re generating traffic through natural search engine results. Your only expense might be to hire a professional to show you the best ways to steer traffic to your Web site.

SEO advertising reaches more Internet users because six of seven people click on natural results rather than paid listings, according to a Jupiter Research study. Savvy Internet users recognize the difference between paid and natural listings and hold natural listings in higher regard.

For those who worry that the online search market is saturated, comScore Inc. reports that Google saw a healthy growth rate of 38.4 percent in search queries on its core U.S. search engine in January, 2009, outpacing the industry’s overall 28.6 percent growth. This shows that even when things look bleak, business goes on and people continue to buy and sell.

For more information about search engine optimization, attend one of the many workshops around the state sponsored by WESST.  Visit www.wesst.org for a schedule of classes.

Article 101

101 Search Engine Optimization (SEO) for Small Business

Julianna Barbee, Director, NMSBDC at Northern NM College

While economic wizards try to rescue America from the worst economic downturn in 70 years, New Mexico is doing what it can to bolster small businesses, because the state’s recovery depends on it. The most recent data from the U.S. Small Business Administration’s Office of Advocacy show that New Mexico’s 36,430 small businesses employ 96.2 percent of the state’s work force and created 54.3 percent of new jobs between 2004 and 2005.

Many New Mexico businesses are suffering the effects of the high-risk business practices — easy credit and poor planning and oversight — that characterized much of the past few decades in our nation. Some have been destroyed, others merely wounded, by the contracting economy.

Whatever the future holds, businesses must end the reckless practices that got us in this mess. The expectations of easy money and instant gratification must yield to more sustainable and realistic attitudes and practices, including the following:

Return to common sense: Our ancestors made a living with the resources at hand. They worked hard, wasted nothing (including time) and were loath to buy nonessential goods on credit. Such old-fashioned virtues are helping families survive on reduced incomes.

Control costs, curtail credit: Businesses should reduce or eliminate unnecessary expenses and pay off loans, mortgages and other debts. Expensive habits should be broken, money should be saved and materials recycled or reused.. High-interest-rate credit cards shouldn’t be used for routine expenses.

Seize the time! Walt Disney and Bill Gates began their businesses during recessions by planning carefully and thinking frugally, thus proving that opportunities exist amid crisis. Small business owners must adjust quickly to changing circumstances and act on opportunities.

Plan for a new reality: When revenues dwindle, managers must pause to revise the business plan in light of market changes. Many turn to recession-proof products and services — the essentials that people can’t — or won’t — do without.

At your service: Good, cheerful service costs a business nothing extra but can boost revenues and build the customer base. Customers trust businesses that anticipate their needs by keeping high-demand products in stock, and they appreciate those that offer value when discretionary cash is sparse.

Polish skills: Many people are returning to school and otherwise diversifying their skills and knowledge in order to be more marketable to employers. A business owner should consider advanced training or education that could take the business to a more profitable place.

Communicate with employees: Recessions can undermine employee morale and breed insecurity and resignation. To counter a downbeat atmosphere that stifles ambition and success, a manager should communicate with employees and involve them in business decisions.

Stop worrying and start selling: Obsessing about economic forces beyond our control wastes time that’s better spent running and building a business. A business owner who stays optimistic and positive will see what’s possible in impossible times.

Help is here: The state’s Small Business Development Centers can help business owners find their way through a changing landscape. Visit the organization’s Web site or call 1800-432-4406.

Article 85

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Roberta Scott, Director, NMSBDC at UNM-Valencia

Raising morale while cutting costs during an economic downturn is one of the toughest jobs a manager can face. To succeed, managers must be honest with employees about the need to reduce costs, including those associated with wages and benefits.

Accurate information is imperative, and managers can pre-empt the toxic effects of speculation and rumors by being open and truthful about the company’s performance. Well-informed workers can focus on the company’s business rather than being distracted by anxiety about their future and the company’s.

Rank-and-file wisdom

Article 84

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Julianna Barbee, NMSBDC at Northern NM College

Attracting customers is a challenge for any business at any time, but during a recession, place-based businesses should pay extra attention to the outdoor signs they use to draw customers in.

An outdoor sign is akin to a silent salesperson; it’s how a business communicates its presence and its image to customers and the surrounding community. Research has shown that on-premise signs drum up between 20 and 50 percent of business traffic, regardless of whether the business is a family-based enterprise, a familiar franchise or a large corporation. That means a large part of a business’s success or failure can be attributed to a sign’s ability — or inability — to communicate with potential customers.

Professional-looking signage benefits an entire neighborhood’s economy. Having no signs or signs that are run-down or covered with graffiti, conversely, reflects poorly on a business and its surroundings. Businesses should consider the following points when planning outdoor signs:

Follow the rules: The size and placement of outdoor signs must comply with local ordinances. If the sign will be illuminated at night, the business must obey lighting regulations.

Look like a pro: A sign’s design and appearance say a lot about the tone and image of the organization it advertises. Poorly made signs create negative impressions of a business, while a professionally made sign conveys a sense of pride, permanence and seriousness.

Solid choices: A sign built with sturdy materials can retain its appearance for many years despite exposure to wind, cold and sun. Once built, it should be maintained and repaired as needed.

Location, location, location: Outdoor signs should be placed for maximum visibility to foot and automobile traffic. A business owner should consider the speed of passing cars and gauge how much time drivers will have to read a sign and safely turn into a business’s parking lot before deciding where to place the sign and how to design it.

Message and medium: A sign should describe a business as concisely as possible so the public knows immediately what product or service it offers. Internal consistency of all its elements — a memorable logo, color, font and business name — should carry over from the sign to business cards, letterheads and other marketing materials. (Some businesses go so far as to make their buildings reflect the business’s theme, with exterior landscaping and architecture that mirror indoor product and service displays and other promotional material.) A mix of uppercase and lowercase letters in a readable font is more attractive than a busy sign cluttered with words and gaudy images.

Innovate and assimilate: A sign should be innovative enough to stand out from other signs — but not so far out that it seems alien to the community in which it’s located — in our case, the tricultural, desert Southwest.

The New Mexico Small Business Development Centers offer workshops that can help your business survive and thrive during a slow economy. Find the NMSBDC office nearest you.

Article 83

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John C. Woosley, CPA and US Small Business Administration New Mexico District Director

Small businesses throughout New Mexico are feeling the effects of various government initiatives designed to stimulate borrowing and lending in the nation’s weakened economy.

Sandra Taylor Sawyer, Director, SBDC at Clovis Community College

Business failure isn’t always the fault of bad planning or mismanagement of money or resources. When markets freeze and retreat as they have around the world, many businesses fail for lack of credit, loss of consumer confidence and other reasons over which an individual business owner has no control.

Cash-flow imbalance is the leading cause of business failure in a healthy economy, according to the U.S. Small Business Administration. So when the economy is ailing, it’s more urgent than ever to maintain a balance between what’s flowing into the business and what’s flowing out.

Cash rules

In business, cash truly is sovereign. It’s used to pay short-term bills, cover unexpected emergencies and invest for future business needs.

The way cash flows into and out of a business — the operating or cash cycle — is a matter of timing. Here’s how it’s supposed to work: Cash enters the business as capital through loans from creditors and investment from owners. Cash then is used to produce goods or services; it flows out to pay wages and purchase buildings, equipment, materials and supplies. Next it flows back to the business as payment for goods or services. Finally, it flows out again to pay taxes and debts and return money to owners before starting again at the beginning.

A breakdown at any stage can throw the operating cycle out of sync.

What to watch for

Breakdowns often happen in current assets, those cash reserves and other liquid assets — marketable securities, inventory and accounts receivable — the business expects to convert to cash within a year. Of these assets, accounts receivable are the most difficult to convert to cash. Businesses can avoid this pitfall by closely monitoring accounts receivable and establishing firm collections and credit policies before extending credit.

The time between buying or producing inventory and unloading it poses another potential obstacle in the cash-flow current. Toyota narrowed this gap with its “Just in Time” concept starting in the 1970s; rather than keep a large inventory of raw materials on hand to build cars, the company bought materials as they were needed on the production line. Other businesses can use this same technique to quickly convert inventory to cash, and they can sell old and obsolete inventory to free up cash for other uses.

Expanding a business too quickly can also impede cash flow. According to David H. Bangs Jr., author of The Business Planning Guide, a business should not expand until employee overtime is piling up, the business has outgrown its operating plant or office space and there’s a list of customers waiting to buy a product or service.

Why it matters

A stash of cash is the best assurance of keeping cash flow positive. Cash reserves are a cushion to fall back on during hard times.

But there’s more to profitability than managing income and expenses. In this case, timing — the efficient management of cash as it cycles in and out of the company — is everything.

Learn more about the New Mexico Small Business Development Centers.

Article 78

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