Working with 75+ SMB owners over the past 2 years has taught me something profound: the ones that win over time all have 5 things in common.

Winning businesses:

1. Collect reviews

2. Raise Prices Yearly

3. Clean Up Their Books

4. Obsess Over Cash Flow

5. Review Their Financials Monthly

The good news? Anyone can do them.

They’re simple, but doing them consistently will get you ahead of 90% of SMBs.

Let’s get into it.

Collect Reviews

According to HBR, 98% of consumers read reviews before they shop, and 50% of consumers trust online reviews as much as recommendations from friends or family, per brightlocal research.

Anecdotally, our clients who boast the strongest Google reviews in their respective markets have a far easier time winning and keeping business. This is because once that solid online reputation has been built, consumers trust them and are less likely to be put off by one bad review. They’re also willing to pay slightly higher prices when reviews are overwhelmingly positive. This is especially true for home service providers.

Raise Prices Yearly

Raising prices is often met with some initial pushback from clients. The fear is that they’ll lose customers and/or risk damaging relationships with the ones that stay.

These concerns are valid.

But what if I told you that all it takes is a 1% price increase to see an 8.7% jump in operating profits? And in my experience, very few customers leave over having to pay 1, 5, or even 10% more than the previous year.

My point here is not to tell you how much your business is leaving on the table down to the last dollar by keeping prices as they are. Rather, it’s to make the case that raising prices gently each year will not usher in the mass exodus of clients that you may fear.

With all that said, price increases done poorly absolutely will drive away your best customers, so here are a few rules of thumb to get started.

First, the best time to raise prices is when clients are already happy across the board. So if you’re planning a price increase for early next year, make sure to overdeliver in Q4. Another way to do this is by improving your offerings at the same time an increase goes into effect. Doing this will soften the blow for more price sensitive customers.

Second, prepare for potential backlash by communicating the price increase in advance. You may also choose to ease clients into paying more by offering initial discounts, or by offering pay in full or bundle credits.

Third, if a traditional price increase will be a tough sell to your clients, another way to reap the benefits of one is by adding service fees where applicable.

Clean Up Your Books

Getting your reporting in order may seem trivial compared to the actual work of running your business, I get it.

But messy books will cost you far more in the long run than any time or money you might save now on getting organized. Even hiring an expensive bookkeeper will pay for itself. That’s because without clean books, you’ll lack accurate data on which to base your strategic decisions, waste countless hours during tax time, and leave money on the table when the time comes to sell.

If you’re not sure where to start with this one, check out my earlier post for a step-by-step guide to getting your books in order—no accounting background required. The best part? You can do all of it yourself if you so choose.

Obsess Over Cash Flow

Far too many owners rely on bank balance accounting to keep the lights on. But this approach leaves money on the table at best and can drive you out of business at worst.

In fact, poor cash flow management is the leading cause of business failure.

At its most basic level, good cash flow management requires matching the amount and timing of your inflows and outflows. Some of the most effective ways to do this are paying just in time and collecting as early as possible.

To see where you stand today, check out this post for 7 cash KPIs to start tracking now. For a more in-depth discussion on the how of cash flow management, head over to this post.

Review Your Financials Monthly

Too often, I see SMBs reviewing their financials just once or twice per year. But getting your books in order does little to help the business without a regular review process in place. Clean data is great, but only if you study and use it to make decisions.

Whether you’re a $5,000 of $5,000,000 MRR business, you need monthly financial reviews. Without them, you and your team miss the opportunity to know where you stand, catch and correct emergent issues, and double down on what’s working.

If you’re not sure where to start, this post covers everything you need to prepare for and conduct these meetings. But in a nutshell, you need 3-5 financial KPIs, a formalized accounting process, and your core reporting compiled into a single source.

From there, you should be reviewing each statement in depth before the meeting begins. The same goes for your team. Note any line item with more than a 5% variance to budget. In the meeting itself, the owner of each high-variance line item will be asked to explain in detail. If they cannot give you a satisfactory answer at that time, investigate further.

The purpose of this exercise is neither to place blame nor point fingers. Rather, it allows you to better understand what’s going on in the business and use that information to continuously improve your strategic position.

These meetings also present a wonderful opportunity to hear ideas about the business that you might not have come up with on your own.

If you need help putting any of these items into practice or have questions, feel free to reach out.

As always, I’m happy to help.

Putting It All Together

Here are your top takeaways from this week’s post.

1. A critical mass of positive reviews will make potential clients more willing to try out and trust your business. The promise of a good experience generated by lots of good reviews will also make them more willing to pay slightly higher prices.

2. Failing to raise prices even slightly every year leaves more money on the table than losing a few clients will cost you. That said, there is a right way and a wrong way to raise prices. Announce an increase in advance when your clients are happy across the board. To ease the transition, you might also offer pay in full or bundle discounts. Lastly, if price sensitivity is a big concern, you can reap the benefits of a traditional price increase by adding service fees.

3. Messy books cost you more opportunities than not hiring even the most expensive bookkeeper is saving you.

4. Bank balance accounting—even during the good times—won’t cut it. First, this approach puts you at risk of liquidity issues. Second, failing to monitor your cash closely can blind you to what’s working and what is not in your business.

5. No matter the size of your business, you need a monthly financial review process. All you need is a few well-selected KPIs, a formalized accounting process, and clear reporting that’s been compiled into one place. In those meetings, you and your team can identify any issues early, make plans to rectify them, and highlight what’s working.

Hungry for More?

1. Follow me on Twitter and LinkedIn for daily content to take your business to the next level.

2. Book a call to learn how Scalable can transform your SMB.

3. Shoot me an email with your questions or requests for what you’d like me to write about next.

‘Til Next Time,

Connor