Quickbooks for the Small Manufacturer

Quickbooks is a great piece of accounting software for the small manufacturer who has limited accounting knowledge. Setting up the software to work with your business is the only technical knowledge that requires a little bit of accounting and some degree of difficulty understanding how the back-end of quickbooks works. If you are not generally computer savvy, I HIGHLY recommend hiring a consultant BEFORE YOU START SELLING to manage your books and inventory so that you do not pay forward a much more expensive and time consuming problem with your accountant at the end of the first year.

This article presumes that you are a manufacturer of products, some with different styles (i.e. for us it was Plush Pads of different pattern designs. We later further complicated matters by changing our packaging such that we had 2 types of packaging options (one for mass retailers and one for boutique retailers) as well as inventory in two warehouses (one overseas and one in the US). Further, we sourced our materials that make up our product and outsourced manufacturing, so we generally over order materials to get price breaks and need to reorder from time to time when our materials run low. There are a number of materials that are needed to make up one unit of our product so tracking all of this was necessary both to understand what assets we currently had to account for their value, as well as to understand what we had on hand to know when we were running low. Quickbooks has some great features that manage all of these needs, but they are a little difficult to understand and need to be somewhat tailored in a custom way for this, as they weren't originally intended (or listed in the menu systems / help manuals) for these purposes.

Inventory Parts - Let's start off with simple inventories - each product is an item, but since our product is made of different materials, each of those are an item as well, so it's important to start off at the most basic level of material (item) that you purchase. For us it was the cotton, elastic, memory foam, etc. each being a separate item as the base level of items that make up our ultimate Plush Pad product. These base items that make up a finished product are called in quickbooks "inventory parts". So you would go into the items section and create a new item for each of them as their own separate "inventory part". You should know how much it costs (either per unit or per yard, per meter, etc. - you can even create custom "units" to describe your unit of ordering) and there is a provision here to list that. For example, our cotton material is purchased per yard, so we place the cost and list the "yard" selection as the unit of measure. We also have "labor" as a cost of our goods sold, so we "tricked" quickbooks into including this as an inventory part and listed the labor cost we pay to our cut and sew factory per unit as it's own item.

Inventory Assembly - your finished product (for us the Plush Pad) incorporates a number of different materials + the labor "inventory part" all together (be sure to include packaging, UPC labels, etc. and assembly costs as additional inventory parts that make up this inventory assembly if these are a part of your finished salable good. Basically every cost to make up what a customer ultimately buys from you.

Managing different styles and /or different warehouses - For us, we have 13 different styles of the Plush Pad - all of them made with the same materials with the exception of the cotton that comes in different patterns that make up different styles of our product available to our customers. Further we have different packaging - for us we had packaging in tubes and in boxes. Lastly, we had both located in 2 different locations (one overseas and one in the US). Ultimately, to track each separately, we had to create slightly different inventory assemblies (i.e. product item names) for each scenario. For us, we coded our sku names to provide consistency for this - for example, Plush Pads in Tubes in the US that were in the Blueberry style were given the sku: PPTUS-Blueberry-10. PP =Plush Pad, T= tube, US=USA, Blueberry=style, and 10 = when the style was first made available. A separate inventory assembly for our Poppy style would be PPTUS-Poppy-10, and the assembly would contain all of the same inventory parts except the Poppy Cotton which would replace the Blueberry cotton. Quickbooks easily allows you to create a duplicate item so that you can copy all of another inventory item to a new one without entering everything in again. It makes it much easier to create new styles, warehouses, etc. by doing this. PPTOS-Poppy-10 would be Plush Pads in Tubes in our Overseas warehouse of Poppy style.

Build assemblies - you would create purchase orders to list the materials that you were ordering and then receive inventory to then have the inventory show up when you see your inventory part items in the items screen. Once you have sufficient materials to make your finished product, go into the "build assembly" screen in quickbooks and select the assembly item - in our example, PPTUS-Poppy-10 to build the number of items ordered in your PO. You do this for every product sku that you have, and as you create new invoices you select those item numbers and each time it takes the number of units from that invoice out of your product item inventory in the items page. Quickbooks also allows you to list an alarm when your inventories drop beneath a certain number.

Moving inventory from one warehouse to another - the cool thing by doing it this way is that you can "move" inventory that may be in one location to another location by simply changing your inventory item assembly to build from another inventory assembly. Using our example, if you wanted to move 10,000 units from our overseas warehouse to our US warehouse, you would edit the PPTUS-Poppy10 item (US inventory) to be made up of the PPTOS-Poppy-10 (overseas inventory). Be SURE to look at the average cost of the items you are taking from (here the overseas inventory) and hard code the item cost in the respective window in that item before building it, as you want to make sure that this average cost (which can change from order to order) is accurate when building it into your other warehouse item. Then simply build 10,000 the PPTUS-Poppy-10 item from the PPTOS-Poppy-10 item. You will see it takes the number away from the one inventory and adds it to the other inventory, and will average cost the new cost per unit with the cost per unit of the new inventory you just moved into there.

You can customize this to suit your needs, whether it be one retail store to another, etc. It all works based on the same underlying way of maintaining items.

Good Luck!!

How to Land Large Accounts

Here are a few bullets to keep in mind when looking to go after bigger business:

1. Don't lose touch with your core competency - diversify yourself by holding on to your smaller business. You don't want to put all of your eggs into one or two large customers to have one of them fall off and jeopardize your company's continued existence. Make sure you can lose any one account and still have a plan to move to.

2. Get the top name of the company you're going after - Find out everything you can about what they do and what they need so that you can help them with what it is that you do. It's easy to then find out who their CEO or President is and contact their office. That's usually the easiest place to get an understanding of their org chart, and decision makers relevant to your business. Many times this person will walk down to the office of the highest person you might ever hope to sell to and present them with your company as an interest.

3. Know as many people in the different parts of the company as you can. Never underestimate the power of a receptionist or assistant. Not only can they help navigate the internal waters for you, but they are frequently the people who can be promoted to a role of importance, and they will never forget that you cared enough about them before their importance.

4. Try to find imperfections that you can help with - look at their website and get into depth with their sales people. The more value you can show by adding you to their business the more interested they will be to get you in.

5. Sell smart - don't just go into a generic pitch. Understand what they sell, how you can make it better for them and pitch your company's value to them in a customized way.

6. Be persistent - if you are close but they are waivering, don't give up. Persistence over time shows you have real value in the potential relationship. Perseverance is a virtue that they will respect so long as it is done with respect. But if it is a clear pass or a vehement no, then move on.

Syndication of your business

Do you sell on eBay, have a YouTube channel, Yelp listing or Twitter account? They all have RSS fees that you can use to syndicate your self and build traffic to your site. Here's how to do it:

1. Do one mega feed of all of your online activity - Friendfeed.com allows you to put in all of your social sites, blogs, etc. to come up with what they call a "lifestream" allowing you to link people to all of your content.
2. Amazon - you can easily become a published author on Amazon, and if you are (or once you become one) you can syndicate that feed on your AmazonConnect profile. If you aren't able to take the time to make a book, apply to have your blog on Amazon Kindle's subscription list, getting a 30% cut from each subscriber's fee.
3. Blog to E-newsletter - Feedburner.google.com allows you to go into your account and activate e-mail subscriptions or set up a Feedblitz.com newletter allowing people associated with you to get daily updates from you in their inbox.
4. Widgets - widgetbox.com allows you to enter your feedurl, add a custom header and then mess around with the appearance settings and publish it on Myspace, facebook or other locations you can paste some html.

Good luck going viral!

3 Questions to Build Your Brand

Every brand you love fulfills the promises that they make to you. For your company you will need to do the same thing.

Answer the following 3 questions: 1) Why did you create your product or service? 2) What are you able to absolutely deliver on without question, every time and 3) How do you make your customer's day-to-day life experiences better each and every day?

That promise that is met is what will make your customer come back, and once you have repeat customers, you'll have a true brand.

Generating Sales Online

Answering questions on Yahoo! Answers can give you the opportunity to acquire new customers at zero cost to you. You will be surprised at how effective it is and will likely get your more sales leads than your own blog.

When You Want to Create an API For Your Site

Try Mashery, a San Fran start-up that has developed API tools for The New York Times, Netflix, and Best Buy. Mashery charges $499 a month or more for businesses with fewer than 500 employees. Note that 2/3 of Twitter's traffic come from 3rd party applications.

Free E-Mail Follow-up for Cart Abandonment

SeeWhy.com, an analytics provider based in Andover, MA, recently launched a free service that provides e-mail addreses of customers who abandon their carts. Use this to follow-up via e-mail to focus on resolving "technical difficulties" that occurred during the purchase rather than simply giving a sales pitch. Wait at least 10 minutes before you send the e-mail or you could look a bit stalkerish. Also be sure to include a prominent "Unsubscribe" link at the top or bottom of the message.

Build Your Website Around A Purpose

Don't simply make a website because every other company has one. Build one around a purpose and you will achieve much greater impact to your customers.

1. Know the purpose of your website
2. Know your target audience
3. Have a clear picture of design choice
4. Think ahead about how you want your customers to navigate through it
5. Determine the extent to which you may want account login requirements
6. Determine whether you will want to integrate video or audio
7. Determine whether you will have e-commerce
8. Think ahead about optimizing your site for search engines
9. Know what your hosting and maintenance requirements will be
10. Determine a realistic not-to-exceed cost
11. Timeline a development schedule and milestone a launch date
12. Know how you will need to manage it

With the above in mind, it will help organize one of the more important parts of your business.

Customer Referral Offers to Boost Sales

Use some of these ideas to stay on top of the minds of your customers for referrals:

1. Plant a seed - Let them know that you know they will be so satisfied with your product that in 2 months you will check in with them. When you do - and they agree - use that as a way to ask them to suggest 3 others who would also benefit from your product. This works more than you would think.

2. Gift Certificates - Send a quarterly mail out to your best customers offering a gift certificate for your products/services that they can give to someone they know who could benefit from your services.

3. Charity partner - find a charity, propose a variety of ways you can create a deep partnership, benefiting them by a dollar-amount for each product you sell. In return the charity will introduce you to their constituency.

4. 100% Money Back Barter - Refer 4 friends who purchase and they get a full refund of their purchase price - 25% for each customer. Take photos of the refunded customers to use as support to get others to try the program.

5. Special Pricing - Once they agree to a price, give them an even lower price if they give you referrals right at that moment.

Get Free Help With Your PR Pitches

YourPitchSucks.com is a free service that promises to get those annoying buzz words out of your pitch. Set up a free account and upload your pitch; they will unleash it to its community of PR professionals who will proofread and edit it.

Recognizing Cash Flow Problems

Cash flow problems are common with small businesses, and although many time people have a hard time figuring out the cause, there are really only just a few ways they come about:

1. Too much cash tied up in receivables ( or for products-oriented companies in inventory);
2. Too many customers who aren't paying you on time (or are bad debts);
3. You are spending too much on overhead;
4. Weak gross margins (i.e. your prices are too low).

Understanding the cause of your cash flow problems is the first step to solving that problem.

Branding A Business - Your Exit Strategy

Back in the 90's the exit strategy for most start-ups was 1) go public, and 2) as a fallback, be acquired.

In today's climate, this may now be reversed. Think about the challenge of regulation and liability, and stock prices aren't what they used to be. Acquisitions are almost always a significantly easier than the process of an IPO. Liquidity is often immediate, presuming buyers are paying in cash.

IPO's also aren't the financing strategy they used to be, as it isn't sustainable, since public markets aren't a particularly good source of long-term, stable investment capital in speculative high-growth companies.

Investors are constantly changing their needs in search for short-term profits.

Essentially - work hard to build somthing valuable and the exite will take care of itself at the right time.