Combine your baking and creative skills with a cake design service, from a shop, unit and/or the net. A cakes by post delivery service and getting into the lucrative wedding market could make you good money. Remember exceptional customer service is they key to success rather than a necessary evil; existing happy customers will provide you with new ones.

If your hobbies include art or photography, design and sell personalised calendars and calendars to order. Constantly seek customer feedback so your business evolves with their needs. Attention to detail makes a big difference to customer satisfaction. Separate your personal and business accounts to save time and money and to protect your personal assets.

Offer a calligraphy service to wedding planners and individuals. It's so important to return phone calls promptly and to keep both promises and commitments; this way, your reputation for reliability builds over time

If you own or rent suitable land at home or abroad, set up a caravan/camping site. Successful managers place great value on developing lifetime relationships with their customers, who will come year after year. Tourism is such a competitive area and they are aware that their customers have so much choice that their loyalty cannot be taken for granted. Maybe combine with caravan hire/sales/storage.

Making candles can be a fun hobby, and why not sell your designs? Always try to "go the extra mile" when providing service and turn your customers into fans, so not only do you keep existing customers, but they recommend you to many others.

If you're a great organiser and communicator, running car boot sales and collector's fairs could provide a healthy regular income, especially as more people are struggling with the credit crunch these days and want cut price bargains. Be prepared for quiet business at first, building as your presence grows. Many cash strapped schools, sports organisations and businesses will hire you land or take a commission. Always take the time to check out what your customer expects and tailor to those expectations.

Use your mechanical expertise to set up a vehicle search/check/delivery service on a commission. Again, in these economically hard times, people are increasingly looking for bargains but don't necessarily have the knowledge - which is where you come in. Consistently research how your customers perceive your image and work on giving them what they expect. Word of mouth will provide you with many referrals if you deliver exceptional service.

Set up as a personal organiser, offering a range of tailored services; for example a diaried card mailing service, present buying, party organising, grocery shopping, wardrobe and interior design. Knowing more about your customer's needs and expectations will allow you to customize the service you provide, using your customer service feedback system

You will need a sophisticated-looking website for this idea, with its appearance involving psychological insight into the colours and designs that will attract your very specific audience.

With a professional counselling, alternative therapy, or hypnotherapy service, assuming you are qualified, it's the personal touch that really makes the difference. Stay in contact and keep good records of meetings and phone calls. Record all relevant information. Track important contact dates such as client reviews and birthdays. Keep in touch, if the client is amenable, by emailing articles or information of interest, or set up your own ezine/newsletter.

Invest in professional equipment and set up a carpet/rug/upholstery cleaning business.

Build long term relationships with a friendly and reliable service, or you leave the door open for your competitors.

Here Are 8 Ways To Ignite Your Sales Without Draining Your Profits:

1. Train your employees to work as a team. This means teaching them the knack of relying on each other. Remember, no man is an island. This is never more true than in the workplace. The success of the business depends on the collective efforts of all employees, not the singular efforts of one individual.
2. Convince people that buying your product is their own idea. Naturally as the owner of a business you are doing everything within your power to promote your product or service, but you don't want to overwhelm your customers with your efforts. Let them feel that they are making their own decisions. They will feel more confident and be more likely to make a purchase from you. All that's really necessary is to state in your ad, "You're making a smart decision for buying our product.", or "Your family will be delighted with your choice." Anything along those lines will reinforce the idea that they are deciding for themselves to make a purchase, and not being led into it by clever advertising.
3. Promote yourself, not just your product or service. Post your picture and a little information about yourself on your website. Also write articles, reports, ebooks, give testimonials, etc. When people get to know you and find that you are forthright and honest, they will be happy to buy from you.
4. Be prepared to show your prospective customers several testimonials from people who liked your product. People are more easily influenced by a few favorable opinions than just one or two.
5. Get the most from your advertising budget. It's not in your best interest to go broke while advertising your product or service. It makes more sense to begin with a small group of loyal customers who will buy your products faithfully and then gradually increase your advertising base along with your profits.
6. Create an additional product or service based on the one you are promoting to serve as an up sell or back end product. This will save you the trouble of having to create a brand new product.
7. Use the power of suggestion to your advantage. Tell people what they're thinking and feeling as they read your ad. All you have to do is plant the suggestion and most people will latch on to it and follow through by purchasing your product.
8. Make your product or service sound unique. Point out all the advantages it has to offer that you can think of, and while you're at it, throw in a couple of free bonuses to sweeten the deal.

1. Research your target audience's needs and wants. Even use a little imagination and consider their heartfelt desires. Desires are a lot like dreams. So use a bit of extra flair and delve into what you think your potential customers dream about doing or owning.
2. Do not, and I cannot stress this enough, absolutely do not make any extraordinary or unbelievable claims in your ad. People aren't as gullible as you may like to believe, and they don't like having the wool pulled over their eyes. Not only will they not believe you, but they won't purchase as much as a tinker toy from you, ever.
3. Go over your ad with a fine-toothed comb and anticipate any questions your visitors may have about your product or offer. That way you will be ready with a quick and competent reply when these matters come up.
4. Select a Good name for your business and product. A good name has to do more than stand out in your ad, it has to grab your potential customers' attention and be easy for them to remember. It should also conjure up a vision of the product you're offering that will make people want to own it, or at least find out more about it.
5. Always resolve customer complaints immediately and in a friendly, gracious manner. That way your customers will feel that you genuinely care about them and want them to be satisfied with your product or service.
6. Never stop seeking ways to better your product or service. This will let your customers know that you aren't just satisfied with the status quo, but want to improve your product or service and thus its value to them.
7. Market yourself as well as your product. The more people get to know and trust you, the more sales you will make. There are many things you can do to accomplish this. You can write articles or ebooks and publish them online, you can post a profile of yourself on your website, you can offer free consulting, etc.
8. Find new outlets for selling your product or service.
9. Create an affiliate program through which interested parties can work for you and sell your product or service in exchange for a percentage of the profits.
10. Take advantage of the many offline ways to promote your business. You can print up fliers or press releases, send out advertisements in the mail, etc.

• CRM as a competitive strategy - a strategic view
• Customer satisfaction and loyalty
• Relationship: selection and retention
• Customer service and service marketing
• Sales Force Automation (SFA)
• Implementation of CRM

Key concepts of CRM are:

• Comprehensive strategy:

  CRM at one end links itself to SCM - supply chain management and on the other hand the customer service and customer care. This makes a comprehensive strategy.

• Acquiring:

  This is about prospecting. Using effective sales promotion methods, prospective buyer can be acquired. It is about developing new customer as well as converting competitor's customers.

• Selection:

  You can't please all people at all times. You may not be able to serve and satisfy all the customers at the same time. There may be customers who may not be willing to have long time relationships with you. As a consequence you need to have selectivity in the customers as well.

• Retaining:

  Once a right customer is selected, we need to provide the customer with a good product and a better service which exceeds the customer requirements. Only then can the customer be satisfied and retention of a customer can be possible.

• Partnering:

  Partnership is about constantly striving to create better value for each other i.e. the buyer and the seller.

• Interactive communication:

  A clearly planned and focused two way, interactive communication is a very essential ingredient of CRM. A meaningful communication will always be an Interactive Communication.

• Technology + people:

  CRM is all about people and relating people to technology. This is all automation of people is all about!

• Mutually beneficial longterm relationship:

  It is all about the long-term relationship of the buyer and the seller. This overall results in the mutual benefit of both resulting in a long-term relationship.

Customer delight needs to be created instead only satisfying the customer. Customer service is about giving facilities and services that the customer asks for, or delivering service that is expected in today's competitive world. Most products require additional or long-term support from the organization. These traditional services include delivery, installation, lessons-in-usage, instruction manuals, repairs and maintenance etc. Customer care (and also customer delight) is going beyond the "expectation check list". Customer care is being proactive in developing relationship with your customer. Always remember “Good customers are worth keeping for life”. Great services can create a great experience and customer delight.

Customer Retention:

The point to be remembered always is that a repeat customer is the best customer. 6:1 is the ratio which means - you need to spend 6 times the money you spend in retaining an existing customer. Another view point is 5% increase in retention of customer can add 25% to 125% increase in profit. Essentially, retention is the key. However, not all your customers are worth retaining. You should select the customer for retention. These customers should be the right ones with whom you wish to establish a long term benefit for mutual benefit.

There are a number of benefits for selection of the right customer for an organization:

• It reduces cost
• It increases profitability
• It helps create goodwill for your organization
• It gets you good word-of mouth publicity
• It improves the possibility of greater customer satisfaction and loyalty

Thus, it's needless to say - select the right customer, have the right understanding of their needs and evolve a right way to satisfy them.

The Service Marketing Triangle

The Service Marketing Triangle shows the relationship and linkage between three elements of service marketing - Company, Customers and Employees. Three types of marketing happen between these 3 elements.

• Company to customers: External Marketing
• Company to employees: Internal Marketing
• Employees to customers: Interactive Marketing

External Marketing:

Internal Marketing:

Interactive Marketing:

Sales Force Automation (SFA):

SFA is Sales Force Automation. Understanding SFA begins with the study of basic selling process and the importance of FAB (Features, Advantage and Benefits) approach to selling. It then moves to the technology of Automating Sales process.

SFA is a technological tool to help sales people acquire and retain customers, which helps in reducing administrative cost and provides good basis for account management. It increases better selling chances for the Salesperson and more business for the company. SFA helps in the following ways:

• It helps a company to get customer retention and hence increase profits
• Customers get better information, better products or services, faster responses to their queries and hence this results in Customer Satisfaction

The reasons why SFA is important to CRM are:

• Reduction in cost of selling
• Increased revenue
• Easy availability of customer information
• Increased sales force mobility
• Meeting increased customer expectations

CRM Implementation:

The most difficult part of CRM is implementing it. Implementing CRM - making it a reality is the real challenge and the purpose of any CRM initiative. When do you say that CRM has happened? When:

• Your customer is more than satisfied; he/she is delighted
• Your customer attrition rate is minimal. Thus, the selected customer is retained.
• The bottom line improves: the profits multiply

Implementation starts with questioning the basics of your business; defining business, redefining your strategy, setting up plans, implementing and evaluating the CRM. Implementing CRM is about creating a change and an urge in your organization to become customer centric. The first important factor taken into consideration while implementing CRM should be people; because CRM is nothing without people. Secondly, technology and the process play should be taken into consideration. A good product or service, sound process, technology and able people are some of the important baseline requirements to begin with the CRM initiative.

Unless you have the CRM merits in place, it is not possible to judge if you are going in the right direction. CRM evaluation has to be in place and predefined before you begin implementing CRM.

Common causes of CRM failure:

• Treating CRM = Technology + Automation
• Large-scale systems with long-term promise are better
• Old organizational mindset
• Lack of CRM understanding
• Poor strategy and planning
• Lack of skills essential for CRM
• Inefficient or inappropriate software
• Lack of commitment

A famous saying in India states a customer to be God. It has all been from the Vedic ages but the fact being people have started noticing it as a specific field of management study for not more than five years, commonly known as Customer Relationship Management. You need to take care of your customer even for the slightest hiccup in his smooth ride on your product. All you need is to have a good professional relationship with your client.

You lose a customer when you don't meet their needs.

Business today is expanding in a manner water spreads being poured on an inverted cone. It has been expanding all over through verbal marketing, through advertisements on communication channels like TV and radio, through hoardings in public places, and the fastest mode of communication “The Internet”. The Internet is a perfect place for customer service. It provides an area for the customers to find the exact piece of information they need.

Customers today expect higher-quality goods, better service and quick delivery. This is where CRM comes in. It's all about understanding and following up with the customer needs, a good quality of product and service, and a fast delivery.

How does CRM improve your relationship with customers?

Some examples of its value to your business include:

• Expediting responses to customer inquiries,
• Increasing company knowledge of customers, and
• Identifying profitable business activities

Feedbacks should always be accepted from your customers in a positive manner. An appreciation from a client means working to get similar appreciation from the rest of your customers. But, most of the people do not accept the negative feedback from customers in a positive manner.

Instead of accepting it as a delta people generally retaliates against it. However, with the information gained from a CRM system which provides customer feedback, it should be used to improve products and services. This would also mean sharing information with your partners to ensure customer satisfaction.

What's the value of implementing a CRM?

Some of the values of implementing a CRM are:

• Your goods and services will improve based on your impact from customers. Valuable feedback from your customers will allow you to more directly meet their needs.
• You will increase the speed of your response to customer concerns. This will result in happy and loyal customers, which in turn will impact your company's bottom line.
• Your knowledge of your customers will grow. You will better understand your customer needs and will therefore be more able to meet those needs resulting in satisfied customers.

“There is only one boss: The Customer. And he can fire everybody in the company, from the chairman on down, simply by spending his money somewhere else.” - Sam Walton.

Customer Relationship Management puts the business focus back on the customer where it belongs. CRM combines business process and technology to create a better understanding of customers. Consequently, Customer Relationship Management is also known as Client Relationship Management. CRM helps to identify new customers and retain existing customers. To reach consumers who will truly benefit from your services, it's important that marketing campaigns define clear objectives and goals directed at an appropriate audience. The audience is defined through CRM.

The Marketing Team of a company uses CRM to identify commonalities among clients. With this information the company's marketing strategy becomes more focused and effective. Sales Team as a consequence notices the number of new customers and profits from existing customers' increases as the company improves its ability to meet client needs.

CRM allows you to customize relationships with individuals to provide a higher level of service. An effective CRM system will help you exceed your customers' expectations by offering them what they need - before they have to ask for it. CRM can create a personalized approach. It can also create a personal approach to customer service.

CRM can ease the exchange of information throughout every department in a company, personalize interactions with consumers to increase customer satisfaction, assist in pinpointing potential clients and monitoring relationship with the current clients. In a nutshell, CRM will assist you in identifying new customers and retaining existing customers. It will streamline information exchange, and it will customize relationships with individuals to provide a higher level of service.

CRM won't make you smarter; it will help you serve your customers by identifying their expectations.

CRM focuses on enhancing service to exceed your customers' expectations. How is this accomplished? By allowing all the departments access to the same information. The second goal of implementing a CRM system is using integrated information to create top-quality service. Customers' don't want to repeat the same information over and over to everyone they speak with. You'll save time and minimize customer frustration by sharing information internally.

Consider a simple example: Getting help from a new friend is tough as compared to getting help from an old friend. Similarly, research has shown that it costs 6 times more to sell to a new customer than an existing one, and your odds of selling to an existing customer are 50% better than selling to a new one.

What are the goals of implementing a CRM?

Some of the goals of implementing CRM are:

• To create a sense of loyalty with your customers
• To realize higher profits through better customer relationships

An effective CRM system takes the customers' view, not the products' or company's view.

There are three stages in CRM. None is more important than the others, but you will need to make one your primary focus - without abandoning the other two,

• Acquiring new customers
• Increasing the profitability of existing customers
• Retaining existing customers

The first stage of CRM is acquiring new customers. Through existing customer testimonials, product quality and availability convenience, and innovation; you can attract new customers to your company. The next stage of CRM is increasing the profitability of those existing customers. Apart from enhancing relationships with the customer through cross-selling and up-selling, it also offers the consumer great convenience at reasonable costs. If you have everything the customer currently needs, make sure he knows it.

To truly see the benefits of the customer/seller relationship, you must sustain customer loyalty. The third stage of CRM is retaining existing customers. Not only do you have to offer products the market wants, but you must also offer what your customers want. Your goal is to retain your customers for life. Many companies focus in this aspect of CRM because the greatest percentage of sales comes from existing customers.

Focusing a company's goal on customer satisfaction is a major benefit of CRM. Another advantage of implementing CRM is that it redefines marketing strategy so that it is more effective. Transforming to a CRM system aligns your organizational structure with actual business operations.

A key advantage of implementing a CRM system is that it re-concentrates the single focus of product performance on to the customer. CRM is a bridge linking an organization to its valued customers. Implementing a CRM system dramatically affects everyone involved. It requires a political, cultural, and organizational change. CRM cuts a wide swath across the entire organizational body that it demands a more cohesive approach toward meeting goals.

Current incentive systems may work against CRM because they reward only a portion of the customer's relationships with the company. Therefore, your organization may lack an incentive program that supports a CRM system. The challenge of implementing a CRM involves the cultural resistance to the change it requires. You also need to embrace the international market and create an infrastructure to facilitate the new system.

To find out what your customer wants, you need to understand and identify the elements of the CRM loop. The CRM loop is the fundamental cycle of activity that drives CRM programs:

• Comprehension and Differentiation
• Development and Customization
• Interaction and Delivery
• Acquisition and Retention

The four stages of CRM loop are an interdependent and continuous cycle of activity. All your initiatives and objectives must be intrinsically connected to this core cycle of action to get the best results.

As you transition from one stage to another, you will become more adept at implementation processes and achieve deeper insights that will improve each successive effort.

So how does a CRM loop work? What are the purposes of the four stages and how they interrelate with each other? This underlying core of activity will be your primary method for gaining knowledge and understanding your customers. The CRM loop will also help you decide what subsequent actions to take. This helps you identify, connect, and hold on to your most valuable customers.

• Comprehension and Differentiation:

  As you learn, you will be able to zero in your valued customers quickly. And you will also attract new ones with similar learning's. Retention comes by listening vigilantly so you are prepared to modify your services when customers change their preferences.

• Development and Customization:

  Use analysis and research to comprehend what your customers' value. Then use your understanding to show customer that your organization is differentiating its services based on what they have told you and what you have learned independently.

• Interaction and Delivery:

  A basic principle of CRM is to develop products and services based on customers' needs and expectations. Although most companies can't afford to customize products for individual customers, they can customize the products for a proven customer sector.

• Acquisition and Retention:

  Besides marketing and sales channels, customers interact in many ways with your organization, including shipping and distribution and customer service. With new information, you can progressively enhance the value you deliver to your customer.

Value is the quality of product, the service, the convenience, the ease of use, the responsiveness, and the excellence of customer service. Value isn't just about the price of the product. A customer interacts with an organization in many ways, including shipping, distribution, and customer service.

The infrastructure provides the solid foundation, but the core competencies provide the heart and soul of a successful CRM system. It is here that the philosophy of CRM is expressed. The first vital core competency is the fine art of up-selling. Up-selling in a CRM environment means identifying your customer's needs and then matching their needs to complementary products and services. The result is a richer, more profitable customer relationship. One aspect of up-selling is event-driven marketing. By implementing up-selling software, you can track customer contacts and establish triggers to identify prospects for additional sales.

A second core competency of a successful CRM system is direct marketing. Direct marketing is the pre-sale interaction with potential customers. This involves the use of advertising techniques to influence and provide your customer with the information needed to make a purchase decision. As your business grows, you will be deluged with requests for information; be sure to manage the fulfillment end of this potentially overwhelming process.

The third core competency of a CRM system is customer service. The goal of an effective customer service program is to provide support and to assign, create, and manage service requests for the customer.

Walking hand in hand with the customer service is field operations, the fourth core competency. Field service is the hands-on extension of customer support. It comes into play when a problem cannot be solved over the phone.

In a nutshell core competencies of CRM are:

• Up-selling
• Direct Marketing
• Customer Service
• Field Operations

To involve the entire organization in CRM, you must be able to identify the benefits of such a system. What are these benefits? An effective CRM system will help you remain ahead in competition, tap into the world-wide market, instill loyalty in your customers, decrease cost, and increase profits.

Integrating a CRM system will help you decrease costs and increase profits, tap into the worldwide market, and remain ahead of the competition.

Effective sharing of client information throughout a company is the key ingredient for successful CRM.

Some examples of CRM information sources are:

• The Internet:

  Tracking visits to your website can give you a good idea of what customers are looking for some pages might get more hits than others indicating a demand for certain products. Using this information within a CRM framework will help you focus on customer needs.

• Customer Surveys:

  Surveys can be given online or through the mail. An effective CRM system can take this information and make it available to marketers, sales people, and customer service people. With a clear understanding of customer needs, each department is more likely to meet those needs.

• Customer Purchasing Habits:

  With data mining and other techniques, you can learn what your customers buy from you. What are your top selling items? Who's buying them? What isn't selling? Answers to these questions and more lie in customer purchasing habits.

• Customer Service Calls:

  Anytime a customer calls you is an opportunity to learn more about him. A CRM system designed for your company can help service representatives increase knowledge of your customers.

The second way to understand your customers is to integrate customer information into your company's system. This allows everyone access to customer information. Marketers can identify customer demographics. Sales people can generate new leads based on customer buying trends. Customer service based on the information gathered.

The Internet is driving a revolution of one-to-one marketing and mass communications.

Effective sharing of client information throughout a company is a key ingredient for successful CRM. The first key to successfully implementing CRM is Integrating Internal Business Processes. Creating a seamless flow of information throughout your company isn't always enough. You should include external business partners in your information stream. Sharing customer information is essential to meeting your customers' needs. Consider third party suppliers and vendors as an extension of your business, and use them to provide solutions for your customers. A CRM infrastructure using Web-based applications can eliminate communication hassles and cost overruns.

To successfully create your own CRM infrastructure, you must integrate computer systems. Theses systems are known as “enabling technologies” that work together to provide more fluid CRM system.

With more powerful applications in the future, this integration might not be necessary, but because methods of delivering information is so varied, you need a CRM solution that can handle information across all delivery channels.

• Legacy Systems:

  Many companies rely on 20 year old systems that cannot simply be replaced. Because of this fact, special software tools, such as “middle ware”, become part of the CRM solutions. This software helps integrate old legacy systems with new CRM applications.

• Computer Telephony Integration (CTI):

  CTI is used to manage incoming calls. It allows information about a caller to be entered into a CRM data repository. This information becomes a valuable part of the entire CRM process because it helps determine what solutions the caller requires.

• Data Warehousing:

  With all the information gained through CRM, data warehouses become invaluable tools. Not only do they store the enormous amount of information you have gathered, but they also supply you with the material needed for customer research. Data warehouses offer customer data for later analysis.

• Decision Support Technology:

  You need a way to analyze the information in your data warehouse. Decision support technology is a set of analytical tools that help you make decisions based on accumulated customer data. You won't get the most out of your CRM system without these tools.

A CRM system creates a new approach to customer service. To ease the transition, everyone in the organization must understand and contribute to the CRM process. The first step is involving the entire management team to establish the CRM strategy throughout the company. Adopt an approach that is consistent with your company's overall approach to its business. Involve leaders from marketing, sales, IT, and customer service. Discuss their future goals and explore ways that CRM can help them meet these goals.

The second step is involving the entire management team to define your CRM integration goals. Identify how you'll track your customers; what software is most appropriate, what vendors can help you, etc. Understand your customers and create a business plan to meet their needs.

Once you have defined your vision and established a strategy, its then time to measure company readiness. This is the third step for involving the entire management team.

The final step in involving the entire management team is to monitor progress through stages. Because of the complex nature of CRM, approaching is through stages. Because of the complex nature of CRM, approaching is through stages that will create a better chance of success. Create a time line for strategy evaluation. Set milestones you hope to reach and continually check your progress.

Through an effective e-CRM system, you can personalize interactions with your customers and expedite the closing of business transactions. e-CRM and data mining systems help personalize interactions with customers. It also creates interactions based on relevant customer information, and expedites business transactions.

e-CRM and data mining systems help personalize interactions with customers. It also creates interactions with customers. It also creates interactions based on relevant customer information, and expedites business transactions.

E-CRM makes it possible to recreate the customer service of the past. Companies can use technology to combine a personal touch with customized service and the illusion of the one-to-one shopping of the past. The four features of e-CRM are:

• Information Analysis
• Customer Personalization
• Direct Marketing
• Simplified Transactions

The first feature of e-CRM is information analysis. With e-CRM, your ability to collect and analyze information is more efficient. It will help you determine inventory sizing, product pricing, sales items, credit policies, and other business decisions. With the analysis of you will be able to effectively use the second feature of e-CRM: Customer Personalization. Individual relationships with customers can be created and maintained through e-CRM. An effective e-CRM system will gather customer preferences and ensure customer-made shopping experiences for each customer.

Technology allows mass-market efficiency with a personalized feel. You can recreate the shopping experience of a mom-and-pop store at minimal cost through the third feature of e-CRM: Direct Marketing. Customers can order goals online and give you permission to send them additional personalized messages about new products, sales item, and other services you want to offer. e-CRM allows you to simplify transactions, analyze information, and create effective direct marketing material.

Companies that focus on customer information and use that information to maintain relationships are most successful in the market place.

What is data mining? It is the process of analyzing enormous amounts of data to identify meaningful patterns. Data mining is used for:

• Research
• Process Improvement
• Marketing

Data mining is an important tool for lowering overhead costs. The first way data mining facilities business operations is as a research tool. Research and Development is a costly process that can be streamlined and automated through data mining. Data mining lowers costs from the beginning of the manufacturing cycle, during the research and development phase, by quickly shifting through vast amounts of information.

Manufacturing and inventory control is another area in which data mining can help your company cut costs. The second way data mining facilitates business operations is through process improvement. Data mining systems can monitor processes to ensure that variables can be monitored and connected through data mining. Although both research and process improvement; are valuable aspects of data mining, they are the least customer - oriented aspects of it.

The most successful use of data mining is in marketing. This is the third way data mining facilitates business operations. Data mining uncovers information that reveals buying behaviors of existing customers. All useful marketing information is available in your customer database. Data mining will help you sift (distinguish) through it all.

Data mining streamlines and automates research methods, improves business processes, and identifies valuable marketing information. Customer database are an unlimited source of information. They are important business tools, but they are technical aspects of data mining that require knowledge of algorithms, decision trees, and predictive models.

Some technical aspects of data mining are:

• Decision Support Technology
• Directed Classification and Prediction
• Undirected Association, Clustering, and Recognition

The first technical aspect of data mining is decision support technology. Decision support covers the entire information infrastructure system that companies use to make informed customer decisions. It's based on recognized data patterns. Data mining helps, identify those patterns.

• Data Warehousing:

  A data warehouse is a database that stores information from a variety of operational systems. It allows companies to view information as a single entity rather than as a collection of information bits.

• Online Analytical Processing:

  OLAP databases are often speedier and more clearly organized than data warehouses, OLAP databases organize information along specified variables and allow for more precise analysis of the information they contain.

• Integration of Decision Support:

  Facts churned out by databases and mainframe computers don't always create a vivid enough picture to create solutions. Decision support technology is a collection of software and hardware that allows you to visualize the information gained through data mining.

In data mining, you use data to build a model demonstrating how every record in your customer database can be categorized based on any combination of variables.

This method is the second technical aspect of data mining: classification is the method of categorizing record in a database by predefined criteria - for e.g. assigning customers to specific purchasing categories. Prediction is taking the mined customer information, analyzing it, and predicting how customers may react in the future.

Undirected data mining is an automated process in which similarities among all records in a database of customer records are found. The third technical aspect of data mining is undirected association, clustering, and recognition. Some technical aspects of determining are directed classification and prediction, undirected recognition and clustering, and data warehousing and OLAP.

In directed data mining, you use data to build a model demonstrating how every record in your customer database can be categorized, based on any combination of variables.

These are often in the form of:

• 10-18% discount in the market value, giving an immediate equity
• Deposit paid i.e. the buyer does not have to pay any down payment to own a property. A normal deposit of at least 5 % is required by lenders, subject to one's income.
• Stamp Duty paid. This is another expense associated with the property purchase, with a minimum of 1% of the house price.
• Fully Fitted Kitchen, bathroom,etc

So what else one needs?

Imagine a property offered at, say £200,000.

Normal purchase would require, the first time buyer to meet the following major costs:

• Initial deposit e.g. 5% = £10,000
• Property valuation (survey) fee, say £300
• Broker's fee, lenders arrangement fee, etc., say £2000
• Solicitor's fee, search fee etc., say £1700
• Stamp duty 1% = £2000

Total cost of owning a property = £16,000.

If you do not have that kind of money, then you cannot become a house owner, except as explained above.

Suppose you bought a new house from the property company, at 15% discount with deposit paid, then you have, not only become a property owner, you have taken a profitable leap into the future financially. How?

Look at the fortune you have amassed:

• Immediate Equity (15% discount in price) = £30,000
• First year rise in the price of the property, say 10 % = 20,000

So are financially well off by £50,000, without spending a penny of yours!

In case you are not aware, we are in a global bear market for equities. This bear market is less than a month old and still contains significant destructive energy. It was inevitable that we would see a bear market after a lengthy bull market. The question now is how long it will last and how we will spot the end of the bear market?

Bear Market Psychology

Bear markets are all about fear. People suddenly shift from being greedy to being fearful of losing capital. As a result, sellers begin to outnumber buyers which forces prices down. As equity prices fall, investors become even more fearful and start to increase their selling efforts. This creates a vicious circle of declining equity values.

When will it End?

I would estimate that the bear market will be quite severe, with equities giving up close to 50% of the gains they made in the 2003-2007 bull market. In terms of length, bear markets usually last for about 25% of the length of the preceding bull market. That would make it a one year bear market ending sometime in the summer of 2008.

What to Watch for

Bear markets are usually coming to an end when non-business magazines feature a cover story that declares that a bear market is underway. By the time it makes it to the cover, everyone has accepted the downward trend and everyone who wanted to sell has done so. Now with fewer sellers, equity prices begin to rise as buyers start to bid up prices. Welcome to the new bull market!

• Financial management: planning and monitoring of an organization's financial resources to enable the organization to achieve its financial goals.
• Liquidity: the ability of an organization to pay its debts as they fall due.
• Profitability: the ability of an organization to maximize its profits.
• Efficiency: the ability of an organization to manage its assets to maximize profits with the lowest possible level of assets.
• Growth: involves the development and use of assets to increase sales, profit and market share.
• Return on capital: the amount of profit returned to owners or shareholders as a percentage of their capital contribution.
• Budgets: provide information in quantitative terms (facts and figures) about requirements to achieve a particular purpose.
• Cash flow budget: records the expected receipts of cash (inflows) and expected payments of cash (outflows) over a period of time.
• Records system: mechanisms employed by an organization to ensure that data is recorded and the information provided by record systems is accurate, reliable, efficient and accessible.

Strategic Role of Financial Management

Organizational planning

Goals/purposes/mission

Organizational objective

Strategic planning

Tactical planning

Operational planning

• Strategic plans may cover a period of 10 years. The goals a business wants to achieve will be incorporated into the strategic plan. These goals will be translated into short term, specific objectives.
• Tactical planning is flexible and adaptable, covering 1 to 2 years and allows the firm to respond quickly to changes. Operational plans provide specifics about the way in which the firm will operate in the short term.
• The 3 elements to sound financial planning are:
• Monitoring an organization's cash flows
• Paying its debts
• Continuing to make profits for its owners and shareholders

Objectives of Financial Management

• Liquidity - a business must be able to predict whether they have sufficient current assets to cover current liabilities + any unexpected expenses - benchmark = 1.5 : 1
• Profitability - to maximize profits, sales revenue, expenses, pricing policy and investment in assets must be monitored.
• Efficiency - achieved by monitoring cash levels, inventory levels and collection of receivables.
• Growth - important as it can result in increased sales, increased profit, increased market share.
• Return on capital - shareholders are interested in the amount of profit to be returned on top of their capital investment

The Planning Cycle

The 8 stages of the planning cycle are:

1. Addressing present financial position
2. Determining financial elements of the business plan,
3. Developing budgets
4. Monitoring cash flows
5. Intercepting financial reports
6. Maintaining record systems
7. Planning financial controls
8. Minimizing financial risk and losses

The 2 sources of data are internal (present/past performance) and external (predictions in demand and competition).

* clear authorization/responsibility for tasks in the organization

Budgets are used as control tools by comparing them with actual results. By determining the variance between budget and actual results, changes can be made as needed.

• Minimizing risk and losses - the following need to be assessed when assessing financial risk :

* amount of organization's borrowings

* interest rates

* required level of current assets needed to finance operations

To minimize financial risk, organizations must consider the amount of profit that will be generated must be sufficient to cover the cost of debt + increasing profits to justify risk taken by owners and shareholders.

Section 2: Financial Markets Relevant to Business Financial Needs

Financial markets are made up of the individuals, institutions and systems supplying excess funds to those who require them. Financial markets provide:

• Access to funds
• Investment opportunities/contacts in managing funds
• Expertise in financial market dealings

The bank's role is as a major operator in finance markets, and as a source of funds for business. Finance and insurance companies specialize in smaller commercial finance. Insurance companies provide secured loans to businesses. Finance companies raise their finance through debentures - share issues.The roles of merchant banks include:

• trade in money, securities and financial fixtures
• arrange long term finance for company expansion
• provide working capital
• arrange project finance
• advise clients on foreign exchange cover
• advise on mergers and takeovers
• provide portfolio investment management services
• underwrite corporate + semi-government issues of securities
• operate unit trusts - cash management trusts, property trusts and equity trusts
• arrange overseas finance

Superannuation funds have grown rapidly in Australia due to tax incentives + compulsory superannuation introduced by the government. Public/private cmpanies participate in financial markets through:

• Borrowing money to fund their operations
• Investing their excess funds
• Dealing in foreign exchange + commodities with overseas suppliers

The role of the Reserve Bank of Australia (RBA) is to act as a banker and financial agent for the federal government, as well as be Australia's central bank. It supervises the financial system and manages monetary policy with the objectives of contributing to the stability of the Australian economy + welfare of the people. The RBA can push up interest rates to reduce reducing the amount of money in the economy, affecting business by increasing expenses and altering overseas trade.

Role of Australian Stock Exchange (ASX)

A primary market enables a company to raise new capital through the issue of shares + through the receipt of proceeds from the sale of securities. A secondary market sees pre-owned/second-hand securities - shares - are traded between investors: individuals, businesses, governments.

Overseas and Domestic Market Influences

Factors in the domestic market which can influence businesses include:

• Competing demands for funds
• Changing demands for products
• Employment rates
• Overseas (external) influences on Australian business/financial markets include:
• World events (September 11)
• Tax regulations for foreign operations
• Political risks
• Foreign government intervention
• Changing technology (e-commerce) provide new online markets + software that connect companies to each other + their suppliers

Section 3: Management of Funds

• Internal finance: funds provided by the owners of the business (capital) or from the outcomes of the business activities (retained profits).
• Owners Equity (OE): funds contributed by owners or partners to establish + build the business.
• External finance: funds provided by sources outside the business - banks, other financial institutions, government, suppliers of financial intermediaries.
• Bank Overdraft: bank allows a business/individual to overdraw their account up to an agreed limit + for a specified time to help overcome a temporary cash shortfall.
• Mortgage: loan secured by the property of the borrower (business).
• Debenture: shares issued by a company for a fixed rate of interest + for a fixed period of time.
• Leasing: long term source of borrowing for businesses. Involves the payment of money for the use of equipment that is owned by another property.
• Factoring: the selling of accounts receivable for a discounted price to a finance or factory company. The company will receive up to 90% of the amount receivable within 48hours of submitting the invoices.
• Debt finance: the short term and long term borrowing from external sources (banks) by an organisation.
• Equity finance: the internal sources of finance in the organisation.
• Leverage (gearing): proportion of debt (external finance) and the proportion of equity (internal finance) which is used to finance the activities of a firm.

Source of Funds

• External (debt) sources of funds include:
• Bank overdraft
• Bank bills
• Trade credit short term
• Factoring
• Mortgage
• Debentures long term
• Leasing
• Internal (equity) sources of funds include:
• Owners Equity
• Retained profits

Internal - OE and Retained profits

• An advantage of OE is that does not have to be repaid unless the owner leaves the business, as well as being cheaper than other sources as there is no interest payments
• One disadvantage of OE is the expectations that owners will have about a return on their investment
• Retained profits: profits which are not all distributed but kept in the business as a cheap + accessible source of finance for future activities.

External funds

• One advantage is that due to the increased funds, increased earnings should therefore be a result, and hence, increased profits
• A disadvantage is that there is an increase in risk - interest, bank and government charges have to be paid on top of the principal amount borrowed
• Short term types of debt finance are bank overdrafts and bank bills - bill of exchange given for larger amounts, period of 90 and 180 days.
• Long term types of debt finance are mortgages, debentures and leasing.
• Long term borrowing is to meet the financial needs of a business in the long term - more than one year. Short term is to meet current debts as they fall due - less than one year.

Short Term

• Overdraft - should be used when needed to cover a temporary cash shortfall, to meet current liabilities/debts.
• Bank Bills - attractive for both borrowers/lenders because they can be traded in the secondary bill market. More attractive for borrowers because the bill can be re-borrowed, extending the period of short term borrowing.

Long Term

• Long term borrowing should be used to meet long term needs and if a great amount of money is needed - purchasing new property for expansion
• Mortgage - loan is used to finance property purchases - factory, office. Repaid regularly over agreed period - 10, 15, 20 years.
• Debentures - used by finance companies to raise funds.

Leasing

• Main participants are the lessor - owner of property - and the lessee - party wishing to use property
• Operating leases: assets leased for short periods, usually shorter than the life of an asset. Owner carries out the maintenance on the property.
• Financial leases: lessor purchases the asset on behalf of the lessee. Usually for the life of the asset. Leasing assets for long periods as financial leases cheaper than operating leases.
• Advantages of leasing include:
• Costs of establishing may be lower than other methods of financing
• Permits 100% financing of assets
• Lease payments are a tax deduction
• One disadvantage of leasing is that inters charges may be higher than for other forms of borrowing

Factoring

This is an important source of finance because the company will receive up to 90% of the accounts receivable sum within 48hours of lodging the invoices enabling them access to quick finance to cover any short term debts due or unexpected expenses The 2 types of factoring are:

• Without recourse - business transfers responsibility for non-collection to the factoring company
• With recourse - bad debts will still be the responsibility of the business.

Trade Credit

• Widely used short term borrowing system for businesses - 30-90 days given before payment due
• Attractive because it is a cheap from of finance
• Stretching: postponement of payments.

Venture Capital

• Used when a business needs to supply seed capital or diversification needs

Grants

• Given to businesses seeking to expand and develop by the government in an attempt to promote international competitiveness

Financial Considerations

Short term finance should be used for matching the short term purpose - managing a temporary cash shortfall. Long term finance should be used for long term needs - expansion of a business domestically/overseas. The 4 factors to be considered with financing activities are:

• Costs - set up costs and interest rates - must be measured for each of the available sources of funds.
• Flexibility - bank overdrafts provide better flexibility than debentures + factoring
• Availability of finance - if a too heavy dependence on a small number of investors, can increase risk if investor pulls out + commitments cannot be met.
• Level of control - if the receivables are factored than the liquidity of an organisation is reduced - this may impact on credit rating of organisation.

Debt versus Equity

In Australia, debt finance does not normally exceed equity finance - decision on which to use rests on the business. Debt finance can be attractive as funds are usually readily available + interest payments are tax deductible - reducing cost of debt finance. The costs of debt finance include:

• Repayment of principal
• Interest payments
• Tax considerations

The important points to consider when comparing debt to equity finance include:

• If organization has high level of debt finance, greater risk than equity
• Risk influenced by amount borrowed - higher the risk, higher the return if the business is successful
• Business must maintain sufficient liquidity + cash flow to ensure commitments are still paid as they fall due

The following factors influence the level of leverage:

• Type of industry + management of the firm
• Risk
• Amount of return
• Degree of control over the enterprise
]]> Wed, 20 Jun 2007 01:01:36 PST http://www.bizcovering.com/Education-and-Training/Strategic-Planning.26980 Strategic competitiveness is accomplished when a firm successfully coordinates and implements a value-creating strategy. When a firm activates such a strategy that companies are unable to copy or find too expensive to imitate, this firm has a sustained, or sustainable, competitive advantage. Above-average returns are returns in excess of what an investor anticipates to earn from other investments with a similar amount of risk.

Concerned with winning competitive battles and obtaining global leadership, strategic intent implies a significant stretch of an organization's resources, capabilities, and core competencies. When established effectively, strategic intent can cause people to perform in ways they never imagined possible. Strategic intent exits when all employees and levels of a firm are committed to the pursuit of a specific (and significant) performance criterion. Strategic intent has been formed effectively when people believe profoundly in their product and industry, when they are focused totally on their firm's ability to out perform its competitors.

Strategic mission comes from strategic intent. Strategic mission is a statement of a firm's unique purpose and the scope of its operations in product and market terms. A strategic mission provides general descriptions of the products a firm intends to produce and the markets it will serve using its internally based core competencies. An effective strategic mission establishes a firm's individuality and is exciting, inspiring, and relevant to all stakeholders. Together, strategic intent and strategic mission yield the insights required to formulate and implement the firms' strategies. Basing their decisions partially on a firm's strategic intent and mission, top executives develop a strategic orientation and predisposition to adopt a certain strategy or strategies over others.

]]> Thu, 26 Apr 2007 09:26:00 PST http://www.bizcovering.com/Accounting/You-Want-to-be-a-Partner-in-a-Big-Accountancy-Practice.27165 The Accountants dream?

When you start in the accountancy profession you are told that the ultimate aim is to achieve partnership. Pass your exams, keep your nose clean, put in the hours and eventually you will make it and be able to sign on behalf of the firm. Then untold riches will be yours.

I am a writer, not an accountant, but many of my friends and relations are accountants and from them I have pieced together a very strange picture of the role of the partner in the big accountancy firms today.

The brightest?

First of all I always thought that it was the brightest who are appointed to the partnership. This may have been the case at one time but now isn't necessary. Most large professional firms invest considerable resources to have departments full of senior managers with the sole task of to reviewing other professionals work. These are people whose whole lives are devoted to ensure that all work leaving the firm has a consistent high quality and thus protect the firm from litigation. In the olden days, that is 10 years ago, partners did this. It was the partners who were responsible for reviewing the quality of everything that would go out in the name of the firm. Partners would be chosen primarily for their technical ability and their personal quantities would be a purely a secondary factor. The professional reviewing department frees today's partners from needing to have the ability to do this work and so they are free to concentrate on the nitty-gritty of drumming up new business and office politics

PR role?

Increasingly a partner's role is seen as developing client relationships. This includes wining and dining and also giving overall direction to the work of the managers under them. Partners may not necessarily be competent to give detailed advice to clients: they may just be glorified P.R. referral points who get one of their specialist managers to get back to the client with an answer. Partners no longer become industry experts as today's auditing pattern means that they will only develop a relationship with the client for a few years before the partner responsible for that client is changed.

Boosting profits

Conflicts often arise between the need for client care and the firm's self- interest. In years gone by it would be that the client would be put first and the firm's interest would not enter the equation. This situation is now reversed and many newer partners are primarily motivated by self interest - linking their self interest to the self interest of the firm. Consequently we should not be surprised when we hear of a partner of a well-known firm saying in a meeting with other professionals "Stuff the client. We want to get the deal done".

Salesmanship

Thus the way to become a partner is not through technical excellence but by developing the personal qualities and style of salesmanship that fits the corporate ethos of the particular large firm concerned. If your firm has just appointed some young, loud-mouthed lad, full of bull to the partnership, who is not technically very bright, you now know why!

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