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1. Reflect & Recognise change

• The market environment is constantly changing and offers new threats as well as new opportunities.

• Look at changes in the business landscape (e.g. internet, changes in your competition) as well as new products and services that address the same customer needs.

• Look for changes within your business and your personal life.

• How will it affect your business and how will you address the threats and opportunities identified above?

2. Learning from experience & consider change

• What has been very successful and why? What hasn’t worked and why?

• You can save a lot of money by determining unprofitable, time consuming and inefficient activities and internal processes. What are they? What can you do differently to be more efficient?

3. Realism and realization

• Planning assists in a view of the future which is supported by facts. Your roadmap may show you hurdles that require the support and assistance of outside sources.

4. Balancing Growth

• By planning for growth you will identify capital needs and be able to ensure that funds are available when you need them.

5. Result $$

• Achieve your goals by making them concise and realistic e.g I will grow “$x” in the” y” part of my business until “z” time.

• Try to review your pathway at least quarterly and monitor your results to do a practical analysis and identify the reasons for variance.

1. Recognising Change

The market environment is constantly changing and offers new opportunities as well as threats. Look at changes in the business landscape (eg. Internet), changes in your competition as well as new products and services that satisfy the same customer needs. Look at changes within your business and your personal life. How will it affect your business and how will you address the opportunities and threats identified above?

2. Learning from experience

What has been very successful and why? The reverse also needs to be addressed. You can save a lot of money by determining unprofitable, time consuming and inefficient activities and internal processes. What can you do differently to be more efficient?

 3. Realism and realization

Planning assists in the prevention of a view of the future which is not supported by facts. Your roadmap will show you hurdles that require the support of outside sources and assistance.

 4. Balancing Growth

By planning for growth you will identify capital needs and be able to ensure that funds are available when you need them.

 5. Result orientation

Achieve your goals by making them concise and realistic. “I will grow x much in the y part of my business until the time z” is a good example. Review your pathway at least quarterly and monitor your results to do a practical analysis and identify the reasons for variance.

 Speak to our BEC advisors about working smarter in your business this year. Book your advisory session by filling in your details in the form on the right.

The old expression “a sale is never made until you’ve collected the cash” is as true today as it ever was.

Here are some ways you might hedge against commonly used reasons for non-payment:

Only extend credit if you need to 
These days, with credit and debit cards readily available, there is much less need to extend credit. So think carefully before you do. 

Faulty Product or Service

• Have a clearly defined and simple warranty program on your invoices and relevant paperwork.
• Clearly state on your invoice and delivery paperwork that the customer must confirm claims to you in writing within a reasonable period (e.g. 7 days)

Timely Invoicing

• Produce and send your invoices as soon as possible, preferably with the goods or services delivered
• Send invoices by email with a read receipt, or by facsimile

Purchase Order Number
Make sure you get this with the order confirmation, don’t send goods or deliver services without it.

Credit Application
Make sure you have a Credit Application form prepared and signed off by your customer prior to trading

• State your trading terms and conditions, including payment period (7, 14, 30 days from date of invoice, not end of month), default provisions e.g. interest rate payable on outstanding accounts in your Credit Application form and invoices/statements
• Talk with your local collection service regarding appropriate wording that the customer is liable for all and any fees and charges associated with retrieval of your money
• State the goods remain your property until final payment is made, and that you have the right to reasonable access to retrieve the goods should they remain unpaid for

 
To seek professional advice on the above before you incorporate these recommendations. For relevant contacts email: accounts@norbec.com.au or phone 02 6622 1933.

4. Increase your average sales $ per customer

In fashion retail encourage customers to experiment with coordinated accessories when buying clothing items. Look to place these in a high traffic location, and especially adjacent to cash registers. Bundle products or services together, and look for complementary products from suppliers to add value without sacrificing your profit margin.

5. Increase you margins

Revisit your core product and consumable costs, and your expenses. Then negotiate with suppliers to decrease them e.g. insurances through bundling with one supplier. Relook at your loans and interest rates, and what is currently on offer for
refinancing. One of our advisors suggested to a fashion shoe shop that they shop around for better deals on merchant fees. Three hours of investigation saved them over $7,000 per year.

Let’s look at an example of applying the 10% rule: 

Thus, increasing each of the five key areas by 10% has resulted in a 62% increase in gross profit.

1.     Increase your sales lead generation by 10%

Contact your existing business customers and ask them for referrals. This is often the quickest and most cost effective method. Most customers don’t mind if you approach it in the appropriate manner. Also seek publicity opportunities in your local and regional media. Often they are seeking topical and interesting business stories and case studies. Contact me if you would like some direction with this. Look at using the internet and social media to increase your business footprint. It can be as simple as using e-Bay to start with.

2.     Increase your lead conversion by 10%

Many times this is achieved by really targeting your sales lead generation contacts e.g. asking your existing customers for leads. Also research your current customer base and identify in which market segments you have most success in converting leads into business. Identify lapsed customers and contact them. Often you can convert them back to you. For example, motor mechanical shops often do not recontact previous customers. It can be as simple as making a phone call. 

3.     Increase your transactions / purchases per customer

Start the next sale when you make the last. With service businesses such as motor mechanics, ask if you can pre-book in their vehicle for the suggested repairs you identified during the current service. Update your customers frequently on new offers and services, and maximise the impact of new stock lines through product releases and a networking event at your business for customers.

Next week we will look at the two other key improvement areas, and how much difference they can make to your profitability.