Preparing your business for the holidays

Preparing your business for the Holidays

If you are the owner or manager of a business outside the retail and hospitality industries, you’re probably looking forward to a well-deserved annual break.
Here is a checklist of some of the important things to do before you shut down for the December holidays.

1. Let your customers know when you’ll be away.

Don’t assume that your customers will know when you’ll be closed – send them an email or a text message notifying them about the dates of your holiday shutdown. If relevant, let them know who on your team will be available to help them in case of emergency. If you are an e-commerce business, make sure someone is responsible for ensuring the smooth running of the online store. Brief your team before you send out any customer communications to ensure they are able to plan for the season as well as answer customers’ questions about the holiday shutdown.

2. Arrange the skeleton crew.

December is a popular time for employees to take leave – it is summer, the kids have long school holidays, and the office is usually quiet. While it may suit you to have most employees take their leave during the holiday slowdown, you should also make sure you are not short-staffed. Ensure there are enough people around to attend to urgent customer requests, answer the phones, look after social media and keep an eye on the business. If you do have a skeleton crew running the show during this time, it might be a great idea to award them with a day of bonus leave or a small gift to show your appreciation.

3. Pay your Accounts in time.

If you are closing down for the December holidays, make sure that you have paid all your usual month-end bills in time. This could be your VAT payment, Municipal Accounts, Telephone bills etc. This will ensure that you don’t enter the new year with additional charges or cut-ff services.

4. Get ready for the New Year.

When you get back to work in January, it’s generally a rat race to first meetings, wrapping up key projects from the previous year, or catching up with admin. Ensure that you have a dedicated person to handle admin duties while you work on important tasks like business development. You may also be inundated with requests for loans and advances from employees who are broke after the December holidays. Prepare to answer these requests with a standard policy, whether you are able to help or not.

Remember, January can be as tight a month for your business as it is for your team because you will find yourself waiting for some payments. Be sure to contact people and businesses who owe you money to confirm when they will pay. If you expect a seasonal cash flow crunch, prepare for it by speaking to your bank about an overdraft.

5. Think more value, not more discounts.

When people think of holiday shopping, they think of discounts. Because of that, almost everyone is offering discounts. To differentiate yourself, you don’t need deeper discounts, just a better story.

6. Prepare an advertising budget, and stick to it.

One of the complaints from many retailers is that while sales increased during the holiday shopping season, overall profit didn’t. So much money was used up in marketing and operations that they ate into the profits. Take the time to lay out all your upcoming expenses and generate a sales forecast — it might help to loop in your bookkeeper or accountant too. Decide from there just how much you’re willing to dedicate to ad spend.

7. Produce all marketing materials now.

Once you’ve decided on a budget and the different channels you’ll utilize in your strategy, you’ll want to get all your assets designed as soon as possible. Once the season starts, the last thing you’ll want to think about is getting graphics designed last-minute for your promotions. Many design freelancers will likely be busy themselves, as well as your own staff. In some cases, you may be met with an expedited service fee, an unwelcome expense in your ledger. Identify the channels you’re using, prepare your graphics and copy, and file them away for easy access when the time comes.

8. Start the New Year with a bang.

Long standing customers will appreciate a New Year mailer to get them excited for opening specials when you are back in business to kick start the New Year. This could be an opportunity to rid the business of old stock that didn’t sell during the holidays. Opening sales are very popular and if you want to attract new business, this could be one of the ways.

 

Practical Steps to Increase your Gross Profit Margins.

1. Analyse your profit margins

Your overall gross profit margin could be deceiving. Find out the gross profit margin on each of your products and services, and analyse your gross margins over different business divisions, product categories, suppliers or customer categories according to your business. This way you can identify both low margin or loss-making items and profitable activities or products. Then you can stop selling low margin lines and focus on the ones that work.

2. Increase your prices

It can be difficult to increase your prices, however, often business owners are more worried than their customers about price, and, let’s face it, our overheads are going up all the time.  It’s true that you might lose the odd customer, but if your margin is 50 percent, a 10 percent increase in prices means you can lose 17 percent of your customers yet be no worse off!

3. Review all your prices

Do you charge all customers the same price? If so, why? You’ll invariably find that some are less price sensitive than others, especially if they’re not paying for the bills themselves, e.g. government or larger organisations. Have you increased your prices to match supplier price rises and kept up with the competition?

4. No discounting

Discounting can be the death of many businesses that don’t realise how badly this destroys their margins. Using the same example as above, at the same margin of 50 percent, if you discount your prices by 10 percent, you need a 25 percent increase in sales just to stand still. Say goodbye to your day off!

5. Don’t compete on price

Differentiate yourself in other ways, whether by giving superior value, going the extra mile or reducing all the other (non-monetary) costs of doing business with you—effort, time, anxiety and emotional costs.

6. Take cash discounts from suppliers

It’s normally a much better deal than trying to delay payment, even if you’re borrowing.

7. Prevent theft

Whether stolen by staff or customers, losing cash is very costly. Do you have anti-shoplifting or theft prevention systems in place, even for staff? Do you balance your tills? Who does your banking?  It is important to look at all your systems and identify easy ways for someone to steal form you, then address those gaps and safeguard your business.

8. Watch supplier bills

Check all supplier bills personally. After a while you’ll get a feel for things which aren’t right. Don’t be surprised to find that you’ve been overcharged for goods or services you haven’t received or been billed at the wrong prices.

9. Use inventory systems

Use an inventory system to keep track of your inventory. You’ll find you have less working capital tied in inventory, suffer less theft and stock obsolescence, know when you’re running out of products that are selling well, and know exactly how much each of your products cost you without wading through old purchase invoices. It’s easy, and it works well.

10. Fire Unprofitable Customers.

 Some customers are simply not worth having. These are the customers who demand the lowest price, want extended credit, demand superior service, abuse return policies and delay or simply not pay for products or services. The best thing to do is send them to your competitors. Establish a program to fire unprofitable customers. Review your customer base at least semi-annually!

11 Pay Attention to Small Items

. Small items, such as consumables, accessories and service parts are often less price sensitive as major items. Increase prices here while holding the line on bigger, more noticeable products.

12 Product Returns.

 How often have product returns sat in warehouses for months before someone does the paperwork to get credit from vendors? This is tying up capital and, in the worst cases, losing an opportunity to return a product for credit due to expiration of warranty dates.

13 Starter Kits.

 One way to increase sales and margins on sales is to create “starter kits”. The concept here is that when a product is sold, you include all the parts, accessories and services to install it, plus a supply of consumable items. These kits increase the sales and margin dollars on the initial sale. Typically, these are sold at an attractive price when sold together so as to give the buyer incentive to buy the “kit”!

14 Product Mix.

 Product mix shifts (even subtle ones) can have a major impact on your gross profit margins. Understand the dynamics of your marketplace and what is happening to your business. Understanding your business is critical if you are to focus on those customers, market segments and product lines that give you the highest gross profit margins. You must then develop marketing strategies and implement sales action plans to pursue the more profitable segments of your business.

15 Discipline.

Above all else, the development of pricing strategies, implementation, maintenance and administration is a disciplined process. Obtaining that extra point or two of GPM does not come easy. Dedication and hard work make it happen

Protecting the Gross Profit of your business

On a daily basis, as we work alongside businesses to manage their business finance we come across plenty of opportunity for businesses to grow, by simply focusing on one aspect – the Gross Profit Margin of their business.

Gross profit margin is calculated by subtracting cost of goods sold from total revenue, dividing the result by total revenue and multiplying by 100. Using this formula, gross profit margin is expressed as a percent. This makes it easier to compare a company to industry standards and benchmarks. The greater the gross profit margin, the more profitable the company is before consideration of general and administrative expenses.

Gross profit margin is used to determine how much can be spent to cover operating costs and still leave profit for the business owner. Stated differently, gross profit margin reflects the difference between costs of production and product revenue. The greater the gross profit margin, the greater the revenue left to absorb operating costs and make a profit.

The importance of this percentage is that every percent that you save or gain runs through to the bottom-line of the entity and falls right into the "future of your company".   This extra resources gained can be used to expand (grow the business), invest in other projects, bless the society and other businesses in order to enhance the community that you are part of. In our opinion something worth to enter into a battle as we do business with a long term vision and to have an impact in society!

Let us first take a look at the difference between the mark up and gross profit. Here is how each one is calculated!
 

Cost 100   Sales 150  
Mark up 50   Cost 100  
Sales 150   Gross Profit 50  
           
Mark up of 50%   Gross Profit 33%  
Calculated (Mark-up/Cost) Calculated (Gross Profit/ Sales)

The three main sectors of business are manufacturing, trading and services. Each sector has a different component to keep an eye on to protect the gross profit margin.

In manufacturing the most important part of the Cost of Sales is material and direct labour in the manufacturing process.   In a trading business it is material purchased and in services businesses it is labour and other small expenses.

Protecting your Gross Profit Margin really has a huge impact on the future of your business, just consider the following.  If we take a turnover of R1 000 000 per month, every percent you can gain or save on GP% will have an impact of R10 000 per month. Or if you should you be able save 5%, the gain per month will be R50 000 and over a year R600 000.

Take time to consider your business’ Gross Profit Margin and take action to protect it.  If you need some assistance in doing this, contact us at Technibook, we will help you.

Purpose beyond Profit

In today’s technology driven, rapidly evolving economy, successful companies are built not from the ground up, but from the purpose up.

 

Starting and surviving in today’s economy is hard, but the companies that figure it out have something in common: the pursuit of purpose, alongside the pursuit of profit. A purpose mobilises people in a way that pursuing profits alone never will.

A business without purpose manages people and resources, while an business with purpose mobilises people and resources. Purpose is a key ingredient for a strong, sustainable, scalable business culture. It’s an unseen-yet-ever-present element that drives a business. It can be a strategic starting point, a product differentiator, and an organic attractor of users and customers.

An easy and fun way to get to your business’ purpose is to play a game. Let’s call it the impact game.

On a piece of paper write down what your business does. Then ask the question, what impact does that have on my clients’ needs, problems or challenges and write it down. Then again ask what is the impact of that impact on your clients?  Go through this question about 5 times. If you’ve been honest in your questions and answers you should have the purpose statement of your business clear and concise in front of you.  Play this game with your business partner, your staff or even your children.

Once you’ve articulated your purpose, be prepared to walk the talk. If it’s not real or believable, it will inspire cynicism rather than trust. Make sure every person in the business is truly committed to it, and align it with performance metrics and rewards.

Ultimately, a shared purpose should create strategic clarity. It allows you to focus on what really matters – and in the process boost productivity, performance, loyalty and the bottom line.

 
GETTING INTO ACTION

So how do you go about to clarify your business purpose?  Here are some practical steps:

1) Go around in your business and ask you employees to tell you what the business' purpose is.  This will give you a good indication of the common understanding, be it right or wrong, this will give you a good starting point.

2) Play the impact game as described above and get to the bottom of the impact you have on your clients. Play it with your employees, your spouse, your friends.  Different perspectives can be helping in unlocking a deeper purpose.

3) Get someone to help you to unlock the true purpose of your business. A session with a business coach will help you to get clarity on the purpose and support in implementation.  Contact us if you need to get in touch with a reliable business coach, we can refer you. 

 

So what is the Purpose

An extraordinary business starts with extraordinary people. 
Extraordinary people start with 
purpose.
– Jesper Lowgren

There are many labels that informs a business’ direction; vision, mission, values and principles.  However, have you ever really thought about your business’ purpose?

A vision statement says what the business wishes to be like in some years’ time. It’s usually drawn up by senior management, in an effort to take the thinking beyond day-to-day activity in a clear, memorable way. There’s also the mission, which describes what industry the business is in (and what it isn’t) both now and projecting into the future. Its aim is to provide focus for management and staff.  Values describe the desired culture, a behavioural compass.  If values provide the compass, principles give employees a set of directions.

So how does purpose differ from all the above, which emphasise how the business should view and conduct itself. Looking at some purpose statements of businesses operating in South Africa;

- Dimension Data: We accelerate the ambitions of our clients, our people, our shareholders, and society.
- Liberty Group: To make a difference in people's lives by helping them to orchestrate their financial freedom. This is our passion.
- Mr Price: To add value to our customers’ lives and worth to our partners’ lives, while caring for the communities and environments in which we operate

Noticed how these purpose statements have, as opposed to vision, mission etc, an outward focus?   This takes outward focus to a whole new level, not just emphasising the importance of serving customers or understanding their needs but also putting managers and employees in customers’ shoes.  It says, “This is what we’re doing for someone else.” And it’s motivational, because it connects with the heart as well as the head.

So how does the world look like from your customers’ reality? What does it feel like to be in their shoes? How is your business investing heart into someone else?
How is your purpose paving the pathway to significance?

Stay Relevant to your Customers

A basic truth about business is that without customers it can’t exist. Another reality is that the world is constantly changing including the world of your customer.   Staying relevant to you customers and their needs might just be the one thing keeping you in business.

Understand 
A customer is essentially someone with a need that your business can solve. Make sure you really understand their needs and re-evaluate the solution you provide them. Ensure it is truly a fit for purpose solution. Also go beyond than just providing a product or service, provide helpful advice and assistance.

Serve
Customers will choose a business that makes them feel comfortable and secure – not humiliated and down. Be a down-to-earth business owner who exists to serve your customers. Put them first and serve with excellence.

Educate
Educate your customers. Share inspiration, stories and information that adds value and teaches them something. Always shed light on problems, be honest and clear so that your business will not suffer from misunderstandings. Trust and confidence attract customers.
 
Adapt
You can never go wrong with catering to your customers' preferences. By adding a personal touch to your products or services, you can give your customers a greater feeling of ownership and show how much you care about their  satisfaction. These personal touches can effectively leave a positive impression, which often results in repeat business and profitability.

Shine
Stand out from the masses. Ensure your customers feel special. Go the extra mile and your customers will follow you anywhere.

Spring Clean your Business

Spring is in the air and  it is time for that big spring clean. This time however, consider how you can spring clean your business.  Decluttering your business will make space and time for more profit, more impact, more quality clients and projects.  It will also bring more freedom, creativity and more meaning in your business. Here are some practical steps how you can spring clean your business. 
 
Physical

File the papers you need to keep, but only the papers you really need to keep.

Action – put the papers that need action together, paperclip them, put the word ACTION on it, and put it right next your computer.

Toss out as much as possible. Remove pens, pencils, post-its and everything you don’t need right now from your desk. Put it in your drawer.  Step back and look around again. What is NOT functional anymore? Take it out.

 
Digital

Desktop – start with your desktop, file or delete all the items that doesn’t absolutely need to be there. Let your desktop give you that crisp and clean feeling when you start the day!

Files - arrange your current projects in working files in your documents to see at first glance.

Programs - do a quarterly review.

Domain names - do a yearly review.

Unsubscribe - Choose carefully what info /newsletter you need to receive.

 
Social Media 
Create a spreadsheet and put down all the social networks you own and use with the URL and password. Evaluate the needs for all your social media profiles used and owned - ask yourself with each channel: what do you want to communicate to whom and also is this the channel your ideal client is on? If not…delete!
 
Financial 
Go through all of your automatic payments cancel the services immediately if you don’t need/use/want right now. Pay your outstanding bills and arrange payment schedules for the ones you can’t pay in full at this very moment
 
Yourself
When cleaning up your physical environment,  your mind becomes clear and calm. This will allow for your thoughts to order themselves. Write it down. Don’t keep all your thoughts inside. Do a brain dump on paper regularly to free the space in your mind for real creativity to flow. Stop multi-tasking and start uni-tasking.