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Ten Things to do for a Profitable Year
Taking a Step Toward Extraordinary
It is always a thrill when speaking to a group of retailers at a trade show or conference, to have the opportunity to visit with an attendee after a presentation. One particular person stands out. Their store was profitable - so much to the point that they would be paying off the last of their loans at the bank some two years ahead of schedule.
The business had exceeded all of their financial goals. He was even paying himself a salary, and taking dividends from the store that were "off the charts" as far as his business plan was concerned. Yet, there was a problem as he saw it.
Having achieved all of this, he was afraid that he was quickly becoming complacent. Would he lose his drive? Would he lose interest in the business? Would there be a dramatic fall as quickly as he had achieved this phenomenal success. The question he wanted to ask was, "What do I do now so that I do not lose my edge?"
Perhaps this scenario describes you and your business. If so, then the advice that was given to that shop owner is probably appropriate for you. And for the person whose business is the complete opposite of the one we have just described, as well as all of those that are in between, the suggestions are very much on target if you want to have the same "problems" as that first shop owner.
We suggest you take notes, and create a chart where you can mark off each of these items as you complete them.
Task number one. Make a point to become very adept at understanding the financial aspect of your business. Perhaps it means that you should enroll in a basic accounting class at a local college. Even if your brother is a CPA and is doing the books for you, the business utilizes your money and you should fully understand where and how your money is working for you. When you gain a strong understanding of financials, you will find that not only do you make better decisions, but you will be asking your accountant in depth questions that will cause that account to work harder for you.
Task number two. Become more aggressive in how you do your advertising, marketing and promoting. Create a 12 month advertising plan. This will accomplish two things for you; the first is that it will likely eliminate your deciding on Monday what will appear in your newspaper ad on Thursday. The second advantage can be a substantial savings in your annual advertising cost. By contacting the various media that you spend your dollars with, and getting an annual contract, you can realize savings of up to 30%.
Resolve that you are going to utilize database marketing. That requires you to better know your customer - not just a name and address but details of their lives. Imagine someone from a company asking you to create a gift basket for anniversary of someone working in that company. Develop a reminder system so that you call that person some 11 months from now and remind them of the upcoming anniversary. It makes for a quick sale as you offer to send a gift basket to celebrate the event year after year. You can do this with most every basket you make as well as asking that customer for other anniversaries, birthdays, employment anniversaries, and occasions that deserve recognition.
Task number three. Ask your customers to tell you what they think. At least once a quarter, utilize a customer survey to ask customers why they do business with you, where else they shop, what they would like to see in your store, and any other point of curiosity you might have.
Your customer survey should constantly change so that you gain new knowledge of your customers, and should only have four or five questions. Any more questions on the survey and you will lose their interest fast. Start with a simple one question survey asking, "What one thing could we do to make it easier for you to do business with us?"
Task number four. Hold semi-annual job reviews. Of course, to have job reviews you need to have job descriptions. But, instead of handing out pay raises without an overall plan, you can use a job description to set goals. An employee would then be working to accomplish goals for your shop, knowing what their raise would be six months from now. Raises should be given on merit, not on longevity.
Task number five. Educate your staff with regard to how your business functions financially. Create financial statements for your staff to see. Ask any number of employees to give their "best guess" as to the percentages in your financial statement, and you will get answers that vary a great deal from the truth. They think you are making a lot more than you actually are. So, you should have plenty of money to give them a sizeable raise at anytime they ask.
By explaining how your business actually works, experience has shown that employees can understand how small changes in your business can affect the profitability and stability.
Task number six. Establish budgets for your purchasing of inventory, and your profit and loss statement. Your financial sheets of the last twelve months will provide you with most of the necessary information. Without budgets (goals), there are no standards by which to judge your efforts for the past year. And while we are discussing financials, make a commitment to yourself to complete your monthly financials within the first five days of the following month.
Task number seven. Utilize a cash flow plan. Imagine being able to see today each of the next twelve financial sheets; this is what a cash flow chart will give you. If there are opportunities to grow your business, you will see them months ahead of time and can maximize them. Likewise, if there is a problem on the horizon, you could minimize the impact of the problem on your business.
Task number eight. Utilize your employees within your store. Hopefully you are not in your shop for every hour it is open. And for those hours you are away from the shop, have competent staff to manage for you. Businesses do not find great employees, they develop their own great people.
Task number nine. While we are talking about utilizing staff, make a commitment to relax, enjoy yourself, and reduce the stress in your life. It is not to be a source of pride when you detail that you are putting in lots of hours within your shop. Do what is necessary to get some time to yourself away from the business.
See a movie or go to a concert. Get two books to read. One should deal with business or self improvement. Try something like, "Who moved my cheese?" or "The 7 habits of highly effective people". The second book should be something that is relaxing and enjoyable to you - a novel, historical, or biography of someone.
The conversation that we mentioned at the first of this article took place just over two years ago. Today, the shop continues to do well. But more importantly, the owner is doing even better. He approaches work with a tremendous smile on his face each day; A smile that has become contagious among his small staff and his very loyal and growing customer base.
If the "problem" that this small shop owner has faced sounds like one that you would like to tackle, then perhaps you should follow the same advise that he has.
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This article is copyrighted by Tom Shay and Profits Plus Solutions, who can be reached at: PO Box 1577, St. Petersburg, Fl. 33731. Phone 727-464-2182. It may be printed for an individual to read, but not duplicated or distributed without expressed written consent of the copyright owner.
Profits Plus Solutions, Inc.