Given your moves to improve the cost picture of the business, it is time to share how those cost reductions were achieved without affecting product or service quality. Since you are using a systematic approach to achieve LCP (Lowest Cost Producer) in comparison to the competition, there shoud be a report produced. Share it with the targeted customers how you were able to lower their prices and see if they are interested in obtaining the same with your support.
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It is critical to select quality suppliers that will provide excellent payment terms - great savings from early payment and the ability to go beyond 30 days. This is part of your brand association - it is just as important to have great suppliers as it is to have marque customers
This could be the essence of business success. When I consider the list of things that make a difference, I always come back to bringing people into the great game of business. In order to get everybody into the game you need to bring them to your level of understanding for success and making money. It requires that right infrastructure a continuous education on how the business performs, makes money, and keeps profits.
This is about taking the customer relationship to the next level. Your company has developed specific areas of competence that the customer might not poccess and providing an opportunity to share and help customers to learn from your experience. Show Objective
Given the shows on creating Data Based Relationships, create a plan to bring your expertise inside the customer to help make improvements and recession proof their business. EPISODE 105: Summary Every company is required to develop several core compentices to become successful. Those core competencies are specific to an industry and market. That means not everybody is good at everything. It is the same for you business. What if you help customers develop competencies you have that would enhance their business? There isn't an exact formula for moving to this next stage of the relatioship, only a some conditions are present - a matter of timing: (1) you have as much of their budget as possible for your suite of products and services, (2) they are very satisfied with your offer and the nature of the relationship, (3) you have observed or been made aware of areas your competence will help, (4) established positive relationships with key decision makers. Topics:
EPISODE 106: What Does The Customer Data Tell You About The Relationships? We started 4 weeks ago focusing hard on the concept of data based relationships. Look at this with the same priority as keeping good financial records. At first the customer data will look scattered and not produce any insights other than establishing a history. Then it will change, soundenly you will move random bytes of information to patterns and finally trends. You can't get there if you don't start with systematic data collection - a CRM system. Use this data to first improve the sales and delivery relationship, then take it to the next level - helping them. Topics:
EPISODE 107: How Does Your Core Competence Match Customers? A quick review of core competence. It is simply something your business does differently than the competition and you use it to win and hold business. One way you can look for your unique strengths is using the balanced scorecard: is there someting you do in mamaging finances, developing systems and process, find and deal with customers, or handling your employees you can share? Topics:
EPISODE 108: Where & How to Start Start with positive relationships that you have built and improved through data collection. If a relationship has gone through rough periods and now is great because you measured and fixed it - all the better. You have demonstrated this as a strength and something they have experienced. Keep one thing in mind. Your 'Report' was not requested and might put the owner/executive in a defensive position. Make clear, if you suspect they see this as another sale pitch, what you are offering is not what you sell, it is out of concern for them. Topics:
Next Show/Chapter 27: Process Improvements How to apply today's show to your business:
Margins are the most critical part of the operation - what do you retain after all the bills are paid from a sale. A safe target is set 60% as the goal, anything below 40% will probably become unprofitable. Margins are the difference between what you can sell it for and subtracting all the costs asscoiated with making, delivering, and servicing the product or service. It is the basis for all profitability.
The focus on lean techniques has led to a demand based system for purchasing inventory. The goal is to keep your inventory levels at the lowest level possible and still meet customer demands. However the fragility of the global supply system, how inventory is purchased, stored, and pulled has changed begging the question - what is JIT+ as oppossed to JIC (Just In Case).
Time to stop talking and start working. We pickup from last weeks show laying out out to structure the implementation plan without the details. Today we are going to build the plan that will enlist all your employees into creating the future and creating a momentum based on commitment.
This is the third show of six looking at how a business can find ways in an inflationary market contain costs and stay competitive. During the early stages of inflation companies can pass on additional costs until the customer cannot afford it, its called Demand Destruction.
Critical in businesses of any size, maximizing the impact of resources is life or death in small business. The business has a written plan that includes aspirations (initiatives), results (goals), and activities (objectives). This is usually viewed as a strategic issue however it is critical if we are to achieve vertical alignment - people with the mission, goals, and objectives, this is a great method to achieve that end.
The third element in building and maintaining an effective customer relationship is having the right people with the right personal characteristics with sufficient authority to solve problems. Based upon expectations created in marketing and sales, your personnel must demonstrate they care about the customers business and aspirations or problems you are here to resolve. During their interactions with customers, they need to be emphatic in emotionally charged situations - deal with the emotion first, then move on to a solution.
The cash conversion cycle makes it easier to assess the operational efficiency of a company in managing its resources. As it is true with other cash flow computations, the shorter the cash conversion cycle, the better the business is at selling its inventories and recovering money from these sales while paying vendors.
PART IV: CHANGE MANAGEMENT - COMPONENTS OF THE STRENGTHEN YOUR CORE PLAN - WILLIAM EASTMAN29/4/2022
Many years ago I had the good fortune of working with John Kotter who is considered the foremost expert on organizational change. We took his book "The Heart of Change", which was an academic review of effective change strategies and created something for business owners - "Our Iceberg Is Melting".
In most businesses, only the owner or the executives are having fun. Business is a game and fun to play if you know the rules. The question universal in all organizations is “how do we get people involved and committed?” The reason that question is so critical is most people just trade time for money and arbitrarily limit their performance to match a paycheck. Getting people in the game changes how they think and increases the amount of discretionary performance they choose to share with the company.
When Delivery on Promise fails, your Recovery process becomes paramount. It is the opportunity to show how service oriented the firm is, as long as it is not an ongoing situation; it will destroy your reputation and become financially unsustainable. The marketing and sales processes create a set of expectations on how important the customer's business is to you, what results can they expect from purchasing the offer, and how easy the offer will be to use or consume.
Before we can determine where to add value to a company we need to identify the value of current assets. The answer you are looking for is your ROA - Return on Assets. The math is simple and it is nothing more than an extraction from your balance sheet. Once we know how well your investment into tangible and intangible assets perform, it will present the next question - what do I need to do to increase its value or what do I need to add to realize the full potential of my processes. The question is for next week.
SHOW & CHAPTER 13: ACTIVITY BASED COSTING OR HOW MUCH DOES IT REALLY COST? - WILLIAM EASTMAN25/4/2022
This is by far the powerful tool in your financial tool box. Using conventional accounting methods will provide you with gross margins, which leads to profitability, but without the ability to identify the highest margin products and/or services or customers. Also it calibrates your break even point with far greater accuracy.
PART III: CHANGE MANAGEMENT - STRENGTHENING YOUR CORE PLAN - THE BIG PICTURE - WILLIAM EASTMAN22/4/2022
As we do every week on Friday, in the Executive block, we pull together the week from the owners perspective. How do I (you) implement what was discussed this week?
Much has been written and available about the necessity for position descriptions and what is the right format. Here is the difference we bring to the feast - the most important element of position descriptions is it must be process based.
The most critical issue in customer service is the initial delivery of what the customer purchased - does it perform as sold? How user friendly is it? Was it delivered on time? Is the value worth the price? Many times in the sales process, marketing and sales overstate results gained from purchasing, delivery date, or features. This creates a situation where the customer will feel deceived or cheated when the product or service is delivered; there is usually no reasonable recovery that will hold this account or recovery that is affordable.
The quality of your suppliers will have a major impact on the quality and margin of the products and services you will deliver. Additionally you want to find marque suppliers to use as part of your brand association. Life cycle costs: defects requiring rework, defects requiring return, warranty or guarantees, durability. Also consider payment terms.
Managing Cash Flow starts with establishing a baseline for business operations - what is the bare minimum required to sustain you over time. Given the current state of the business, how much revenue is required to pay all bills on time over a defined period - a week, a month, a quarter.
Unless you are starting here with a blank sheet with no operating business, something exists. This one of your multiplier roles, the ability to Manage the Change from today to the future. Never forget that most change efforts come up short of its potential. Only your management will make change successful and create the success you need. Managing Change is both a technical process to align all of the businesses resources, it is also a method for building commitment and consensus for the change.
Never forget that as long as the pain of staying the same is less than the pain of changing, you will be pushing a very large boulder uphill. A second lesson is good plans with commitment will always outperform great plans with little commitment.
The smartest method of defining roles, creating expectations, and providing initial training is the creation of standard operating procedures. Each step in a process requires sub-steps, documentation, tools or equipment needed, preventive maintenance, and specifies everything in 1 location for reference. The process for building SOPs will be covered in other shows. The goal today is to emphasize its importance in placing the right people in the right roles with the highest probability of success.
The essence of all business relationships is data. That includes quantitative (numbers) and qualitative (feelings) to build a complete picture of the relationship. Most businesses, the large included, focus on just one. However, both are required to tell the story of the customer's relationship with the offer and doing business with you. Later on, when we discuss how to gain the customer’s support for improving the offer or creating a new one - this is essential.
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