Ensuring Business resilience during an economic downswing is a top ten goal for SME business owners in South Africa. Figuring out what to do to survive and thrive no matter the current economic status is an essential priority for most business owners.
The difference between a prepared response and a knee-jerk reaction is generally due to deliberate preparation, prior planning, and intentional action.
At ActionCOACH-Inspire, our Quarterly Business Planning workshops or GrowthCLUB. This is one of the main reasons business owners who coach with us are better prepared and more resilient in their thinking and action plans.
Why, you may ask? I believe it has a lot to do with spending enough time planning and developing scenarios or alternate plans of action and thinking them through properly.
Understanding the risks and alternatives will give you a strategic advantage over other players in the market.
So how do you protect the profit in your business?
One way could be to ensure that we have “The Four M’sM’s of Profit” in place in our business. Even a brilliant business will fail without creating and preserving profits when economic conditions aren’t good.
I believe that adhering to the “Four M’sM’s of Profit.” This could go a long way to help guarantee success even when times are tough.
The 4 M’sM’s are:
Management must Manage
Profitable companies are well managed, and as Harold Geneen stated in his book on Management, “Management Must Manage.”
Managing a business requires a well-constructed budget, strong accounting practices, on-time reporting, and skillful time and resources.
Holding your team accountable to delivering the budgeted numbers, following up, training, and guiding the employees to reach maximum performance is of utmost importance!
Intelligent managers know how to systemize routine procedures while humanizing the exceptions.
For example, while customer service systems should be consistent and follow written guidelines and rules, customer service also depends upon motivated, well-trained individuals who will spontaneously solve unexpected or out-of-the-ordinary problems.
Your team must understand your company’s core values and internalize them to ensure advantageous representation for the business at all times.
Clear roles and responsibilities must be established and ensure you know who is accountable. Establish a clear action plan with a record of who must deliver what by when, and why!
Remember, if everybody is responsible, then nobody is!
Yes, money matters, and you need the best strategies for dealing with money matters as it could make or break profitability.
A successful strategy for managing money includes:
- Proper auditing of your numbers.
- Setting budgets that are understood and followed by everyone in the business.
- The appropriate Management of Gross and Net Profit.
Remember always, only profit is the natural bottom line!
Your business should not absorb inflationary price increases such as higher taxes, more expensive fuel, and salary and wage increases, and doing so will seriously impact your business’s profitability.
I believe the best approach is to proactively raise prices and concentrate on superior customer service to justify the increases and boost net profits without alienating customers.
Most business owners learn to discount before they can count.
Discounts and freebies should be discontinued as far as possible. Look at establishing alternate ways of payment, i.e., credit card facilities, to make it easier for customers to buy and pay for their purchases.
Remember, growth sucks capital, and it might just be that you need to consolidate to weather the storms. Set clear financial metrics for new projects and reduce the financial risks through well-established accounts receivable practices.
Marketing your CVP
Marketing is about creating your unique customer value proposition, believing it, and ensuring that your marketing message is consistent in everything you do.
It should not be about selling or price, but more about buying or the benefits achieved.
I believe that marketing in SME’sSME’s is too often done solely from the seller’s perspective.
Take a good look at your marketing strategy. Ensure that it addresses the need or pain point of the buyer or customer.
At ActionCOACH-Inspire, we have developed a unique marketing audit to understand the status quo and identify the gaps. Is your marketing spend delivering the same results as any other investment in your business?
You don’t know…? Well, perhaps it’s time to talk to us and get a clear picture if you can change it from an expense to an investment.
We know that businesses that focus on marketing and customer service will tap into the needs and desires of their targeted market in a way that translates more easily into increased business revenue and profits.
When you’re client-centric, marketing involves offering real value and involves strategies like “upselling” to customers.
Another example is “down-selling,” which works well when a customer might otherwise not buy anything. Understand and accommodate their budgetary constraints and, in so doing, make a customer for life. Don’tDon’t try selling them what they can’t afford and losing them to a competitor.
Marketing is about delivering on what you promise and re-innovating your products and services to prevent commoditization.
Marketing is math; use this to measure and reduce your lead-to-customer ratios and your acquisition cost.
Merchandise – your product and service offering
Taking a high-level view of your business’s product and service offering can be a valuable exercise for any business owner.
Remember, your products and services are offering to define the entire business model and guide the direction of sales and revenue.
Evaluate your different offerings. Compare and look at the potential and current profit margins and choose the one that delivers the most money.
Identify which products and services are profitable and focus on selling only those. Other ways to manage merchandise include selling exclusive lines that others don’t offer and carrying own label merchandise.
Selling only quality merchandise – and making that part of an overall brand identity – is always a wise approach. It generally delivers higher margins because people pay more for prestige, status, and excellence.
Remember, you want to safeguard and protect your income; having the proper marketing, products, and services your customer wants to buy an excellent marketing strategy to attract new customers is essential.
Don’tDon’t forget to maximize the sales to existing customers and take full advantage of each opportunity each customer represents.
Sign up for our next complimentary 6 Steps webinar or join us for our next GrowthCLUB session – I will show you how you can Increase Profits in Your Business!
Stay inspired and connect with me today to arrange your free one-hour complimentary business strategy session.
Yours in Great Business,