adminthe business.
Capitalise on the downtime and focus on preparing for the busy season.
Give room to plan and audit
A plan makes it easier for you to get where you are going.
For you to know where you should go, you first need to know where you actually are.
By examining specific areas within your company, you should be able to determine which areas worked against your growth in the past year.
Remember that today’s fast-paced technologically savvy world allows for countless competitive advantages. The Internet for us with small businesses has created both opportunities and challenges.
Work on lowering information and communication costs, there is the danger of finding increased competition from non-local Internet businesses.
Review customer statistics
All customers are not created equal, it is advantageous to know your customers well, rank them based on volume or revenue and treat them accordingly.
Also be sure to gather information about customers who have reduced or withdrawn their business from you — the most expensive cost on your financial statements could be the cost of not doing business with certain customers.
Once you determine who those customers are, think of the bigger picture and develop a game plan for resurrecting each account.
Develop your products
Investigate new ways of developing your business.
Ensure that your current and prospective customers have easy access to professionally designed marketing materials with dealer specific details.
Supply and inventory management
The basic understanding is that companies hold inventory for two to reduce costs.
The motivation for each differs as firms balance the problem of having too much inventory; which can lead to high costs; versus having too little inventory; which can lead to lost sales.
To avoid shortfalls or stockouts, firms carry extra inventory known as safety stock.
As your business flourishes against the backdrop of good customer service, you can expect sales to increase.
However, as you provide perfect customer service, logistical costs increase exponentially. If a company holds too much inventory, it can lead to low inventory turnover and hide operational problems.
Reduce manufacturing or production costs
If the supplier of components is not willing to consider price reductions and cannot offer less expensive alternatives, a company can explore sourcing from different suppliers.
It can send the component requirements to various possible suppliers and select those that offer the best value in terms of meeting the specifications and low pricing.
Nowadays sourcing from two or three suppliers keeps prices low due to competition.
One of the main costs of production is the cost of the components that make up the finished product.
Reducing these costs even slightly on a percentage basis can have a substantial impact on the cost of production. You can reduce component costs by buying in bulk or substituting less expensive components that satisfy the requirements.
Sometimes a design will allow for less material without affecting quality. A review of such possibilities often results in a decrease in production costs.
An effective strategy for reducing production costs is to redesign the product.
I have seen too many glossy products on the shelf which do not add much value to the quality of the product. Try to identify the key characteristics of the product that are responsible for its success in the marketplace.
Other features may be costly but add little value for customers. Companies can change the design of the product to reduce costs by eliminating unimportant features while retaining the characteristics.
Technology allows automation of certain production processes, resulting in greater consistency and reduced costs, and companies can use it to analyse their production work flow.
Many companies already use a high degree of automation but have considerable scope for work flow optimisation.
Now you know why I prefer calling the month of January the “wake” month.
Customers are experiencing a spending “hangover” from all the Christmas buying and they are probably not in the mood to spend extra in the first month of the year.
As a business, you cannot afford to take a back seat — be the leader.
Till next week, may God richly bless you!
Shelter Chieza is an advisor in management issues. She can be contacted at [email protected]
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