For those of you would prefer to listen rather than read, this show was originally broadcast on June 8, 2009 and you can listen to archived version at:
http://www.talkshoe.com/talkshoe/web/tscmd/tc/33960
MERCHANDISE ONLY OR STORE CREDIT FOR RETURNS, THE FOLLY!
Let’s talkfirstabout the difference between advertising, promotion, publicity, public relations and marketing.
There is a famous saying that illustrates these differences:
If the circus comes to town and you paint a sign that says- “Circus Coming to Fairground Saturday,” that’s advertising.
If you put a sign on the back of an elephant and walk him into town, that’s promotion.
If the elephant walks through the majors flowerbed, that’s publicity.
If you can get the major to laugh about it, that’s public relations.
And if you planned the elephants walk, that’s marketing.”
If the town’s citizens go to the circus, you show them the many entertainment booths, explain how much fun they’ll have spending money at the booths, answer their questions and ultimately, they spend a lot of money at the circus. THAT’S SALES!!!!!
I was inspired to do this particular show and interrupt my series on twitter because of an incident in a local store that happened to me this past week. Two weeks ago while walking in the Southside of Pittsburgh after dinner I found a delightful little store and was intrigued by the name. My female business associate and I decided to go in and check it out. On first glance it was a delightful store but for small women, actually perky teens and the adorable young women who stroll the club scenes at night in the Southside. Nothing in the store would fit us, but the costume jewelry was quirky, inexpensive and delightful. The shoes were a bit too high of a heel for us but the accessories were conversation pieces. The sales clerks were probably wondering what two senior citizens of such size and stature (to coin a phrase) were doing in their store.
I happen to love big, gaudy, unique, conversation starting jewelry and I have four nieces of the size that this store offers to buy for. So despite not fitting the profile for their perfect customer, I would have been a great one, but not now. Why you are asking if the store was so delightful?
Well let’s talk about the famous quote that I started out with, that’s advertising. The only advertisement that I have seen for this store is its unique name which caused us to go into the store in the first place, it’s location, which is simply real estate on the Main St of Southside, and its delightful contents once you get in the door. It’s great prices and unique contents contribute I am sure to word of mouth advertising. Remember, word of mouth advertising is great as long as it’s good. One satisfied customer will tell one, possibly two people but a dissatisfied customer will tell ten or more, statistical studies have proved this time and again.
Did I mention that I brought a delightfully gaudy pair of huge sunglasses that not only keep the sun out of my eyes but are great attention grabbers? I probably did not and perhaps will not because of my bad experience from the second purchase that I made that day. I found a wonderfully designed bracelet that I thought would be great for my son’s girlfriend’s birthday. It was a unique, eye catching piece of jewelry and I was delighted with my firnds. Sunglasses for me and a birthday gift for son’s gal. I was definitely coming back as these two delightful finds cost me less than $20.00. I am sure the owner was happy also because I paid in CASH. Now if the story had ended here that would be a great example of PROMOTION.
However, the story does not end here. I wore the sunglasse and everyone thought they were delightful but I only wore them once so far because they are hot pink and I don’t wear hot pink every day besides I have a great collection of sunglasses. But the bracelet did not suit my son’s girl because it was too large and it fell off her arm. So I tried it on, it fell off mine. Then we thought it might be an upper arm bracelet and had several people try it on, to no avail. This gorgeously designed bracelet had a design flaw.
So I took the bracelet, with the wonderful little jewelry tag on fine white string still attached and the receipt to the store and the bracelet was in the original bag. I had in mind to buy a great pair of bright yellow and rhinestone earrings that reminded me of the fifties, retro jewelry and I am sure I would have found several other gaudy pieces of “must have” jewelery. I was not prepared for the “PUBLIC RELATIONS ” fiasco that ensued. The beautiful young, size two sales clerk told me she would be glad to exchange the bracelet for store merchandise or store credit but that I could not get my money back. Now mind you, when I went into the store I did not ask for my money back, but she pointed to a sign 5 by 8 in a picture frame beside where she was standing on the counter and obscured by the same kind of delightfully gaudy flowers reminiscent of the delightfully gaudy jewelry, in good taste, considering the contents of the store. But nevertheless the sign was very small and not in plain view.
When the clerk told me this I became a little less of my normally diplomatic self as she was telling me that she had tried the bracelet on with the same challenge but unfortunately the store policy was, Merchandise Ony or Store Credi for Returns and it was prominently printed on the sales receipt. Excuse me, correct me if I am wrong but doesn’t the customer get the sales receipt after the shop owner has already received your hard earned money? Some really bad PUBLICITY now began.
I asked the young size two sales clerk to call the owner, told her I was unhappy and that I had a several radio shows and that I would love to talk about what a wonderful store this was. She called the owner the first time in front of me and neglected to say anything about the radio show. Mind you the store had several customers now because it was a peak time of day. So I had a “spritied” second discussion with the size two sales clerk and asked her to call the owner again. This time she went to the back room to avoid the eyes and ears of the customers in the store. I am sure she left out the part about the radio shows and told the owner this “fat woman” who would probably never buy again in the store was causing a scene in this quaint, small little shop.
She came back with the great news that the owner said that the store policy stands and another admonition that she would be glad to exchange the defective bracelet for something else or store credit. Well by now I was definitely tired of being pushed around by this young lady who was only do ing her job and left the store with the knowledge that this was some pretty bad “MARKETING” on the part of the stores owner.
Now mind you, how many people would come into the store at all if there were a prominent sign on the wall that said Merchanside Only or Store Credit for Returns?
Not too many, but how many more people would be turned on by 100% Satisfaction Guarnteed or Your Money Back.
Now I do understand the reasoning behind this policy because of the area and its demographics of young, hip chics with champagne tastes and beer pocket books, however, there are also people like me who would spend and some 250,000.00 condo owners who would spend also.
This blog post can be reproduced in its entirety with the following information:
© Joanne Quinn-Smith 2009, Monday Morning Marketeer™ 412-628-5048
Listen at: http://www.talkshoe.com/talkshoe/web/tscmd/tc/33960
Blog: http://www.marketingmondaymorning.blogspot.com
Or on its unique radio channel at:
http:www.positivelypittsburghlivemgazine.com
Joanne Quinn-Smith is the Creative Energy Officer of Dreamweaver Marketing Associates in Pittsburgh, Pennsylvania and an expert on Web 2.0 Branding.
Joanne has also been designated by the 2009 U.S. Small Business Administration as the Small Business Journalist of the Year for her work with information relevant to small business.
Follow at: https://twitter.com/monmornmarketer
Showing posts with label PittsburghMarketingCompany. Show all posts
Showing posts with label PittsburghMarketingCompany. Show all posts
Monday, June 8, 2009
Monday, March 30, 2009
MondayMorningMarketeer, Tough Times Evaluation for Your Sales Team
Blog—MMM 3-30-09 Tough Times Evaluation for Your Sales Force
In tough economic times a business owners needs to know the value and payback on every dollar paid out in the business including the money paid out to sales employees. So this is one of the areas that you need to closely examine as a business owner as your sales drive your revenue and revenue drives your profit.
Before you can evaluate the performance of your sales team, you must first analyze the components of sales performance. There is a simple, standard and accepted formula for analyzing the components of Performance.
Performance = Competence + Motivation + Opportunity
Each component is individually important. For instance a highly competent sales person or team that has no motivation is dead in the water and in these tough times if opportunity is not created, yes created, then all of the competence and motivation in the world will not end up in outstanding performance without opportunity. Here’s the catch though, a competent and motivated team will create its own opportunity no matter what.
After you evaluate the components of performance, evaluate the key measure of performance: sales results. After you complete all of your evaluations, you can take action for each sales representative. In a down economy results are king, it’s difficult to keep paying a highly competent, motivated sales team who creates opportunities but has a mediocre closing rate.
Appraise competence
Competence includes knowledge of your products, your sales processes and policies, your company, and your industry. It also extends to knowledge of your customers, their problems and opportunities, and their industry. Additionally, it includes a basic understanding of how business operates. Do not forget, however, that competence includes the basic knowledge of what I call the anatomy of a sale, how does it happen, what are buying signals, what does “no” mean and what makes turns a suspect into a prospect and a prospect into a valued client.
Evaluate Historical Knowledge
Depending on your industry, sales representatives might need to have a certain amount of knowledge in technology, finance, engineering, manufacturing, or human resources or any number of fields wherein your prospects lie. But the rainmakers in your organization will also research their individual targets and know as much as possible about the prospect before even calling on them or making the initial phone call. Many sales are won or lost in the initial contact, ignorance of important details about a prospect or company can be lethal.
Consider Sales Abilities
The second element of competence is sales abilities. These skills include:
• Knowing how to find new leads and qualify them in advance
• Knowing how to prepare for a sales call, what to bring, information needed about the prospect
• Knowing how to build rapport and trust with customers, often the sale is not made in the first
contact
• Knowing how to qualify prospects and assess their needs—never going in to pitch first without finding out the needs of the client, worst case scenario, beautiful pitch, prospect agrees with everything but has no need for product or service.
• Knowing how to write a proposal and deliver a sales presentation
• Knowing how to overcome objections and close the sale, most importantly knowing how to ask for the sale, well and often
When you evaluate representatives who manage key accounts, look at their skills in building relationships at multiple levels of the customer organization, managing change, communicating back into your company, influencing, negotiating, and thinking strategically.
Simple Guidelines for Sales Competency Appraisal
There are many complicated assessment tools and psychological profiles out there but this is after all gorilla Marketing, which means we are doing this on the cheap but also efficiently.
So here are some basic guidelines for your business evaluation of your sales team.
One star—operates like a newbie) Knows the names of all the products and can review features with customers from the product catalog or sales collateral. Don’t discount the novices, they make up for in enthusiasm what they lack in knowledge. A new broom often sweeps clean.
Two Stars—functions with competence Competent functioning requires that the two star sales person knows the names of all the products and can review features with customers from the product catalog or sales collateral. This Two Star Rep knows what’s going on in the world and can relate it to customer needs and benefits. . This representative can also demonstrate online products at a customer's desk and can answer a customer’s general questions about a product.
Three Stars—Functions Proficiently The Three Star Representative knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral. This representative can readily link current events and trends to a customers business and has a feel for the next big thing that will affect the customer. A Three Star Rep demonstrates online products at a customer's desktop and can answer more specific questions about the products.
Four Stars: An Expert Rainmaker The Four Star Representative knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral, if necessary. The Four Star Expert Rainmaker is good at defining trends early and creating sales opportunities out of them. . This Four Start Expert Rep can demonstrate online products at a customer's desktop and answers the most specific questions about the product without qualification or assistance.
Field Sales Call Shadowing
The most effective method of evaluating your sales team's competencies is to shadow them in the field and observe them in action. You need to know how they create relationships, demonstrate your product, deal with objections and their sales closing procedures. Use a competency assessment as a guide, and record what you see. Your representatives will appreciate the time you spend with them, and they will be much more likely to accept an on site, in person assessment and any constructive suggestions.
The Mystery of Motivation
Motivation is a self starting desire to succeed. It can come from within or from incentives.
Assessing your representatives' motivation is much more subjective than assessing their competencies. Observe them in the field and around the office, and note the following:
Examine opportunity
Opportunity is the availability of goals, territory, tools, products, and support.
Performance evaluation starts with you, the employer, the boss. To evaluate the opportunity component of performance, ask yourself the following questions:
Have you set the right sales strategy and goals?
Have you convinced your team that your goals are their goals?
Are territories clearly defined?
Do you have the right salespeople in the right territories?
Are your sales collateral and product demonstrations conducive to creating interest?
Does your sales team have marketable products fitting current economic trends and customer needs?
Are the products positioned, promoted, and priced effectively for the current market?
Do you make product training available and is it effective?
Do you create exciting promotions that will excite both your sales force and your clients?
Do you coach your representatives, help them in closing difficult deals? Do you create a winning attitude environment for them? The apple does not fall far from the tree!
Do you create effective sales incentive programs, partner with marketing to generate leads?
Do you augment the sales process with excellent fulfillment and Customer service?
Put a number on sales results
At this point, you have evaluated the competencies and motivation of your representatives. You have also considered the role that opportunity might have played in your representatives' performance. Now it is time to look at the most important measure of performance: sales results.
Metrics of sales performance against sales goals
The fairest way to evaluate sales results is to measure them against goals.
1. Keep track of whether your representatives achieve or exceed the goals that you set for them.
2. Do they achieve their own goals or even set them?
3. Be sure to set goals that support your sales strategy. If your growth strategy is to get more revenue from existing customers, it's a good idea that your sales representatives' individual goals state the source of the revenue.
4. Your evaluation measures might include a percentage of total revenues from existing customers, and an increase in revenues from existing customers compared with last year. You would not give much weight to any decline in the total number of accounts.
5. How about evaluating new accounts and lost accounts returned?
6. Measure sales results rather than sales activities
Be careful of the activity measures trap. If you measure sales activities (for example, number of calls or number of proposals), you get activity from your representatives, but it might be at the expense of results. Instead, measure results such as revenue, profit margins, number of new accounts opened, and increases over last year.
7. But in tough times, it’s important to also reward and evaluate activity because nothing happens until someone gets excited and gets out there..
BE Decisive, after all you are the boss!
After you complete your evaluations, use the following four categories to decide which action to take with each of your salespeople.
Top performers who are competent and motivated, you should keep and promote.
High potentials who are incompetent but motivated, if you can afford to keep, coach and train.
Underachievers who are competent and unmotivated, again if you can afford to keep and counsel, good employees are hard to find, perhaps you have a job better suited to them.
Unacceptable performers who are both incompetent and unmotivated, according to your budget you may chose to reassign to a non sales position but incompetent and unmotivated employees would only motivate me to dismiss them.
This blog post can be reproduced in its entirety with the following information:
© Joanne Quinn-Smith, Monday Morning Marketeer™ 412-628-5048
Listen at: http://www.talkshoe.com/talkshoe/web/tscmd/tc/33960
Blog: www.marketingmondaymorning.blogspot.com
Or on its unique radio channel at:
www.positivelypittsburghlivemgazine.com
This show was originally taped at Talk Shoe on Monday, 3-30-09
In tough economic times a business owners needs to know the value and payback on every dollar paid out in the business including the money paid out to sales employees. So this is one of the areas that you need to closely examine as a business owner as your sales drive your revenue and revenue drives your profit.
Before you can evaluate the performance of your sales team, you must first analyze the components of sales performance. There is a simple, standard and accepted formula for analyzing the components of Performance.
Performance = Competence + Motivation + Opportunity
Each component is individually important. For instance a highly competent sales person or team that has no motivation is dead in the water and in these tough times if opportunity is not created, yes created, then all of the competence and motivation in the world will not end up in outstanding performance without opportunity. Here’s the catch though, a competent and motivated team will create its own opportunity no matter what.
After you evaluate the components of performance, evaluate the key measure of performance: sales results. After you complete all of your evaluations, you can take action for each sales representative. In a down economy results are king, it’s difficult to keep paying a highly competent, motivated sales team who creates opportunities but has a mediocre closing rate.
Appraise competence
Competence includes knowledge of your products, your sales processes and policies, your company, and your industry. It also extends to knowledge of your customers, their problems and opportunities, and their industry. Additionally, it includes a basic understanding of how business operates. Do not forget, however, that competence includes the basic knowledge of what I call the anatomy of a sale, how does it happen, what are buying signals, what does “no” mean and what makes turns a suspect into a prospect and a prospect into a valued client.
Evaluate Historical Knowledge
Depending on your industry, sales representatives might need to have a certain amount of knowledge in technology, finance, engineering, manufacturing, or human resources or any number of fields wherein your prospects lie. But the rainmakers in your organization will also research their individual targets and know as much as possible about the prospect before even calling on them or making the initial phone call. Many sales are won or lost in the initial contact, ignorance of important details about a prospect or company can be lethal.
Consider Sales Abilities
The second element of competence is sales abilities. These skills include:
• Knowing how to find new leads and qualify them in advance
• Knowing how to prepare for a sales call, what to bring, information needed about the prospect
• Knowing how to build rapport and trust with customers, often the sale is not made in the first
contact
• Knowing how to qualify prospects and assess their needs—never going in to pitch first without finding out the needs of the client, worst case scenario, beautiful pitch, prospect agrees with everything but has no need for product or service.
• Knowing how to write a proposal and deliver a sales presentation
• Knowing how to overcome objections and close the sale, most importantly knowing how to ask for the sale, well and often
When you evaluate representatives who manage key accounts, look at their skills in building relationships at multiple levels of the customer organization, managing change, communicating back into your company, influencing, negotiating, and thinking strategically.
Simple Guidelines for Sales Competency Appraisal
There are many complicated assessment tools and psychological profiles out there but this is after all gorilla Marketing, which means we are doing this on the cheap but also efficiently.
So here are some basic guidelines for your business evaluation of your sales team.
One star—operates like a newbie) Knows the names of all the products and can review features with customers from the product catalog or sales collateral. Don’t discount the novices, they make up for in enthusiasm what they lack in knowledge. A new broom often sweeps clean.
Two Stars—functions with competence Competent functioning requires that the two star sales person knows the names of all the products and can review features with customers from the product catalog or sales collateral. This Two Star Rep knows what’s going on in the world and can relate it to customer needs and benefits. . This representative can also demonstrate online products at a customer's desk and can answer a customer’s general questions about a product.
Three Stars—Functions Proficiently The Three Star Representative knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral. This representative can readily link current events and trends to a customers business and has a feel for the next big thing that will affect the customer. A Three Star Rep demonstrates online products at a customer's desktop and can answer more specific questions about the products.
Four Stars: An Expert Rainmaker The Four Star Representative knows the names of all the products and can review features with customers without the assistance of the product catalog or sales collateral, if necessary. The Four Star Expert Rainmaker is good at defining trends early and creating sales opportunities out of them. . This Four Start Expert Rep can demonstrate online products at a customer's desktop and answers the most specific questions about the product without qualification or assistance.
Field Sales Call Shadowing
The most effective method of evaluating your sales team's competencies is to shadow them in the field and observe them in action. You need to know how they create relationships, demonstrate your product, deal with objections and their sales closing procedures. Use a competency assessment as a guide, and record what you see. Your representatives will appreciate the time you spend with them, and they will be much more likely to accept an on site, in person assessment and any constructive suggestions.
The Mystery of Motivation
Motivation is a self starting desire to succeed. It can come from within or from incentives.
Assessing your representatives' motivation is much more subjective than assessing their competencies. Observe them in the field and around the office, and note the following:
Are they giving 100 percent effort?
Do they have a positive attitude?
Do they understand the numbers, that it takes a certain amount of “nos” to get to the "yeses."
Do they enjoy interacting with your customers and creating concerned relationships?
Do they celebrate their sales successes because they know they are worthy of both success and praise?
Do they closely track their sales results and commissions earned? Are they constantly seeking to outdo themselves, they should be their own best competition?
Do they hit the ground running and enjoy getting out in the field or on the phone?
Does every new day of selling provide an exciting opportunity for them?
Also look at past performance. A decline in performance might indicate a motivation issue rather than a competency issue.
Examine opportunity
Opportunity is the availability of goals, territory, tools, products, and support.
Performance evaluation starts with you, the employer, the boss. To evaluate the opportunity component of performance, ask yourself the following questions:
Have you set the right sales strategy and goals?
Have you convinced your team that your goals are their goals?
Are territories clearly defined?
Do you have the right salespeople in the right territories?
Are your sales collateral and product demonstrations conducive to creating interest?
Does your sales team have marketable products fitting current economic trends and customer needs?
Are the products positioned, promoted, and priced effectively for the current market?
Do you make product training available and is it effective?
Do you create exciting promotions that will excite both your sales force and your clients?
Do you coach your representatives, help them in closing difficult deals? Do you create a winning attitude environment for them? The apple does not fall far from the tree!
Do you create effective sales incentive programs, partner with marketing to generate leads?
Do you augment the sales process with excellent fulfillment and Customer service?
Put a number on sales results
At this point, you have evaluated the competencies and motivation of your representatives. You have also considered the role that opportunity might have played in your representatives' performance. Now it is time to look at the most important measure of performance: sales results.
Metrics of sales performance against sales goals
The fairest way to evaluate sales results is to measure them against goals.
1. Keep track of whether your representatives achieve or exceed the goals that you set for them.
2. Do they achieve their own goals or even set them?
3. Be sure to set goals that support your sales strategy. If your growth strategy is to get more revenue from existing customers, it's a good idea that your sales representatives' individual goals state the source of the revenue.
4. Your evaluation measures might include a percentage of total revenues from existing customers, and an increase in revenues from existing customers compared with last year. You would not give much weight to any decline in the total number of accounts.
5. How about evaluating new accounts and lost accounts returned?
6. Measure sales results rather than sales activities
Be careful of the activity measures trap. If you measure sales activities (for example, number of calls or number of proposals), you get activity from your representatives, but it might be at the expense of results. Instead, measure results such as revenue, profit margins, number of new accounts opened, and increases over last year.
7. But in tough times, it’s important to also reward and evaluate activity because nothing happens until someone gets excited and gets out there..
BE Decisive, after all you are the boss!
After you complete your evaluations, use the following four categories to decide which action to take with each of your salespeople.
Top performers who are competent and motivated, you should keep and promote.
High potentials who are incompetent but motivated, if you can afford to keep, coach and train.
Underachievers who are competent and unmotivated, again if you can afford to keep and counsel, good employees are hard to find, perhaps you have a job better suited to them.
Unacceptable performers who are both incompetent and unmotivated, according to your budget you may chose to reassign to a non sales position but incompetent and unmotivated employees would only motivate me to dismiss them.
This blog post can be reproduced in its entirety with the following information:
© Joanne Quinn-Smith, Monday Morning Marketeer™ 412-628-5048
Listen at: http://www.talkshoe.com/talkshoe/web/tscmd/tc/33960
Blog: www.marketingmondaymorning.blogspot.com
Or on its unique radio channel at:
www.positivelypittsburghlivemgazine.com
This show was originally taped at Talk Shoe on Monday, 3-30-09
Sunday, November 16, 2008
Survival Tips for Entrepreneurs
Survival Tips for Entrepreneurs:
This Show was recorded live at www.talkshoe.com on October 27, 2008. Arcived version can be hear at: www.talkshoe.com or www.positivelypittsburghlivemagazine.com
If you think you are being affected by the current economic downturn and you are concerned about your business survival you are not alone. Please don’t blame the current administration government as in case you have not noticed, this is worldwide.
If you're affected, experts say there are a variety of ways to cope with the situation:
* Stay on top of sending your invoices on time to ensure your revenue returns are timely.
* Make sure your accounts all are federally insured.
* Prioritize your payments – not just for this month, but for several months out. Negotiate as many as you can.
* Ask new clients for some upfront payments – a third now, a third at a determined date, and a third upon completion.
* Step up networking as a key and inexpensive way to boost marketing, which is key in a tightening economy.
* Maximize all of the time allowed on your payables.
* Offer discounts – but be sure you know the ultimate cost, and don't appear desperate.
Following is an article from Small Business.com:
Five Survival Tips for Entrepreneurs
By DIANA RANSOM
From smSmallBusiness.com
What do you do when sales are down and your credit's been slashed? You rethink your business. Because of the ongoing credit crisis, banks are becoming even more reluctant to extend lines of credit to small-business owners. And the sluggish conditions aren't expected to improve any time soon. That means business owners who rely on banks to finance everything from inventory and office equipment purchases to new store expansions are left scrambling for ways to stay afloat without a lifeline.
"Now's the time to make tough decisions," says George Cloutier, chief executive at American Management Services, a small-business consulting firm in Orlando, Fla.
Cutting costs can help free up much needed cash flow during a crunch, but when the economy is expected to stay down indefinitely, more dramatic measures may be in order, he says.
Here are five tactics to help keep your dwindling business capital flowing:
Slash Expenses
Streamlining your business can help you stay in the black even when customers make fewer purchases. Be sure to call in overdue accounts receivables, sell off unsold inventory and analyze expenses such as office space, supplies and even your company's phone bills.
"Cut your costs viciously," says Cloutier. For instance, if you're long-time delivery vendor isn't fulfilling orders on time and it's costing you money, cut them loose. The same is true for employees who aren't pulling their weight. You might even need to do away with some benefits. While having to let go of a trusted staff member or business partner is never ideal, when the economy sinks, business owners need to make tough calls.
Eliminate Unprofitable Operations
Consider spinning off unprofitable business segments, suggests Victor Cheng, a small-business consultant in San Francisco. "Focusing on your core business"—especially if your other divisions are losing money—will serve you in a downturn, he says. To help you figure out what's working and what's not; schedule an appraisal of your business's operations.
Seek Alternative Funding
Some business owners take on a second job. Others use consulting to pad their wallets. One thing is for certain: If you're relying on a credit line to float your business until, say, after the holidays, now's the time to create a backup plan. "Don't assume that line of credit will be there," says Cheng. "If you are in that kind of situation, you either have to have a back up financing source or back up revenue source."
Embrace Incentives
As the nation's unemployment rate ticks up, business owners should think about restructuring their company's compensation, says Dave Waddell, president of Waddell & Associates, an investment firm in Memphis, Tenn. He suggests linking more employee pay to variable incentives such as commissions, which are payments linked to specific sales targets. For instance, if 20% of an employee's compensation stems from commissions, make it 50%. While commissions generally work well for sales staff, linking bonuses and other financial incentives to a company's performance is another compensation technique, which generally goes for everyone. "If employees hit goals for the firm, the firm is going to do well even in tough times," says Waddell.
Cut Production Costs
"The only way to make it through a recession is to be a low-cost producer," says Bob Prosen, a small business management consultant in Dallas. Think about it this way: Inefficient competitors can survive for a time at their current cost structures, but in the end, they'll have to either raise prices or go out of business. In contrast, a low-cost producer may try lowering prices to attract added sales, says Prosen. "You're better off taking a little less profit to keep the business going."
This Show was recorded live at www.talkshoe.com on October 27, 2008. Arcived version can be hear at: www.talkshoe.com or www.positivelypittsburghlivemagazine.com
If you think you are being affected by the current economic downturn and you are concerned about your business survival you are not alone. Please don’t blame the current administration government as in case you have not noticed, this is worldwide.
If you're affected, experts say there are a variety of ways to cope with the situation:
* Stay on top of sending your invoices on time to ensure your revenue returns are timely.
* Make sure your accounts all are federally insured.
* Prioritize your payments – not just for this month, but for several months out. Negotiate as many as you can.
* Ask new clients for some upfront payments – a third now, a third at a determined date, and a third upon completion.
* Step up networking as a key and inexpensive way to boost marketing, which is key in a tightening economy.
* Maximize all of the time allowed on your payables.
* Offer discounts – but be sure you know the ultimate cost, and don't appear desperate.
Following is an article from Small Business.com:
Five Survival Tips for Entrepreneurs
By DIANA RANSOM
From smSmallBusiness.com
What do you do when sales are down and your credit's been slashed? You rethink your business. Because of the ongoing credit crisis, banks are becoming even more reluctant to extend lines of credit to small-business owners. And the sluggish conditions aren't expected to improve any time soon. That means business owners who rely on banks to finance everything from inventory and office equipment purchases to new store expansions are left scrambling for ways to stay afloat without a lifeline.
"Now's the time to make tough decisions," says George Cloutier, chief executive at American Management Services, a small-business consulting firm in Orlando, Fla.
Cutting costs can help free up much needed cash flow during a crunch, but when the economy is expected to stay down indefinitely, more dramatic measures may be in order, he says.
Here are five tactics to help keep your dwindling business capital flowing:
Slash Expenses
Streamlining your business can help you stay in the black even when customers make fewer purchases. Be sure to call in overdue accounts receivables, sell off unsold inventory and analyze expenses such as office space, supplies and even your company's phone bills.
"Cut your costs viciously," says Cloutier. For instance, if you're long-time delivery vendor isn't fulfilling orders on time and it's costing you money, cut them loose. The same is true for employees who aren't pulling their weight. You might even need to do away with some benefits. While having to let go of a trusted staff member or business partner is never ideal, when the economy sinks, business owners need to make tough calls.
Eliminate Unprofitable Operations
Consider spinning off unprofitable business segments, suggests Victor Cheng, a small-business consultant in San Francisco. "Focusing on your core business"—especially if your other divisions are losing money—will serve you in a downturn, he says. To help you figure out what's working and what's not; schedule an appraisal of your business's operations.
Seek Alternative Funding
Some business owners take on a second job. Others use consulting to pad their wallets. One thing is for certain: If you're relying on a credit line to float your business until, say, after the holidays, now's the time to create a backup plan. "Don't assume that line of credit will be there," says Cheng. "If you are in that kind of situation, you either have to have a back up financing source or back up revenue source."
Embrace Incentives
As the nation's unemployment rate ticks up, business owners should think about restructuring their company's compensation, says Dave Waddell, president of Waddell & Associates, an investment firm in Memphis, Tenn. He suggests linking more employee pay to variable incentives such as commissions, which are payments linked to specific sales targets. For instance, if 20% of an employee's compensation stems from commissions, make it 50%. While commissions generally work well for sales staff, linking bonuses and other financial incentives to a company's performance is another compensation technique, which generally goes for everyone. "If employees hit goals for the firm, the firm is going to do well even in tough times," says Waddell.
Cut Production Costs
"The only way to make it through a recession is to be a low-cost producer," says Bob Prosen, a small business management consultant in Dallas. Think about it this way: Inefficient competitors can survive for a time at their current cost structures, but in the end, they'll have to either raise prices or go out of business. In contrast, a low-cost producer may try lowering prices to attract added sales, says Prosen. "You're better off taking a little less profit to keep the business going."
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