Imagine how Google would go about organising your business’ administration. What about if the team…
Want to Grow Your Business? Start by Firing Your Clients and Dropping Your Products
What? Did I just read that right? Did you just say grow your business by loosing both customers and products? Yes you heard right. That is what I said.
I believe that you can grow your business by loosing customers and by selling less. Crazy I know, and I must admit it takes a lot of all kinds of crazy to do it but I have seen it work time and time again.
Let me explain, if you are a Small Business person you know what a demanding life it can be. Often, you are too busy running the business to stop and take time to look over the business. You get into the trap of always doing what you have always done but rarely do you take time to analyse your business.
You assume that if turnover is up then that is good, profit will follow. But sadly this is not always the case. By analysing your business you will identify your most profitable customers and your most profitable product lines. Then it is quite obvious what you need to cull. Yep that’s right the unprofitable customers and the unprofitable products. To do this we need to look deep into your sales reports to see who is buying what, how much are they spending and how much profit are you making.
Lets start with your customers…
Print out a list of customers in order of what they spend. Start at the bottom and work up. Do you recognise any of the names straight away. You know the ones who are always calling to make enquiry yet rarely spend; they demand discounts, they don’t pay on time and they are always complaining and returning product. Dump them!
I know the customer is always right but sometimes there are customers that you don’t want. These are the customers that are costing you in time and money servicing them. I bet if you look at the top of your list you will see customers who buy a greater volume and as such probably deserve a discount but never ask. They pay on time and order without being prompted from you.
What if, because you have dumped your time wasting customers you now have time to better service your higher spending customers, what a difference that would make for your business. In no time at all you would make up the sales of those dumped customers. Spend time with your higher spending customers; value them and find ways to service them better by selling them what they need when they need it.
You don’t have to be everything to everyone you are in business to make money. Identify your top 10; 20 or even 50 customers, value them, service them well, upsell to them and before you know it both your turnover and your profit will increase.
Now let’s take a look at your products…
But as you know turnover alone does not increase your bottom line, you need to look at the profitability of your product range. When was the last time you looked over each item on your stock list or menu and worked out what it really cost you to have it there. Make sure you have the correct markup on it to sell it at a profit that covers more than just the expenses of your business.
But profitable items alone are not enough. An item can be profitable but if it sits on your shelf for six months and you need to discount it to sell it, well clearly it is less profitable than you think. The next step is too look at how many of each product you are selling. Do the same as we did above. Print out a list of all your products in order of most sold to least sold. In particular look at the bottom of the list and drop at least 10 items more if you can. Clearly your customers are not buying them so they won’t miss them if they are not there.
Now you can see why loosing some customers and product lines actually grows your business. Taking the time to analyse your business pays dividends. Figures never lie. Use the data that is contained in your Point of Sale to make the decisions that will improve your profitability and grow your profit which in essence grows your business. This is how loosing both clients and products can be a growth strategy.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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