Your business and lockdown
Almost all businesses will be affected at all stages of the Coronavirus lockdown. Some will suffer greatly, being unable to do any business for an extended period while others will be touched lightly or even benefit from the lockdown. Wherever you are on the scale it is likely that many things will change, some forever. We have been told many times that this is a time to think and plan, to develop strategies for a new online world, to consider what working at home means and many similar bits of advice. But how exactly? What sort of planning? What strategies do they mean? The average SME entrepreneur, business ownership is a lot more operational than strategic, we may not even have a written strategy. We work on opportunity, but suddenly there are no opportunities. What now? So here are a few things you can think about to get ready for a new world after lockdown.
First consider your products and services.
Ask yourself the hard questions; are they really good enough? Do they need updating? Are they still appropriate to today’s changed world? Do I need to make or acquire new or additional products? Are there old favorites that we should have killed years ago but keep making because we cannot bear to get rid of them? You have priceless time to check competitors’ websites and product information to see how you stack up – use the time well, instead of wasting time in useless online meetings to check up on everyone. Then research what the market is asking for. Many companies switched production to make PPE or ventilators during this time. See what you can innovate that people need in this new world then plan to produce or acquire it. Very few product ranges are perfect, almost all could use some new thinking, now is your chance.
Another issue to think about is your pricing.
Most of us will use cost plus a markup and then tweak the result if that calculation makes us uncompetitive. You can do better than this. Even if you stay with the cost plus model, how sure are you that the cost is accurate? Very few businesses have the luxury of actual direct cost including transport, quality checks and everything that should go in there. To most, cost is a formula based on some kind of averaging. When last did you check this? And if your formula is right, is this the best cost price you can get without sacrificing quality and delivery reliability? Suppliers will be hungry for sales and cash now – this is a good time to renegotiate prices. Consider the markup, where did it come from? What is the logic behind it and when was it last reviewed, if ever? Is it a round number like 50%? If so, why that number? Why not 51% which would give more margin while only minutely changing the price. Pricing is one of the most underutilized tools of being competitive and profitable. This is a good time to learn pricing theory and apply some logic to your pricing.
A third issue you should consider is your customers.
Do the basic information gathering. How many are there? How many new customers last year? How many have not bought for 6 months, one year, more than a year? How many did you have to part company with because they did not pay, or were abusive? Retaining one good customer is more valuable than securing a good new customer. No admin costs, you know their buying patterns so you can forecast accurately, you have a relationship and they trust you. Why do we put so much effort onto developing new business which not even knowing how many customers we lose each year? A good classification of customers would be something like:
- Regular – buy frequently and pay well
- Super – large buyers, very demanding, good payers, high volumes
- Single product – buy only one product from our range but buy regularly (could you sell them on the rest of your range?)
- One time – single purchase, never came back
- Irregular – buy some volume at irregular intervals (you may be only their alternative source of supply)
- Occasional – buy the odd product or service from us (could you convert them to become regulars?)
- Dormant – have not bought for a while
Then devise plans to keep and grow each category. Retention and growth of the customer case is the simplest, least costly and usually most effective form of marketing. Many businesses have grown appreciably by only working their customer base effectively.
All of the above can be done from your home during lockdown and could make the difference between growing and failing by the start of the rush when restrictions ease.
For more information, contact:
Tel: 011 894 7618
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