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The recession is over

January 16, 2010 at 9:30 PM

profit.gifThe Recession is over: What does this mean for Small Businesses?

Although the UK is officially out of recession, conditions are likely to remain tough for many small businesses and, at Wow, we believe you  need to act quickly if you want to take advantage of the economic  change. We’ve put together 5 areas we think are important for small  businesses to focus on right now:

 

Your customers/clients

Your current customers might be happy with the service you provide,  but now that we are out of a recession people may start to look around  for a better deal. Research shows that even if a customer rates your  services 8 out of 10 they are still considered to be in the ‘corridor of average satisfaction’ and could potentially be tempted away by a competitor. Make sure you stay in regular contact with your  customers and try to find ways to give them more value and really exceed their expectations. Don’t confuse customer loyalty with  inertia or assume your customers are happy with the service you provide and therefore there is no room for improvement! There will always be  something you can do, no matter how small, that will add to the  perceived value of the products and services you provide. If you’re not  sure what more you could do for your customers, just ask them….. they  will often have loads of great ideas that you can implement right away.

Below are some quick tips on how to get more from your existing customers and contacts:

  • Go back to your existing customers and ask them for referrals (be specific if you can)!
  • Create a system for doing this regularly.
  • Survey them – find out what they really want. www.surveymonkey.com   is a great tool to help you do this.
  • Organise a client event, e.g. invite your top 6 clients for coffee and get feedback from them.
  • Grade your customers and make sure you spend more time with the best ones!
  • Stay in contact with them regularly and give them incentives to buy from you again.
  • Use the Wow Cross Selling Matrix to identify untapped opportunities within your client base. Request your copy by e-mailing info@thewowcompany.com 
  • Print out a list of your existing customers and go down it with  a marker pen looking for cross-selling and up-selling opportunities.
  • Go back through your diary for the last 2 years. Which sales  prospects could you phone up today to see if they are ready to buy  again?
  • Produce a list of everyone that has bought from you ever – who is worth a phone call, or a letter, or e-mail?

 

The Purpose of your business

Now is a good time to really evaluate the purpose of your business  and what you want it to achieve for you financially. Do you plan to sell your business to fund your retirement? Do you have other plans in place  to fund your retirement? How will you ensure your business is worth  enough? Are you building a family business that another family member  will eventually take over? Whether you have another 10 years  left working or another 30 years....you need to know the purpose of your  business and how it will help you achieve your lifetime goals.

You may find it useful to read our Financial Planning case studies to help with this:

The Busy Company Director 
The Company Director With No Spare Money
The Married Couple 


Improving Profitability

All small business owners know the importance of monitoring the bottom line and increasing profits and it has never been more important to keep an eye on cash and profit  than right now, especially as the usual sources of credit are much less willing to lend than they used to be.

When it comes to increasing profitability, there are all the usual  ways to do this, although many business owners often neglect to look  right underneath their noses and assess their current products and  services to ensure they stack up. When it comes to  profitability, what do you currently measure? Could you list your top 10 most profitable clients, or easily calculate the Gross Profit for each of your products? Do you measure profitability by job or project? What would it be useful for you to start measuring?

If you’re looking to generate increased profit in 2010 and want to  look at the impact increasing prices, selling more and reducing costs  will have on your profitability e-mail info@thewowcompany.com now to receive your free ‘Wow Profit Improver’ tool.


Added value from your suppliers

Are you getting good value from your suppliers and receiving the best possible service from them? We’ve outlined the 5 key areas of added  value that you can rate your suppliers against:

  • Proactivity: Are they proactive or do you need to chase them?
  • Accuracy: Does your supplier deliver what they say they will on time?
  • Communication: Do they contact you regularly to  ensure you’re satisfied with their service? Do you feel that you have a  relationship with them?
  • Transparency: Are you ever charged surprise fees?
  • Value: Do you feel you are getting value for your money?

 

Rate your suppliers: To find out if you  are getting real value from your suppliers, pick the supplier that has  the biggest overall impact upon the success of your business. Now rate  them out of 5 (with 5 being the highest) for each of the 5 Cornerstones  of added value, and add these scores up....

If you scored between 0 and 10 – We would recommend  you review the relationship with this supplier immediately. From the  score you’ve given, it doesn’t look like you are getting the best  service, or the best value for your business. If there are particular  issues you are not happy with, speak to your supplier first, before you  consider if you need to look for a new supplier. Clearly state the  issues you have and how you want these to be resolved. Business Link give some useful advice for picking the right supplier and reviewing your suppliers' performance, click here to read more.

If you scored between 11 and 18 – This isn’t a bad score, but it isn’t a great score either. In this economic climate you  really need to be working with suppliers who are delivering on each of  the 5 Cornerstones of Added Value. Speak to your supplier, raise the  issues you have with them. Find out more about building good relationships with suppliers here.

If you scored between 19 and 25 – Congratulations!  You seem to have a good supplier relationship and are getting good value from them. This is a relationship worth nurturing and we would  encourage you to continue to review your suppliers on an ad hoc basis,  to ensure you continue to benefit from such a positive service.


Sales

It's time to capitalise on the upturn in the economy, build momentum and generate increased sales. However, is selling your thing? You could be an engineer, IT guru, marketing expert or plumber, but that doesn't mean selling is your forte as well. The recession may have  forced you to re-evaluate the sales function within your business and  take on this responsibility yourself. If you’re not a natural sales person, get some sales training to brush up on the basics.



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