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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 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:
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
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 firstname.lastname@example.org now to receive your free ‘Wow Profit Improver’ tool.
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:
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.
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.