Profit Planning Revs Up Results
It was a smart move, that so many of you slowed hiring and capital spending while inventories dwindled, according to NFIB’s Small Business Economic Trends - January 2009.
By Jerry Glenn, SCORE District Director
It was a smart move, that so many of you slowed hiring and capital spending while inventories dwindled, according to NFIB’s Small Business Economic Trends - January 2009. Profits are impacted by overhead and your quick response to rein in costs is a big help in weathering a recession that still has months for us to work through. It takes time for the economy to improve that’s true. But, if you wait it out with no strategy, you could miss out on future opportunities. You can profit even in a recession it just takes a step back to:
- Focus your mind.
- Redefine your plan.
- Seek out opportunities.
- Dedicate yourself to client retention.
- Surround yourself with supporters.
Now is a good time to revisit your business plan, which may not have been updated since you initially developed it. Don’t get bogged down in the document. Ask your self the following questions:
- Has my customer base changed?
- Has my product/service offering changed?
- How often/how many new customers have I obtained in the last year?
- Do I have new competitors? Who?
- Do I have more/fewer competitors? Why?
- What are the current competitive threats to my business?
It is never a good idea to cut your price, even in tough economic times. If you do cut your prices, only do it for a limited time encouraging customers to “act now.” This should be a last resort effort. Look at two large retailers Home Depot and Macy’s. Both had sales and profit declines in the fourth quarter of 2008, but Home Depot’s results were much better than Macy’s “because [they] held margins by not cutting the price,” while Macy’s had terrible results due to across the board price cuts.
Look for businesses that you can partner with to cross-promote your products and services while sharing the costs. For example, a laundry mat offers free detergent with each washer load and the free detergent is paid for by both the owner of the laundry mat and the supplier of the detergent. The price was not reduced, but there is a unique incentive for the customer with a specific start and end date, which will get the customer to “act now.”
Profit with sales this year. Explore new markets, new prospects and new products and pitches. This year, the three Ps of marketing your business are: prospects, products and pitches. All three may need to change a bit to get you to a profitable year.
You can do it. Surround yourself with mentors who you can talk to plan for success. It’s amazing the difference it makes just talking through your ideas. Think of planning as preparing yourself for success with a clear profit picture in mind.
As you review your business plan, ask yourself where else you can sell your product or service. Go back to those customers who have not bought from you in a while. Have a compelling reason for them to buy from you now, such as improved service, different products or greater customer satisfaction just to name a few. Does it make sense to enter new geographic markets? Have any competitors in that market left or ‘retrenched, waiting for better times?
Update Your Offerings
After reviewing your business plan is it necessary to change or update your product or service offering? Will product or service changes or additions allow you to sell more to your existing customers? An “update” here could mean a redesign of your web site, starting a blog, joining a social network. Essentially any way you can expand your reach to potential customers. The reason newspapers across the country are closing is due to lack of readership. People are moving to the internet for their news and information…and to find your business!
Improve Your Pitch
Thoroughly understand your product and service and why someone should buy it from you. Use written testimonials from some of your satisfied customers.
- Tell your story in five minutes or less.
- Use demos to illustrate your story.
- Practice to perfect your pitch “before” the sales call.
- Listen well. Ask questions & really listen to the client’s needs and concerns.
The bottom line is practice makes perfect. Be a dedicated practitioner in client connection. You are the owner. Your time, care and connection in the sales process will bring results. In these times, you can be tenacious & focus on seeking out new opportunities.
Meet with a SCORE mentor to review your updated sales plan. You might even practice your sales story with him or her as well.
Jerry Glenn is the past president and CEO of Armstrong DLW Flooring. He has served in sales and executive management roles, growing sales and profits in a multi-million dollar enterprise. He is a District Director with SCORE Lancaster in Pennsylvania.