Three weeks in and we seem to be repeating some of the basic lessons of business, but let’s face it how many businesses do because we get on the hamster wheel of ‘busyness’? The beauty with so many of these little costly errors are that they are all very simple to put right and stop. That does not mean they are easy and often it will take some patience, some learning and a change in habits.
This week I would like to highlight 3 areas that are easy to miss and simple to fix.
- Know Your Margins.
- Sales Skills.
- Production System.
1. Know Your Margins
The boys team really struggled to get their heads around this with the sales strategy the adopted. This is particularly appropriate for the team that was selling to the trade because they did not know how much they could negotiate profitably which caused them to lose a least one good sale. It is so crucial to know your break-even point for your products and services so that when you have to negotiate with a buyer you are doing so from a position of strength. If you don’t know how to calculate your true break-even point for each product then you need to talk to a specialist, for example your accountant who will help you to understand the crucial ratios for your business.
2. Sales Skills
The key to the success of any business, in fact anything you want to achieve in life is your sales skills. I don’t hold with the ‘He/She was a born sales person’ line because I have never seen a hospital ward where the babies were labelled ‘ Sales Person, Banker, IT specialist, coach, etc’ every time I have been on a maternity ward the only labels are the babies names. Actually we are all born selling and spend the rest of our lives selling; we are selling ideas, opinions, ourselves (to potential partners and friends), a well as selling products and services to clients. The difference in most people’s heads is that selling products and services means we may need to ask for money at the end of it and I think that is the challenge people have, not selling. There are hundreds of books and courses on ‘Selling’ and ‘How to Sell’ and I think that everyone in business should have read at least one, the important question though is which one. That all depends on how you learn, what sort of style of relationship you like building and what sort of personality you have. A lot of people I suggest books to complain that they are ‘too American’, but the information is valid you need to pick the important lessons which hold true no matter which country you are from. If the sub team on the losing side had a few more sales skills they would have sold the remaining stock at the price they needed.
3. Production System
The really criminal element of failure for the losing team was having poor production and not being able to produce the required amount of product. To create a system is really simple, the first thing you do is to write down what should happen, in what order and by who. Worldwide businesses and franchises are built on the simplicity of a system, Micheal Gerber in his must read book ‘The E-Myth Revisited’ talks about systemising the business so that it can run smoothly and so that anyone can do the task repeatedly with the same results. The problem that the mens team had was that there was no system, no responsibilities allocated and worst of all no basic recipe to follow. The first system that anyone preparing food should have is a recipe, the beauty of this is that anyone can prepare the dish again if they follow the recipe. Millions have been made by chefs and cooks the world over because they sell their recipe books for the likes of you and I to read and follow. The great ones are the ones that we follow to the letter and produce food of the highest quality, I have been doing that myself recently with a Ken Hom Chinese Cookery Book with surprisingly good results which I am very proud of. The massive benefit to be gained from writing down the repetitive tasks in the business, apart from the fact that anyone should be able to follow the system, is that the human brain is always looking for ways to improve things. This is because if it doesn’t have to think how to do something due to it being written down it can focus on making it better. Now in your business that could mean financial improvements, time improvements or even ways to improve the the business as a whole, there is no end to what can be achieved when the mind is free from trying to work out what to do.
A little preparation and planning to get the production correct, understand the correct margins would have paid off handsomely for the losing team this week, please do not let this be your business any time in the future or even now. We often talk to business owners who don’t know their margins, have no systems for running their business and most interestingly claim ‘They are not Sales People’. I know from experience that if you are not getting these basics right, improving your sales skills by learning then all of a sudden it is not the MP Growth side of our business that is required it is the experts at Marshman Price that are needed because it is last chance saloon.