Solomon Bruce Consulting Blog

Wednesday, March 23, 2011

Your Employee-- your most valuable asset

   In any business endeavor, profit, non-profit, government, big business, small business, family business, your employee(s) are the most valuable asset that you have.  Without your employees, your business is worthless-- you cannot do it all yourself-- if you did, you would be dead!
    I am familiar with a business that has several owners.  Each owner owns a different percentage of the business, with no one having a controlling interest.  Now, that model is bad, however, that is the topic of another blog entry!  In this particular business, a key employee was hired that had specific and expert domain knowledge in the particular industry.  The key employee took a failing operation and within six months, had all of the wheels turning in the same direction leading the business to profitability.
    Sadly, the key employee told the owners that the business needed some new equipment in order to maintain a competitive posture.  Well, the owners could not collectively decide what to do, whether to support the key employee or do nothing.  Nothing happened-- the equipment was not purchased and the business improvements were not made.  Interestingly, this happened several more times, all with the same result.  Finally, the key employee said that he could no longer work there, found a new position that paid significantly more money and left.  The business was shut down, the owners did not have the expertise or additional capital to continue to run a floundering operation.
    Employees make your operation run.  Listening to your employees is critical to the success of any business.  Now, I am not saying that the employee is always right or has the best ideas.  What I am saying is when the employee tells you something, asks you something or proffers new ideas, listening to what he/she has to say is well worth it.  You will not only learn something, but gain a better appreciation and understanding of how your employee thinks and how he/she is helping to improve your business.
    Listening to your employees is critical to business success!

Monday, March 21, 2011

Same stuff, nothing new!

  I was in a new coffee shop the other day and asked the clerk what was for lunch.  The answer I received is the title to the article!  Wow-- I thought, somebody needs to help train this individual better.
  Interestingly, it was 1150 in the morning when I was in the coffee shop, just about lunch time.  I had provided the "buying signal"-- "What is for lunch" when I asked my question.  Now, the astute clerk would have told me what the soup special was, how the sandwich was prepared and why I wanted to eat there.  Unfortunately, none of that happened!  I ended up getting glass of ice tea, having my meeting and going down the street for lunch.
   I have addressed staff training many times in this blog.  Staff training is one of the most significant facets of owning a business-- irrespective of size.  With a small business, the staff training element is much more critical than with a Fortune 10 size company.  Why?  Well, at the Fortune 10 size company, there is enough duplication of staff that someone else can fix a mistake.  In a small 6 person business, everyone must know what the business does, what the customer wants and how you can always increase sales to address enhanced profitability.
    The example I posed above is applicable to everyone, business size makes no difference!  In this case, the clerk did not think about how to "upsell" me, keep me in the establishment or try and get me to increase my buying desire.
    If you run a business, check out how your staff sells your product, irrespective of  product type.  What you may learn may surprise you.  What you learn will provide you with sufficient "grist" to have a staff training session to refresh staff members on how to sell your products.

Wednesday, March 9, 2011

Why Do I need YOU-- A "Service" Professional?

  A friend of mine is getting married soon.  She calls several travel agents wanting help in planning her honeymoon.  Now, this lady is an experienced traveller, she has been all over the world and knows how to travel.  3 weeks of phone calls, voice mail hell, emails that never get answered and finally going to the travel agent's office results in, "I am going to be gone next week, however, I will try and get you something before I leave."
    My friend was looking for travel and event options while on her honeymoon.  Sadly, she had to find all of the travel and event options by herself, the "service professional" could not come up with unique and creative solutions for her.
   Another friend has taken a job transfer out of town.  He called a couple of professional realtors to seek assistance selling his home.  Interestingly, he experienced the same run a round-- calls placed, voice mail hell, emails not answered, go to the office of the realtor and be told that "I was just going to call you-- I have been real busy."  Interestingly, after he visited with the realtor he was recommended to visit with, he left feeling that "this does not feel right."  My question was, "What does not feel right?"  Well, the answer was that my house should be priced about $30,000 lower than others in the neighborhood so that it could be sold rapidly.  Again, this friend is a smart guy that has owned several houses and other properties.  He felt that he was not being taken care of properly.
    As a service professional-- and are we not all service professionals-- if we don't help answer the client's questions and concerns, why does the client need to seek our assistance.  In both of the above mentioned examples---which, trust me, are as true as night, service professionals "dropped the ball" in trying to provide service.
    In today's world, you only get one chance to fulfill a service request.  If you fail to answer the customer's question, you won't get another opportunity.  Competition is too great and time if too fleeting to fiddle around.
    Think about how you handled your last service request from a customer.  If you did not make that client "Job 1", you lost the client, lost the contract and lost the opportunity to grow your business.

Tuesday, March 1, 2011

What is Your Break Even Point?

   One of the most fundamental but often times least understood financial principles of business operation is the concept of the break even point.  Simply stated, the break even point is the point where your sales equal your expenses.  Once you have achieved your break even point, then you should be making a profit on each additional product sold.
    Let's take a simple example.  Let's assume that we have fixed costs as follows:
                Rent= $500/month
               Utilities= $200/month
                Telephone-= $200/month
                 Insurance= $100/month
                 Salaries= $1000/month

                Total Fixed Expenses= $2000/month

    Let's assume that we sell a widget that costs us $2 each to manufacture.  We sell the widget for $7/ each, making us a profit of $5/widget.  How many widgets must we sell before we reach break even?

     Well, the answer is 400!  How did we get that?  Well, we know our fixed expenses are $2000.  We make $5/widget, so we divide our total fixed expenses ($2000) by the profit contribution of each widget ($5) to get 400 widgets.  We check our work, $ 5 X 400= $2000!!!

       So, we must sell 400 widgets before we begin making any profit for the month, assuming our production schedule is calculated in months.  Let's keep this simple-- we can add a whole plethora of wrinkles to this, however, for our example we now know that we have to sell 400 widgets before we make a profit.  If we can make 50  widgets a day, then it will take us 8 days before we begin making any profit. 
       Now, if the widgets do not sell as rapidly as we predicted, it may take us longer in the month before we "turn a profit."  This is why it is very important to know your break even point-- you know how much you have to sell before you are making money.  Of course, we would not want to continue making widgets every day, building a large inventory if the product is not selling-- that is the theme of another full article!
      Calculate your break even point-- when you know that, you then know what you have to do before you begin making a profit.  After all, is that not we are in business for, to make a profit?

Do You Know What Your Market is Doing?

   In the past several weeks, we have worked with several clients that experience difficulty with defining their market.  What we mean in market definition is where are your products being sold?  OK, this is not tough, however, does require some thought.
    Let us use a simple example to explain the concept.  Let's say that you make and bake bread.  Let's further identify that you make 3 different types of bread, white, whole wheat and rye bread.  Now, I am interested in knowing how much of each type of bread is being sold, where it is being sold, how it is being sold (by the loaf or in packages), if people come into the bakery to buy it or we sell it through the distribution system.
    As you can readily see, what appeared to be a simple example of selling bread has become a 3X4 factorial problem.  Don't get excited about the technical terms-- what is important is that we need to know how much of each type of bread we make and sell every day.  We want to know where it is being sold-- here in town, or at the super markets across the state.  We want to know if people just a loaf or two, or buy several packages.  Why is this important?  Well, that is a great question!  Here is the answer-- once we know what the customer is buying, how he/she is buying it, where they are buying it, we are then able to adapt and adjust our manufacturing processes to accomodate the customer demand.  Ok, your next question-- why is that important?  Well, when we know the answers to the questions posited above, we are then able to adjust our baking process to insure that we have plenty of the right kind of product at the right place at the right time.
    There is no reason to bake a whole rack (180) loaves of rye bread when the data tells us that we only sell 12 loaves of rye bread each week!  Conversely, if we only bake 12 loaves of white bread and the data tells us that customers want more white bread, our production processes are out of alignment-- and we are loosing sales.
    It makes no difference if you bake bread, manufacture gears or cook jelly-- what is important is what does the customer demand, how does he/she demand it, where do they demand it and how are you fulfilling that customer demand?  If you don't have the systems in place to address these questions, you will never be able to fulfill your customer expectations!  This is not complicated or hard-- however, once you have these systems in place, you are in a much better position to be able to fulfill your customer demand.
    Another benefit of having these systems in place is to be able to adjust your production schedule to adapt to changing customer demands.  When adapting to changing customer demands, you are in a better position to beat your competition!