Solomon Bruce Consulting Blog

Friday, January 16, 2015

Price is What You Pay—Value is What You Receive

            A large church in a downtown location had a problem with their sound system.  The parishioners knew that they had a problem, the preacher knew that they had a problem and the board of Deacons knew that the problem was not getting any better.

            Like any good nonprofit entity, the board of Deacons wanted to be sure that they “got the best deal” for the money that they were going to spend.  The Deacons formed a committee of lay leaders and members and sought out to find the “best” deal for the budget that had been allocated for the sound system repairs.

            As usual, one company presented a bid which was significantly and substantially lower than the others.  The Deacons and the sound renovation committee reviewed all of the bids, performed due diligence on the various offerors and elected to hire the firm that submitted the lowest bid.

            The sound system was repaired—or so the Deacons thought.  After the budget had been thoroughly expended, the successful offeror said that the work was complete and successful.  Well, the sound system was improved, marginally from what it was originally, but nowhere near what was envisioned or expected.

            The Board of Deacons accepted the work, but unhappiness set in from the time that the work was accepted.  After a couple of months, the Board of Deacons realized, as did the rest of the congregation that more repairs were needed on the sound system.  Unfortunately, no additional budget was available to make the needed repairs.  Seeking some redress, the church called the company that had originally been contracted for the work.  Sadly, the firm had gone out of business—there was no guarantee to the work that the church had paid for.

            Another offeror who was originally unsuccessful with the initial offer was called to come and help remediate the work that the initial contractor had performed.  Needless to say, much of the original work was not done according to standards for the sound industry.  With no additional money available for rework, the church still today has an inferior sound system that is maintained by another company which has a high reputation and well recognized for outstanding value.  This firm is not the cheapest in town, however, the work speaks for itself.

            Remember, price is what you pay, value is what you receive.  Be careful when you buy—if something is significantly cheaper than others, there is probably a reason why.  Check it out before you spend your hard earned money.  At the end of the day, you will be money ahead.

Friday, January 9, 2015

Which Credit Card-- Yours or the Companies? There is a Difference!

           Recently, we had a visit with a professional services individual who is travelling on a weekly basis on company business.  Because he is a young millennial employee, he thought that there would be no problem using his personal credit card for company business.  His logic, rather interesting, was that he could acquire airline miles on his card, and be able to use the miles earned to help “pay” for an overseas trip with his newlywed wife.

            All was well for the first couple of trips.  He managed his fiscal resources in such a way that he was willing to “float” the money until his expense reimbursement came through for the travel that he had completed.  Nobody at the company knew any differently.

            However, on the third trip, he travelled to a city where snow was deep and plentiful.  As he was going down the road, a car in front of him spun out of control.  He was unable to stop his vehicle in time and a resulting accident ensued.  Thankfully, no one was hurt—however, the rental car and the other vehicle sustained significant damage.

            The young professional reported it to his office when he returned—and stated that he had used his personal credit card to pay for the rental car.  Well, as one might imagine, his supervisor was not happy—the reason being that because he was on company business, he should have used the company credit card, which, because it was a company sanctioned business trip, had an insurance provision if any accident occurred when the company credit card was used on company business.

            The young professional admitted that he DID NOT use the company credit card, but used his personal credit card because he wished to accrue the attendant airline miles for personal benefit.  His supervisor was very unhappy and displeased and shared this with the young employee.

            Luckily, the whole situation worked out in a satisfactory manner, however, the supervisor made it very clear that when any employee travelled on company related business, the employee was expected to use the company credit card—that is why it was issued to each employee!

            As we have written previously—this is an ideal time to have this matter addressed in an employee or operations manual that all employees are responsible and liable to follow.  Thankfully, no one was hurt, the young professionals’ credit card covered the accident, which he was NOT responsible for.

            Policies of this nature are important for any company, of any size.  Do not allow employees to use a “county option” mentality when travelling on company business.  State clearly and explicitly what the corporate expectations are and hold each employee to those expectations.

Thursday, January 1, 2015

The New Year has Arrived—Now What?

               2015 has arrived, safe and sound!  Now What?  Is that not the question that you have every New Year?  In the business world, we always ask, “What are you going to do differently this year than last?”
                Now, does not seem like a tough question—however, it does require more brainpower than you might imagine.
                Interestingly, if you keep doing the same thing and expect different results, that rarely is the case.  If you want to achieve a different result, you have to use a different technique or approach.  Using the same approach or technique and expecting different, i.e., better results, is pure folly!
                We talked with a business owner the other day who said that he was going to increase his client contact by 33% this year.  He had lost several large contracts, through no fault of his own, but immediately realized that if he was to maintain the same margins that he had experienced previously, he was going to have to touch more individuals who were not yet his clients.
                If you sell a product or a service—are you content to continue with the same product, or do you wish to enlarge and enhance your product offerings?  We have another client who elected to increase his product offerings after a large number of his current clients requested new and different products.  He took a very conservative approach, bought enough product to fulfill demand, but not so much that if the products did not sell, he would have to “fire sale” them out 6 months later.  Here is what is interesting—in 3 weeks after he added the new product lines, he had sold out of the products and had to re-order—to be ready for the Christmas season!  Fortunately, he was able to obtain the new product, in the same quantities as he initially started with.  Interestingly, the same thing happened—he sold out in the next 3 weeks!  OK, now, he realized that his existing and new clients liked the products that he brought in, so on his second order, he ordered about 10% more than the initial order.  The holiday season allowed for ALL of the 3rd order to sell as well!
                What the client did next was pure brainwork!!  He ordered 2/3 of his initial order, knowing that going into the spring time, the products would not be as popular or in demand as they were during the holiday season.
                The end result?  Shelves stocked with new product that has proven to be a good seller, not as much money invested in inventory going into the spring and the ability to bring in new spring merchandise that he previously did not have the space to sell!

                What are you going to do this New Year?  What changes are you going to make to increase your business sales, fulfill customer demand and increase your overall profitability?  If you don’t know, give us a call—we have ideas!