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That Terrible, Technical ‘R’ Word
NEW ZEALAND is now close to being in a
“technical recession”. We hope this will be temporary.
How should you prepare?
The country has several things going for it and it might fare quite well when compared to other countries. After all, we supply food to the world and it is in short supply.
Who knows?
For businesses, in difficult times we need to look after our existing customers. It is far harder to get a new one than to retain one you have. How are you going to go about this? Try some of the following strategies.
Keep in touch with newsletters
Newsletters do not have to be four pages long like ours. Half a page is better than nothing. Use your
newsletter to give your customers useful ideas. Your newsletter could be a free add-on service.
A painter told me recently I should wash my house down twice a year because it helps to preserve the paint.
So a painter, for example, could give advice about:
* maintaining the paint work;
* choice of colours and the reasons for making those choices;
* the effect of sunlight on paint;
* new products;
* are all painting quotes the same, and why is the lowest price not necessarily the best?
‘How’s things’ calls
Another way of keeping in touch with clients and contacts is to give them a call. Never use this tool to promote sales – your aim is to keep in touch. Reserve this for your most important customers. It is known as a “how’s things” call. It should be brief because your customer might be busy and won’t thank you for taking up valuable time. Incidentally, the “how’s things” call will sometimes lead to a sale!
Make it friendly
Almost everything you do in your business affects your marketing. How the phone is answered is vital. If you are being hassled and answer the phone quickly, you are likely to convey your feelings to the caller. It shows in your voice.
The atmosphere at work affects how your staff feel. This can affect the way they treat your customers. One of our clients recently bought a couple of appliances worth about $12,000, for his home. The conversation with one firm’s rep in the store went something like this:
“When could Paul [the manager] give me a price?” the buyer asked.
The sales assistant responded. “He will need to come and measure up and unfortunately he is working in ? [a town about 80km away} all next week. He doesn’t like us ringing him during working hours.”
“Would he be available on Saturday, then?”
“Well, he takes the children to sports on Saturdays.”
“How about Sunday?”
“He has to have some time off,” she retorted.
At this point the customer was heading for the door, prompting the assistant to ring Paul immediately, who suddenly became available to measure up. In the end the firm did not get the contract.
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Are you really in business?
GETTING into business is not easy. We see many clients who have what Michael Gerber calls the “entrepreneurial seizure”. They get fed up working for a boss. They decide the profits they have been making would be better in their own pockets. The day comes when they hand in their notice and have a go themselves. They work hard and the business grows. They might enjoy a bigger income than when they were employees, but they have merely swapped bosses from their former employer to themselves. They invariably work long hours. They probably earn, after taking into account the evenings and weekends spent on accounting and preparing quotes, much the same rate per hour as they did before going out on their own. These people are self-employed. They are not in business. A business is a money-making machine. You should be able to leave it for a long time and it will continue to make money in your absence. It should not depend on you. A McDonald’s franchise is a business. The question is, how do you switch from self-employment to business?
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Be ruthless with yourself. If someone else could do the job, don’t do it yourself.
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Remember you don’t have to delegate to your staff alone. You can outsource services.
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Make full use of modern technology. Make full use of your word processor. Use standard letters. Use cut and paste. Use the internet to access information. An outworker at home could access your computer just as easily as a person at your workplace.
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Plan to make yourself redundant and measure your progress. Others can do your work when you have given them systems to follow. Focus on systems for your business. This includes scripts when selling and checklists when performing work.
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You should be the ideas person, but never forget if you have staff, they also have brains. Use them. If you encourage contributions from staff and reward them, they will help provide those ideas.
People in business do not need to work long hours. The test of being in business is – how long can you stay away and the business function without you? |
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Emergency Call-Outs
A Vehicle is not exempt from fringe benefit tax just because it is taken home in case of need. The exemption applies on the day the vehicle is used for an emergency call-out. You are allowed to use the vehicle privately on a day where there has been an emergency call-out and still have that day exempt from FBT. If a person is on call they do not automatically qualify for the call-out exemption. What constitutes an emergency call-out?
THE FOLLOW-UP PHONE CALL: |
Putting Your Prices Up
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Being a Trustee brings Responsibilities
IT'S flattering to be invited to be a trustee. However, it is alarming when things go wrong.
If you want to accept an invitation to be a Trustee, be prepared to do the job properly, or run the risk of some sleepless nights. This applies particularly to the common Family Trust.
On becoming a Trustee, you should:
* Get control of the family trust immediately. Trustees are required to do this. It is not enough
to just sign pieces of paper as requested.
* Look through the Trust Deed and be sure you understand it. You will have to refer back to it
on occasions. It tells you what you are supposed to do.
Then:
* Read all Minutes, particularly those over the last few years.
* Hold regular meetings of Trustees, at least quarterly. One of our clients appointed an
Accountant and a Solicitor as Trustees for a Family Trust. They held regular trustee
meetings. On one occasion they noticed a rental property was not insured for loss of
rentals. Being good trustees, they did not consult their client (because it was the trustees'
business and not the client's) and took out a loss-of-income policy. A few months later the
building caught fire and was gutted. If the trustees had not met regularly to review their
responsibilities, the Trust would have lost a lot of rental income. They could have been
accountable to the beneficiaires for this.
* Minute all decisions and get them signed by all Trustees before acting on them.
* The nature of a payment to settlors (those who formed the Trust) needs to be specified in the
Minute. It might be reduction of debt or a distribution of income, for example.
* Get a copy of the most recent financial statements and make sure you are happy with them
and understand them. Take action, now, if you are concerned or do not understand.
Conclusion:
As a trustee, it is your responsibility to have control. You cannot delegate this.
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Never say die when it comes to Sales
IF YOU earn your living by selling, this story might provide some inspiration.
One of our clients told us about calling on a customer for nearly six years. He estimates he made more than 30 calls but he got no orders. Then, out of the blue, came the big one.
“I kept calling on him because I knew how big he was,” our client said. “I knew I would get him when I was in the right place at the right time. Now this is our customer and no longer one to be won.”
He went on.
“And here is another story. I called on another customer every two weeks for almost two years without any success. Then it happened. One day they gave me a big list and simply said, ‘Supply it’.” They did not even ask for a quote. Our client advises, “You have just got to take the knocks. You must not be out there only for the good times." |
Playing It Safe In Difficult Times
If your bank doesn’t want a security over your company assets, why don’t you take one? If your company fails, subject to some conditions and priorities (such as wages and IRD for PAYE and GST), you could find yourself with the first right to the proceeds of the sale of the company assets. You could be paid out ahead of other unsecured creditors. Some people might question the morality of doing this. However, going broke is sometimes not your fault. For example, Wellington City Council formed a trust to create a big event to celebrate the 150 th anniversary of European settlement in New Zealand. The enterprise failed and many small businesses were not paid. Who would have expected a city council venture to go broke? Those who took a security over the assets of their own companies were far better off than those who didn’t. |
More on pricing
On page 3, we gave you some guidance on putting up prices. Sometimes you may be able to
achieve a price increase without appearing to have done so. Try these ideas:-
* Revise your discount structure downwards
* Change your minimum order size or unit sizes
* Charge for delivery or travel - an excellent excuse in the current environment of high petrol
prices.
* If asked for a rushed order, can you charge for overtime?
* Your terms of trade should include interest payable on overdue accounts. Try enforcing
this charge. Even if you later forgive it, the threat should have a positive effect on cash
flow.
* It may be time to put escalation clauses back into contracts. The supplier, when quoting
puts in a condition that the price is subject to change it material prices increase.
Contractors
If your prices are higher than your competitors, for example you may be a painting contractor
explain why the customer would benefit
from paying you more money for the job. Don't just
put in your price and hope. References from happy customers could be included with your
quote.
A CLIENT tells the following story.
“My wife and I popped into a coffee shop after work. She bought a piece of ginger slice and I asked for some fruit loaf, which looked tempting but turned out to be extremely dry.
I mentioned this to a staff member, who took my plate away. I waited with interest. After a while the waitress returned with a refund. Could she have done better?
If she had invited me to choose something else, the only cost to the coffee shop would have been a piece of dried-up fruit loaf. She might have impressed me by being generous with the choice of a substitute, which could have turned me in to an advocate for the coffee shop.”
Goods are often worth less than half the cost of a refund.
Train your staff to handle complaints properly and empower them to make decisions for the firm. You can set a monetary limit on their discretion, if needed. It is better to be generous than mean with the limit.
Don’t Throw Away Sales
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Make your customers feel good WE RECEIVED the following story recently. “Butcher’s shops are becoming a rarity,” we were told. “Occasionally I buy my meat at an excellent butcher’s shop. There are usually three or four people serving.“I use my credit card to pay for the meat and I am always told I don’t need to sign because ‘We know who you are’. “How do you think I feel? Important, of course.” Is this little touch good for business? Notice he uses the words “excellent butcher”.
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All information in this newsletter is, to the best of the author’s knowledge, true and accurate. No liability is assumed
by the author
or the publisher for any losses suffered by any
person relying directly or indirectly upon this newsletter.
You
are advised to consult professionals before acting upon this information.
